Bond Strategies for Rising Rate Environments
... longer duration means the price fluctuates more as the yield moves up and down). By reducing maturity, the thinking goes, investors avoid large potential price shocks in their bond portfolio. In today's bond market, with the Federal Reserve intent on keeping short-term interest rates at or near 0% f ...
... longer duration means the price fluctuates more as the yield moves up and down). By reducing maturity, the thinking goes, investors avoid large potential price shocks in their bond portfolio. In today's bond market, with the Federal Reserve intent on keeping short-term interest rates at or near 0% f ...
The Risk and Term Structure of Interest Rates
... some bonds over others for reasons other than interest-rate risk (their preferred habitat). To hold other bonds, investors need to be compensated – by a term premium, which acts the same way as liquidity premium. Either of these theories accounts for all 3 facts. ...
... some bonds over others for reasons other than interest-rate risk (their preferred habitat). To hold other bonds, investors need to be compensated – by a term premium, which acts the same way as liquidity premium. Either of these theories accounts for all 3 facts. ...
Marketline Monthly - Cascade Investment Advisors
... On the foreign front, results were mixed. The Hang Seng had exactly no return last month. This market is somewhat of a proxy for the Chinese economy, which has apparently been slowing. However, after the month closed, Shanghai stocks surged, with reports indicating that some of the action was levere ...
... On the foreign front, results were mixed. The Hang Seng had exactly no return last month. This market is somewhat of a proxy for the Chinese economy, which has apparently been slowing. However, after the month closed, Shanghai stocks surged, with reports indicating that some of the action was levere ...
INVESTMENT OPPORTUNITIES
... “borrow” your money for a fixed amount of time at a fixed interest rate. LOW RISK ...
... “borrow” your money for a fixed amount of time at a fixed interest rate. LOW RISK ...
Power Point
... Relationship of Ep to Total Revenue • When Ep > |1|, decreasing price increases total revenue (the elastic range of the demand curve) • When Ep = 1, total revenue is maximized • When Ep < |1|, decreasing price decreases total revenue (the inelastic range of the demand curve) ...
... Relationship of Ep to Total Revenue • When Ep > |1|, decreasing price increases total revenue (the elastic range of the demand curve) • When Ep = 1, total revenue is maximized • When Ep < |1|, decreasing price decreases total revenue (the inelastic range of the demand curve) ...
Read More - Prudent Management Associates
... In comparison to 2005, the reductions in current yields are most pronounced at the shorter end of the yield curve. This is consistent with the Federal Reserves’ intent to keep short-term interest rates close to zero. The FED’s Quantitative Easing program, which ended last October, was an attempt to ...
... In comparison to 2005, the reductions in current yields are most pronounced at the shorter end of the yield curve. This is consistent with the Federal Reserves’ intent to keep short-term interest rates close to zero. The FED’s Quantitative Easing program, which ended last October, was an attempt to ...
Total Yield Bond Fund Adding New Investment
... Total Yield Bond Fund Adding New Investment The Total Yield Bond Fund was first offered in January 2012 to provide participants with a diversified fixed income investment option. This option includes managers that invest in not only traditional bonds, like treasury bonds, but also non-traditional bo ...
... Total Yield Bond Fund Adding New Investment The Total Yield Bond Fund was first offered in January 2012 to provide participants with a diversified fixed income investment option. This option includes managers that invest in not only traditional bonds, like treasury bonds, but also non-traditional bo ...
Yield Curve Inversions and Future Economic Growth.
... 5. Hedge funds. There has been a recent increase in demand for U.S. bonds from the Caribbean area indicating hedge fund activity. With long-rates above short rates, many managers do “carry trades” (borrow short-term and buy long-term bonds hoping the relation between rates remains stable). As the te ...
... 5. Hedge funds. There has been a recent increase in demand for U.S. bonds from the Caribbean area indicating hedge fund activity. With long-rates above short rates, many managers do “carry trades” (borrow short-term and buy long-term bonds hoping the relation between rates remains stable). As the te ...
Quarterly Commentary
... The Horizons Active Canadian Bond ETF (“HAD”) began the quarter with a long duration and moved between neutral and long. The unexpected Trump victory caused a very sudden and dramatic move to higher yields on fears of fiscal stimulus with accompanying inflation pressures and an accelerated Fed respo ...
