Not exact matches
U.S. government
bonds serve as a benchmark against which
other bonds are
priced — especially the Canadian variety, given the close ties between the two economies.
The biggest losers were energy (XLE), consumer staples (XLP) and materials (XLB), all down more than 7 percent amid riding
bond yields — which makes dividend stock yields less attractive and overrode
other factors, like stronger oil
prices and a weak dollar.
If Brexit - like sentiment in
other nations leads to restrictions on the flow of trade and labor, he adds, «that is going to create greater uncertainty and volatility» — at a time when some commentators believe that global stock and
bond prices are overdue for a tumble.
Bond yields spiked, and
prices for a number of
other financial assets that had benefited from expectations of ongoing asset purchases by the Fed dropped precipitously, not just in the United States but in almost every
other country.
On the
other hand, U.S. fixed - income ETFs had outflows of $ 1.7 billion as
bond prices sagged and interest rates climbed on the prospect of a more aggressive Fed.
To some extent, the prospect of rating downgrades has already been
priced into recent
bond auctions by Italy, Spain and
other countries.
Bonds rated below investment grade may have speculative characteristics and present significant risks beyond those of
other securities, including greater credit risk and
price volatility in the secondary market.
This was the lesson taught by William Petty in the 17th century and used by economists ever since: The market
price of land, a government
bond or
other security is calculated by dividing its expected income stream by the going rate of interest — that is, «capitalizing» its rent (or any
other flow of income) into what a bank would lend.
Bonds are subject to market, interest - rate,
price, credit / default, call, liquidity, inflation, and
other risks.
Monti, however, was critical of German and
other insistence on austerity and surrender of control as the
price for assistance to countries struggling with unsustainable
bond yields.
On one side of the equation we have rising commodity
prices, and on the
other side we have falling
bond yields.
A repo is a contract between two counterparties where one agrees to sell a
bond to the
other and repurchase it at a specified
price at some date in the future.
But, over time, the longer central banks create liquidity to suppress short - run volatility, the more they will feed
price bubbles in equity,
bond, and
other asset markets.»
In general, they may seek to take advantage of market inefficiencies such as
pricing differences and relative discrepancies between securities such as stocks and
bonds, technical market movements, deep fundamental valuation analysis, and
other quantifiable trends and / or inconsistencies.
If interest rates decline, however,
bond prices usually increase, which means an investor can sometimes sell a
bond for more than face value, since
other investors are willing to pay a premium for a
bond with a higher interest payment.
An unusually high yield relative to similar
bonds is often an indication that the market is anticipating a downgrade or perceives that
bond to have more risk than the
others and therefore has traded the
bond's
price down (thereby increasing its yield).
Income earned on
bonds is so low that it's difficult to offset the
price declines when rates rise (remember interest rates and
bond prices are inversely related, so as one rises the
other falls).
Bonds are subject to market, interest rate,
price, credit / default, liquidity, inflation and
other risks.
The elitists have no problems whatsoever with stratospheric stock and
bond prices; 5,000 year low interest rates; $ 450 million Da Vinci's; $ 250 million private homes; $ 50,000,000 annual salaries for circus masters, whose role in keeping the masses distracted and dumb is vital; $ 1.9 million Aston Martins; $ 100,000 Air Jordan sneakers, or any of the
other prices that have now gone into outer space.
So in addition, the Fund periodically hedges its exposure to those market fluctuations, based primarily on the status of valuations and market action (
price behavior, trading volume, breadth, industry action, and
other asset types such as
bonds, commodities, and so forth).
Bond prices change because the interest rate paid on other bonds and loans changes while the individual bond's rate doesn't cha
Bond prices change because the interest rate paid on
other bonds and loans changes while the individual
bond's rate doesn't cha
bond's rate doesn't change.
Other examples are the broad US stock market, the stocks of companies involved in social media and / or e-commerce, the market for junk
bonds, and a group of junior mining stocks where just the hint of a possible discovery has led to spectacular
price gains and market capitalisations that bear no resemblance to current reality.
That lower risk to payment usually helps high - yield
bond prices not fall as much as
other bonds.
An increase in rates will still decrease the
price of high - yield
bonds but not as much as with
other bonds because high - yield
bonds follow the economy more closely.
