Sentences with phrase «yield curve makes»

In addition, the present steep yield curve makes borrowing cheap deposits and lending long - term at higher interest rates very profitable.

A flatter yield curve makes profits from these transactions tougher to come by.

But we prefer shorter - duration Treasuries, as policy shifts that steepen global yield curves make us cautious of longer - duration U.S. government bonds.

Several factors contributed to the change in expectations, including less supply of MBS to absorb due to a slow down in originations, a steep yield curve making MBS an attractive investment, and the announcement that Fannie Mae and Freddie Mac will begin buying back about $ 200 billion in delinquent -LSB-...]

Not exact matches

Our alpha transmission process centers on making key decisions across all four of our alpha pods — duration, sector allocation, yield curve and currency.

Not sure how your two recommendations of reducing exposure and staying short the yield curve are any different from my recommendations since those two are two of many recommendations I make in this post.

On the short - side of the yield curve, the consensus seems to interpret the Federal Open Market Committee's recent use of the word «gradual» as an indication that it will allow inflation to run higher than 2 % in order to make up for the last 20 years of below - target growth.

As usual, I don't place too much emphasis on this sort of forecast, but to the extent that I make any comments at all about the outlook for 2006, the bottom line is this: 1) we can't rule out modest potential for stock appreciation, which would require the maintenance or expansion of already high price / peak earnings multiples; 2) we also should recognize an uncomfortably large potential for market losses, particularly given that the current bull market has now outlived the median and average bull, yet at higher valuations than most bulls have achieved, a flat yield curve with rising interest rate pressures, an extended period of internal divergence as measured by breadth and other market action, and complacency at best and excessive bullishness at worst, as measured by various sentiment indicators; 3) there is a moderate but still not compelling risk of an oncoming recession, which would become more of a factor if we observe a substantial widening of credit spreads and weakness in the ISM Purchasing Managers Index in the months ahead, and; 4) there remains substantial potential for U.S. dollar weakness coupled with «unexpectedly» persistent inflation pressures, particularly if we do observe economic weakness.

The eventual goal is to manage monetary policy aiming for a yield curve that has a low positive slope, allowing the banks to make a little money, but not a lot.

This makes it particularly difficult for the yield curve to invert, and arguably skews the probability of the risk of a recession lower.

In particular, the removal of the yield floor for asset purchases, currently set at the deposit rate, would make QE implementation much easier and the curve steeper, especially if the ECB cuts rates more aggressively, but the Bundesbank seems reluctant to tolerate what could be viewed as indirect monetary financing.

Meanwhile, any QE expansion would make the issue of core bond scarcity worse — we estimate that 45 - 50 % of the PSPP universe of German Bunds currently trade below the ECB's deposit rate, thus non eligible for QE, and contributing to a flattening of the German yield curve.

But it had also yielded a paradox: Gravity should make the cosmos curve inward and crash in on itself.

They tried to compensate by tuning their World engines for maximum HP and yielded a peaky torque curve, that made the engines seem underpowered.

The chart below shows the average 12 - month returns in some of the industries that make up the MSCI World Index - including Materials, Energy, Industrials, Consumer Discretionary, and Consumer Staples - subsequent to different shapes of the global yield curve.

During earnings season, investors worried about the impact of a flattening yield curve on small cap banks, which make up roughly 25 percent of the Russell 2000, according to Bloomberg data.

That would make me queasy if I had a lot of money riding in the belly of the yield curve, say 4 - 7 years out.

Beats me; the slope of the yield curve today is adequate to allow banks to make money; if the Fed waits at these levels, the economy should recover over the next two years.

Index investing doesn't require studying company balance sheets, writing call options, positioning yourself on the yield curve, or any of those other things that might make active investors sound smart.

From a sector perspective, energy, materials and financials make up more than a third of the MSCI Europe Index.2 Many of these companies tend do well when inflation is rising and bond yields are rising because typically inflation nudges up commodity prices and financial companies tend to profit when the yield curve steepens.

It's very difficult to outperform the market, so prudent investors should look to employ valuable tools like the yield curve whenever possible in their decision - making processes.

The illustrative investment is made in 5 - year zero - coupon bonds with yield levels initially set by the Treasury curve.

Interpreting the slope of the yield curve is a very useful tool in making top - down investment decisions.

Because yield curves have historically offered good indications for economic changes, reflecting the bond market's consensus opinion of future economic activity, levels of inflation and interest rates, they can help investors make a wide range of financial decisions.

In this article, we'll discuss short - term versus long - term interest rates, the yield curve and how to use the study of yields to your advantage in making a broad range of investment decisions.

The yield curve is best used to make general interest rate forecasts, rather than exact predictions.

The flattening of the bond yield curve in recent years meant you might pay only 1 % or 1.5 % more to lock in a long - term rate, and that made the stability of fixed rates much more attractive than it was five years earlier.

The banks can easily make money with a yield curve that steep... not much money, but enough to keep them alive (the financial sector would shrink under these rules).

Bonds How to Make Money From Bonds Utilizing a bond ladder while paying attention to the yield curve can help you create a portfolio for achieving your financial goals

The fund will make asset allocation decisions based on two driving factors: the 200 day moving average for the S&P 500 index as well as the bond yield curve.

The eventual goal is to manage monetary policy aiming for a yield curve that has a low positive slope, allowing the banks to make a little money, but not a lot.

Bernanke inverted the yield curve, banks took more credit risk to compensate, worst loans were made then.

Now, anyone that does work on the Treasury yield curve knows that the US government made life tough when they withdrew the 30 - year back in 2001.

Well, now they will have to bear that expense, and yes, as Daniel points out, that will make the muni yield curve steepen.

Though in the long run investors in First Marblehead will likely make money, the short run may end up being very rocky with potential cancellations on the horizon and a flat yield curve.

It has absolutely depressed rates on the long - end of the yield curve, which makes it cheaper for businesses, individuals, and governments to borrow for periods of up to 30 years.

By holding short - term interest rates near 0 %, the Fed has effectively made it impossible for the yield curve to invert.

A wide yield curve would give surviving banks the ability to make profits and heal themselves (sound familiar?).

Pre-2008, the Fed controlled only the short end of the yield curve, which, with time, is a pretty powerful tool for making the economy rise and fall.

Summarizing, it still seems prudent to limit maturities to about 15 years, since absolute yields are still below levels that would make longer - term TIPS a compelling buy regardless of the shape of the yield curve.

Additionally, as short - term interest rates fall faster than long - term rates, banks benefit from a more favorable yield curve; essentially, they pay short - term rates on customers» deposits and charge long - term rates on loans, making the combination of low short - term rates and relatively higher long - term rates very beneficial for their net interest income.

This makes banks to lend (as on a steeper yield curve banks make more profits and it is worth the risk of lending) to value companies helping value companies to make more profits and expand.

The Kunsthalle Basel had The Long Walls (2013), two gallery - spanning openwork walls made of 20 - foot metal studs insterted into tracks on the top and bottom and strapped to sprinkler pipes to yield a gradual curve.

My choice was made in such a way to yield to a low relative error and a good correspondence between the curves during the pre-industrial era.