Securities

The crack spread is a major component that drives refiners’ valuation. In this article, we’ll look at the metric’s different aspects.

The negative interest policy of the central banks is casting government bonds as a futile choice for investors compared to stocks and gold. As a result, bond prices dipped and yields started rising.

The FOMC is made up of hawks and doves, and their balance could affect future policy. Investors who follow the Fed need be able to tell the differences.

Bond prices and interest rates have an inverse relationship. If an interest rate increases, the price on a bond declines, and vice versa.

The U.S. Treasury Department’s latest issue on January 29, the floating rate note (or FRN) will fulfill two investor needs: participating in anticipated future interest rates increases and protecting principal against default.

A lower credit rating means higher risk, and therefore, higher yield as investors look for the premium to take the risk and vice versa.

A ratings upgrade or downgrade has a direct impact on fixed income yields, and therefore directly affects bond prices.

Historically, a flatter yield curve had an adverse impact on the financial institutions’ returns. It lowered their net interest margins. The Fed continues to stress an accommodative monetary policy. The policy and strong overseas demand have kept yields low at the long end of the curve. As a result, the difference between 30-year and five-year Treasury yields fell to 154 basis points on September 5, 2014.

U.S. investment-grade bonds can provide investors with a safe and steady income stream. They’re issued by the U.S. Department of the Treasury and corporates. The issuers have a very high ability to service the debt issued. There’s little risk of default.

The purpose of Treasury auctions is to obtain financing from markets at the most competitive cost. The yield on these securities is determined through a public auction process. These yields affect the secondary market for U.S. Treasuries. Yields and bond prices move in opposite directions.

Widening spreads indicate a slowing economy. Since companies are more likely to default in a slowing economy, credit risk related to their bonds rises.

Historically, high-yield securities have outperformed investment grade securities in good times and vice versa in hard times.

Yields on bonds don’t remain constant. When they change by the same magnitude across maturities, we call the change a “parallel shift.”

We note that net or effective returns (that is, returns after expenses) fall to 7.95% versus perceived returns of 8.44% for TLT for the past three years.

“Industrials, materials, and financials are the sectors. . .you want to be invested in,” said Jeffrey Gundlach recently in a CNBC interview.

Investors can take an informed decision by knowing the rate of return on their investment.

Companies may prefer to raise money through preferred equity for a few reasons. One possible benefit to issuing preferred equity is to reach a new pocket of investors

Differences in crude’s density, sulfur content, and production location can vastly affect the price which it commands on the market.

International bond funds like the Vanguard Total International Bond Index ETF (BNDX) can have various investment styles determined by their stated choice of bond investments.

FRNs are usually issued in capital markets, whereas leveraged loans are arranged by commercial and investment banks. While FRNs are typically unsecured and investment-grade, leveraged loans are secured.

Richard Fisher also discussed the impact of quantitative easing (or QE) on excess reserve balances held by depository institutions at his speech at the London School of Economics on Monday, March 24.

QE is an unconventional form of monetary easing—the Fed’s way of putting in more money into circulation in the economy.

Gundlach thinks that we’ve already seen a bottom in interest rates for 2019. US Treasury yields have been hitting lows in 2019.

The US Dollar Index, which measures the strength of the dollar against a basket of other currencies, has risen 2.2% in the past month.

Although the US doesn’t export much crude oil to China, the additional supply of cheap Iranian oil could pressure both Brent and WTI crude prices.

When it comes to investing in stocks, Berkshire Hathway’s (BRK.A) chair, Warren Buffett, and Bridgewater’s founder, Ray Dalio, have similar advice.

Federal Reserve Chair Jerome Powell’s speech did little to assuage investors’ concerns regarding the overheating of the US economy.

Monetary policies have been crucial in determining the movement in precious metals.

The US Dollar Index started Thursday on a mixed note and traded with weakness in the early hours.

As per the latest JOLTS report, total separations for December were 5.2 million, which is 3.6% of the total workforce.

This constituent of the LEI is an economic model, constructed by modeling changes in six financial market instruments.

The US Dollar Index started this week on a weaker note. At 3:35 AM EST on January 26, the US Dollar Index was trading at 88.83—a drop of 0.62%.

Bill Miller said, “Bonds, in my opinion, have entered a bear market, but one that is likely to be benign for the next year or so.”

On January 24, 2018, the US Dollar Index opened the day lower and traded at fresh three-year low price levels in the early hours.

The US Treasury is not able to issue any more debt until the debt ceiling is raised, which could increase the volatility in the bond markets.

According to the December CPI report released by the U.S. Bureau of Labor Statistics on January 12, consumer prices in December increased 0.1%.

The December PPI fell 0.1% month-over-month—compared to a 0.4% increase in November and October. The final demand index rose 2.6% in 2017.

The core CPI of 0.3% pushed the annual number up by 0.1% to 1.8%.

After falling for four consecutive trading weeks, the US Dollar Index started this week on a weaker note by falling to three-year low price levels.

Gold is a non-yield bearing asset that reacts negatively to rises in the interest rate.