... The Horizons Active Canadian Bond ETF (“HAD”) began the quarter with a long duration and moved between neutral and long. The unexpected Trump victory caused a very sudden and dramatic move to higher yields on fears of fiscal stimulus with accompanying inflation pressures and an accelerated Fed respo ...
PowerPoint Slides
... Relationship between yields to maturity and maturity Yield curve - a graph of the yields on bonds relative to the number of years to maturity – Usually Treasury Bonds – Have to be similar risk or other factors would be influencing yields ...
... Relationship between yields to maturity and maturity Yield curve - a graph of the yields on bonds relative to the number of years to maturity – Usually Treasury Bonds – Have to be similar risk or other factors would be influencing yields ...
Chapter 3
... • Expanding economy Downward Sloping Yield Curve • Expected lower interest rate levels • Tight monetary policy ...
... • Expanding economy Downward Sloping Yield Curve • Expected lower interest rate levels • Tight monetary policy ...
Document
... • Why people discount future with nominal interest rate but estimate future earning with real rate? • Probably it is born from most people’s personal experiences. The borrowing cost varies with nominal interest rate. But most people’s earnings are not adjusted for inflation. This is probably also t ...
... • Why people discount future with nominal interest rate but estimate future earning with real rate? • Probably it is born from most people’s personal experiences. The borrowing cost varies with nominal interest rate. But most people’s earnings are not adjusted for inflation. This is probably also t ...
Waiting for Godot*
... risk is on the inflation front. Recent numbers may not yet have the tailwind of wage increases. However, in growing economies exhausting the oversupply of labor before the inflation reflects in the wage levels is usually only a matter of time. The expectation of economic growth is itself a risk in t ...
... risk is on the inflation front. Recent numbers may not yet have the tailwind of wage increases. However, in growing economies exhausting the oversupply of labor before the inflation reflects in the wage levels is usually only a matter of time. The expectation of economic growth is itself a risk in t ...
Interest rate_Ch05
... The rate of interest that would exist on default-free U. S. Treasury securities if no inflation were expected Ranges from 2 to 4 percent in the U. S. ...
... The rate of interest that would exist on default-free U. S. Treasury securities if no inflation were expected Ranges from 2 to 4 percent in the U. S. ...
Yield curve
In finance, the yield curve is a curve showing several yields or interest rates across different contract lengths (2 month, 2 year, 20 year, etc...) for a similar debt contract. The curve shows the relation between the (level of) interest rate (or cost of borrowing) and the time to maturity, known as the ""term"", of the debt for a given borrower in a given currency. For example, the U.S. dollar interest rates paid on U.S. Treasury securities for various maturities are closely watched by many traders, and are commonly plotted on a graph such as the one on the right which is informally called ""the yield curve"". More formal mathematical descriptions of this relation are often called the term structure of interest rates.The shape of the yield curve indicates the cumulative priorities of all lenders relative to a particular borrower, (such as the US Treasury or the Treasury of Japan) or the priorities of a single lender relative to all possible borrowers. With other factors held equal, lenders will prefer to have funds at their disposal, rather than at the disposal of a third party. The interest rate is the ""price"" paid to convince them to lend. As the term of the loan increases, lenders demand an increase in the interest received. In addition, lenders may be concerned about future circumstances, e.g. a potential default (or rising rates of inflation), so they offer higher interest rates on long-term loans than they offer on shorter-term loans to compensate for the increased risk. Occasionally, when lenders are seeking long-term debt contracts more aggressively than short-term debt contracts, the yield curve ""inverts"", with interest rates (yields) being lower for the longer periods of repayment so that lenders can attract long-term borrowing.The yield of a debt instrument is the overall rate of return available on the investment. In general the percentage per year that can be earned is dependent on the length of time that the money is invested. For example, a bank may offer a ""savings rate"" higher than the normal checking account rate if the customer is prepared to leave money untouched for five years. Investing for a period of time t gives a yield Y(t).This function Y is called the yield curve, and it is often, but not always, an increasing function of t. Yield curves are used by fixed income analysts, who analyze bonds and related securities, to understand conditions in financial markets and to seek trading opportunities. Economists use the curves to understand economic conditions.The yield curve function Y is actually only known with certainty for a few specific maturity dates, while the other maturities are calculated by interpolation (see Construction of the full yield curve from market data below).