Sentences with phrase «term bond interest rates»

Not exact matches

But, «the U.S. and the Bank of England have gone to more extremes because they have interest rates below the Bank of Canada's, and they've also been buying bonds to lower longer term interest rates,» Shenfeld added.

Still, combine the indications of the short - term bond market with today's 5 % GDP news and you get the sense that stock traders betting on low interest rates for longer periods of time may soon have to bail out.

The caveat with this method is that bonds and annuities typically come with long - term interest rates, and from a wealth perspective, that's more dangerous than short - term ones.

Alternatively, it's best to shorten the average term to maturity of your bond portfolio as interest rates enter into a rising cycle, because the shorter the term, the less their price will be affected.

To explain this concept a bit further, we already know that the longer a bond's term to maturity, the more sensitive its price is to changes in interest rates.

Long - term interest rates could rise abruptly, as bond prices fall.

And corporations have spent the last decade issuing longer - term bonds to take advantage of low interest rates.

And with a strong - enough economy spurring the Federal Reserve to raise short - term interest rates, bond investors may need to reduce expectations.

The simplified explanation for this aberrant investing disaster was a dramatic rise in interest rates during the period: Rates on long - term government bonds went from 4 % at year - end 1964 to more than 15 % in rates during the period: Rates on long - term government bonds went from 4 % at year - end 1964 to more than 15 % in Rates on long - term government bonds went from 4 % at year - end 1964 to more than 15 % in 1981.

While U.S. savings bonds have lost popularity as a means of long - term savings due to the low interest rates they currently earn, some retirees have been holding on to bonds that were issued when rates were higher.

Already, the bond yield curve, which measures the difference between short - term interest rates and long one, has been rising.

This tool uses the present value of bond portfolios, adjusted for interest rate and inflation expectations, to show current retirees how much in retirement savings they need today to account for every $ 1 they need in the future, assuming they hold a portfolio made up entirely of investment - grade bonds and longer - term Treasurys.

The Fed had lowered interest rates down to zero in terms of short - term rates and that pushed bond yields down.

By secular reflation, we mean at least a decade in which short - and long - term interest rates stay habitually below nominal GDP growth and high grade bonds are not really bonds any more: delivering trend returns that are close to zero or even negative.

Residential real estate had taken on a healthy pace in late 2012 and early 2013 but has slowed since the Federal Reserve started talking about reducing its monthly bond purchase, which helps keep long - term interest rates low.

The risk - free interest rate approximates the yield on benchmark Government of Canada bonds for terms similar to the contract life of the options.

In our terms, there are value investors for Treasuries 10: There are lots of natural buyers and sellers of interest rates, and if Treasury bonds crash dramatically someone will step in to buy them.

Many funds companies, including Vanguard and Fidelity, offer short - term bond funds that will likely outperform during a rising interest - rate period.

Progress in a few areas has been solid: slashing of bureaucratic red tape has led to a surge in new private businesses; full liberalization of interest rates seems likely following the introduction of bank deposit insurance in May; Rmb 2 trillion (US$ 325 billion) of local government debt is being sensibly restructured into long - term bonds; tighter environmental regulation and more stringent resource taxes have contributed to a surprising two - year decline in China's consumption of coal.

Interest rate expectations are constantly changing over the short - term but over longer periods bond returns are more or less based on math.

The biggest disadvantage of buying a Treasury bond is that the interest rate could rise during its term, which means your money might be tied up in an investment that pays 2.75 percent interest when you could be getting 4 percent or 5 percent — or more.

But that relationship has been tested over the life of this bond bull market that saw double digit interest rates fall over the past 30 + years, boosting the performance of long - term bonds.

Let me remind you that monetary policy operates with a long lag and there are many transmission channels through which interest rate changes affect the economy, including longer - term bond yields and the exchange rate.

For bond investors with a short - term investment horizon, it is absolutely critical to think about rising interest rates.

Yes, cheap money polices did help stabilize a reeling housing sector, that shouldn't be dismissed, but what else does the Fed have to show for near - zero short term interest rates and the fortune spent lowering longer term rates through its bond buying program?

