Much of the volatility in stocks appears to be related to ten -
year government bonds getting to around the 3 % level.
Not exact matches
Compare that with the 1.5 % they'd
get from holding a 10 -
year Government of Canada
bond.
The interest rate on 10 -
year bonds was 1.79 % at the end of 2014 — about half as much as the federal
government had to offer to
get investors to buy its debt a decade ago.
In addition, housing and the economy should
get a lift from the plunge in 10 -
year U.S.
government bond yields to 3 %, and, if the economy needs it, a new round of quantitative easing from the Federal Reserve.
Investors famously shorted Japanese
government bonds, or JGBs, a few
years ago but
got burned; the bearish trade was dubbed the «widow - maker.»
You can buy a Swiss
government 10 -
year bond and
get LESS money back at the end of ten
years.
They can
get over 4 % fixed from 10 -
year UK
government bonds — a huge spread over short - term rates, but still not very attractive compared to 3.25 % from the FTSE 100, given that dividend income should rise over time.
He said changes in
government bond yields, worsened by Brexit, meant «20
years of investment return is missing that we've
got to try to make up from employers».
But while you could
get 5 % on
bonds a decade ago, the current yield on 10 -
year Government of Canada
bonds is about half that today.
Usually on a fixed - coupon
bond (e.g.
Government bond) the interest rate is fixed for a given period (say 10
years), and if market rates rise the face value of the
bond falls, to compensate for the lower return a new buyer would
get, compared to the market interest rate.