Interest rate risk is the thing we talked about above: when interest rates go up,
the value of your bonds you currently own go down.
Not exact matches
Bonds may not offer tremendous nominal
value, comparatively speaking, in the current market, but they do generally offer peace
of mind and stability which, for some, may be more important than they
currently realize.
the coupon is based on the par
value of 100 but the
bond is
currently trading at 102.
And Gordon knows if interest rates rise, the
value of her two
bond ETFs (
currently $ 260,000) will fall.
The S&P 500
Bond Index
currently tracks over 5,000 constituents with a combined market
value of USD 4.6 trillion.
If we look at the market composition
of the S&P Pan Asia
Bond Index, which is market
value - weighted, it is not surprising to see the S&P China
Bond Index has a dominant share
of 59 % with its market
value currently stood at CNY 24 trillion.
Today's negative real rates incent us to favor real capital, which provides positive long - term real expected returns, as a long - term store
of value over cash and government
bonds, which
currently pay negative real rates.
That said, I do not
currently see enough
value in treasury
bond ownership nor am I inclined to seek price gains that correspond to twice (200 %) the daily performance
of the Barclays Capital U.S. 7 - 10 Year Treasury Index.