Because most wealthy Chinese seem to think about RMB in terms of USD or Hong Kong dollars, it is the fear that any depreciation of the RMB against those two currencies (the Hong Kong dollar is pegged to the USD through a modified currency board) greater than the couple of percentage points interest rate differential would yield less than equivalent USD or Hong Kong dollar bonds.

With extraordinary low interest rates and modest inflation, investing in long - term bonds to capture as much yield as possible may seem like a smart move.

Bond prices rise when interest rates fall, and vice versa; the effect is usually more pronounced for longer - term securities.

The recent spike in interest rates, and corresponding drop in bond prices, has left longer - term U.S. bonds looking more reasonable.

What we have really seen over the past several years, in terms of the appreciation of markets and the decline of interest rates based on what the Fed has been doing, is a result which has eliminated the possibility of investors in bonds and stocks to earn an adequate return relative to their expected liabilities.

One is legitimate — every year in which short - term interest rates are expected to be zero instead of say, a typical 4 %, should reasonably warrant a 4 % valuation premium in stocks and bonds, over and above run - of - the - mill historical norms (one can demonstrate this using any discounted cash flow approach).

The rates that have responded most significantly to lower borrowing costs are short - term loans for financial speculation, above all for derivatives and related buying or selling of stocks and bonds on margin — enormous gambles on which way the dollar, the stock market and interest rates may go.

We assumed that in each period a 30 - year bond is issued at prevailing interest rates (long - term government bond plus 1 %) and that amount is invested for the next 30 years in a portfolio of large - cap stocks while paying off the bond as an amortized loan (as if it were a mortgage).

Over the last twenty years, investors have witnessed a steady decline in the interest rate on investment grade bonds, GICs and term deposits.

Funds can also have different levels of interest rate sensitivity depending on whether they focus their investments on short, intermediate, or long - term bonds.

The recent spike in interest rates, and corresponding drop in bond prices, has left longer - term U.S. bonds looking...

Although bonds generally present less short - term risk and volatility than stocks, bonds do contain interest rate risk (as interest rates rise, bond prices usually fall, and vice versa) and the risk of default, or the risk that an issuer will be unable to make income or principal payments.

What is the risk - free interest rate (which we consider to be the yield on long - term U.S. bonds)?

Yields on long - term Treasury bonds dropped markedly, and analysts predicted that interest rates on fixed - rate mortgages would soon drop below 5 percent.

Bond market geeks refer to this as a «flattening of the yield curve,» meaning that shorter - term interest rates rose while longer - term interest rates fell.

For example, an interest rate swap is a derivative whereby two parties exchange, or «swap,» interest payments on a bond; one side might get a constant 3 percent each payment period, while the other gets the LIBOR rate (a benchmark rate that some banks charge each other for short - term loans).

In part, the bond yield curve — the difference between short - term and long - term interest rates — is an indicator of future economic growth expectations.

We could take the $ 16 billion we have in cash earning 1.5 % and invest it in 20 - year bonds earning 5 % and increase our current earnings a lot, but we're betting that we can find a good place to invest this cash and don't want to take the risk of principal loss of long - term bonds [if interest rates rise, the value of 20 - year bonds will decline].»

Interest - rate risk is generally greater for longer - term bonds, and credit risk is generally greater for below - investment - grade bonds, which may be considered speculative.

Thus fluctuations in interest rates will cause the total return on bonds to fluctuate, with long - term bonds fluctuating more than short - term bonds.

(Longer - term bonds risk a price decline if U.S interest rates should rise.)

That could mean investors are moving money out of stocks and into bonds in anticipation of disappointing earnings; or that foreigners who are worried about their own economies are looking for a safer haven in the U.S.; or that expectations of future inflation have declined, allowing long - term interest rates to come down a little.

Put simply, even taking account of current interest rate levels, and even assuming that stocks should be priced to deliver commensurately lower long - term returns, we currently estimate that the S&P 500 is about 2.8 times the level at which equities would provide an appropriate risk premium relative to bonds.

(Longer - term bonds risk a domestic dollar - price decline if U.S interest rates should rise.)

Legg Mason plans to close a deal this month to restructure $ 650 million in debt, a move designed to lock in favorable interest rates for the long term while taking advantage of the market's sustained appetite for corporate bonds.