All Entries Tagged With: "bonds"
PIMCO’s Bill Gross Is Bearish on 2012
The head of the world’s largest bond fund—PIMCO—released his investment letter on Wednesday. In it, Bill Gross was notably bearish on the global economy. Gross states, “financial markets and global economies are at great risk.” Noting that the global financial market has depended upon the growth of credit in recent decades, Gross sees little hope [...]
Germany Proposes Greek Debt Swap
Wolfgang Schaeuble, Germany’s finance minister, has sent a letter to the European Central Bank insisting on “voluntary participation of the private sector in case of a new aid package for Greece,” according to MarketWatch. In plain talk, that means that bondholders would be forced to take a writedown on their Greek bonds. Under Schaeuble’s plan, bondholders would [...]
Duration: The Key to Understanding Bond ETFs
In this article “The Right Way to Short U.S. Treasury Bonds,” Keith Fitz-Gerald correctly points out the inverse relationship between yields and bond prices: In case you’re not familiar with how yields and Treasuries work, here’s the 10-second version. The first thing to understand is that bond prices and bond yields move in opposite directions. [...]
Small Investors Underinvested (At Least in Stocks)
The investing blog “Pragmatic Capitalism” published an article on how small investors are allocating assets, noting that “bonds and cash are still the asset of choice for small investors.” The latest monthly survey data from AAII shows: Asset class Percentage allocated Monthly change Historical average Stocks 51.7% -1.2% 60% Bonds and bond funds 24.0% +2.4% [...]
IBM Issues Bonds – Pays Just 1%
According to the WSJ MarketBeat, deflation worries sent the yield on 2-year US Treasury notes to an all-time record low yield on August 3 of just 0.53%. But what’s really interesting is that the same day IBM raised $1.5 billion selling 3-year bonds. The yield? Just 1%. Bloomberg says that’s the lowest coupon rate of [...]
Yield Bribery? Comparing Stocks to Bonds
David Loeper wrote an article for Forbes on the pitfalls of investing in high-yield securities, such as preferred stocks and corporate bonds. His main point about risk is sound: The higher the yield, the higher the risk. So, instead of a higher yield being thought of as attractive what investors should think of is it [...]
Low 2-Year Yield, High Treasury Spread
As a follow up to my post on a recent US Treasury auction, I thought I’d take a look at the yield on the US 2-year Treasury notes. The bond market often provides interesting clues on where investors are putting their money and how much they expect to receive. As the chart below shows, those [...]
Treasury Auctions: Good News? Bad News?
Here’s why trading on the stock market can be tough. This June 23 article in the Los Angeles Times suggests that the recent US Treasury auction went great. That’s good, right? Well… let’s take a closer look. According to the article, the high demand “suggests many investors fear that growth will fizzle in the second [...]