As I emphasized last week, «While we're already observing cracks in market internals in the form of breakdowns in small cap stocks, high yield
bond prices, market breadth, and
other areas, it's not clear yet whether the risk preferences of investors have shifted durably.
These fears drove losses in the market
prices of
bonds in Italy, Greece and
other troubled European countries.
How are we to think about the message of
bond prices when the U.S. Federal Reserve, and
other central banks, have literally bought trillions and trillions of dollars of them?
On the
other hand, if interest rates decrease then the
bond's
price will increase.
High yield
bonds (
bonds rated below investment grade) may have speculative characteristics and present significant risks beyond those of
other securities, including greater credit risk,
price volatility, and limited liquidity in the secondary market.
Although decades of history have conclusively proved it is more profitable to be an owner of corporate America (viz., stocks), rather than a lender to it (viz.,
bonds), there are times when equities are unattractive compared to
other asset classes (think late - 1999 when stock
prices had risen so high the earnings yields were almost non-existent) or they do not fit with the particular goals or needs of the portfolio owner.
So, market participants who buy and sell
bonds at different
prices are expressing different views about a number of variables: the likelihood that these cash flows will be received (credit quality); the velocity at which they may be received (prepayment or extension); their relative value to
other bonds; and their interest rates relative to prevailing rates.
(For example, a
bond paying 4 % typically fetches less when
other, similarly situated
bonds are paying 5 %; the market is usually smart and fast enough to
price that 4 %
bond to yield 5 %.)
So now
bond and stock
prices move opposite of each
other.
It was observed that
prices of
other risk assets, such as emerging market stocks, high - yield corporate
bonds, and commercial real estate, had also risen significantly in recent months.»
A key sign:
Prices for government
bonds of
other heavily indebted eurozone countries — such as Spain and Italy — are not suffering in sync with Greek
bonds, as they did before.
the last couple contacts I had actually suggested short term
bond funds in preference to
other options, since they are not subject to this strong down
price pressure if this pressure or bubble is to blow.
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These models are currently used by the insurance industry in underwriting flood and wind insurance products, by the finance industry in
pricing catastrophe
bonds, and by local officials in coastal communities in preparing for and responding to hurricanes and
other coastal storms.
Although recently rising
prices for stocks, high - yield
bonds, commodities and
other riskier assets would suggest otherwise, investors remain skittish over the still unresolved and quite concerning risks facing financial markets, such as the U.S. presidential election, the potentially prolonged post-Brexit renegotiations, Italian bank solvency and a slowing China.
Remember, as
bond yields rise,
bond prices fall, as do the
prices of
bond proxies such as utilities, REITs and
other high - yielding stocks.
The recent steep decline in yields have pushed
bond prices up resulting in Puerto Rico out performing the rest of the municipal
bond market and
other bond market segments so far this year.
So, market participants who buy and sell
bonds at different
prices are expressing different views about a number of variables: the likelihood that these cash flows will be received (credit quality); the velocity at which they may be received (prepayment or extension); their relative value to
other bonds; and their interest rates relative to prevailing rates.
Although
other factors may affect them,
bond prices are often closely tied to interest rates.
They offer higher yields than interest bearing cash accounts while still offering some safety, since they mature within shorter time periods relative to
other bond variants, and have
prices that are less affected by interest rate fluctuations.
(For example, a
bond paying 4 % typically fetches less when
other, similarly situated
bonds are paying 5 %; the market is usually smart and fast enough to
price that 4 %
bond to yield 5 %.)
You would see similar results in graphs of GDP growth,
bond prices, housing starts, and virtually every
other indicator of economic health.
When risky assets get very correlated with each
other, and the only alternative game to play is buying high quality
bonds, it is an unstable situation that portends lower risky asset
prices.
A
bond with a «Put option» works in exactly the opposite manner, wherein the investor can sell the
bond to the issuer at a specified
price before its maturity if the interest rates go up after the issuance and the investor has
other, higher - yielding investment options.
Also, the relationship between interest rates, inflation, and
bond prices is complex, and can be affected by factors
other than the ones outlined here.
On the
other hand, the
price of a
bond ETF can be observed on the exchange, and an investor can use that information to decide whether to buy or sell.