Why US inflation data is important and how we measure it
U.S. inflation is not just a measure of growth and price pressure in the U.S. economy. It has more far-reaching consequences.
Securities
Market Realist has the latest news and analysis on debt securities, from bonds to exchange traded notes.
Why Treasury Inflation-Protected Securities May Offer Some Value
TIPS may offer some value as inflation breakeven seems modest. TIPS provide investors a hedge against inflation just like gold (GLD) and other commodities (DBC).
The Difference between Corporate Bonds and Treasuries
Bond investors should understand the difference between Corporate Bonds and Treasuries. Below is a list of the key differences between the two.
Refining Crack Spread Overview: All You Ever Wanted to Know
The crack spread is a major component that drives refiners’ valuation. In this article, we’ll look at the metric’s different aspects.
Gold versus 10-Year Treasury Bonds
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.Financials Hawks and doves: Why Fed-watching isn’t for the birds
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.Financials How bond prices, interest rates, and credit spreads correlate
Bond prices and interest rates have an inverse relationship. If an interest rate increases, the price on a bond declines, and vice versa.Financials Why do floating rate notes, or FRNs, differ from regular bonds?
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.Financials Why investors should look at floating rate notes as an option
On January 29, 2014, the U.S. Treasury Department issued a new class of security: the floating rate note (or FRN). This is the first new security introduced by the Treasury since 1997.
The default rate and its relation to bond and loan prices
Default rate is a key metric of credit risk and is defined as the risk that the counterparty will default on its financial obligations.
Must know: How credit rating affects default rate and bond price
A lower credit rating means higher risk, and therefore, higher yield as investors look for the premium to take the risk and vice versa.Financials Why credit upgrades and downgrades affect bond returns
A ratings upgrade or downgrade has a direct impact on fixed income yields, and therefore directly affects bond prices.Financials Why the yield curve impacts bank profitability
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.Financials Overview: Investment-grade bond ETFs
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.Financials Why Treasury auctions impact investors and financial markets
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.
What Do Widening Bond Spreads Indicate?
Widening spreads indicate a slowing economy. Since companies are more likely to default in a slowing economy, credit risk related to their bonds rises.Financials Must-know: The difference between high-yield and leveraged loans
Historically, high-yield securities have outperformed investment grade securities in good times and vice versa in hard times.
Why investors should follow shifts and twists in the yield curve
Yields on bonds don’t remain constant. When they change by the same magnitude across maturities, we call the change a “parallel shift.”Financials Key takeaways: Why is the yield curve normally upward-sloping?
In normal conditions, the yield curve is upward-sloping. As bonds pay only interest (the coupon) until maturity and pay face value at maturity, investors take longer to recover their principal.
Investors Beware: Duration Risk Has Risen across the Bond Market
If you’re a bond (BSV) (AGG) investor or fund manager, fluctuation in interest rates is one of the key risk drivers for the returns you get from your portfolio.Financials Must-know: Why expense ratios have affected TLT and MUB
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.
Gundlach: Invest in Industrials, Materials, Financial Sectors
“Industrials, materials, and financials are the sectors. . .you want to be invested in,” said Jeffrey Gundlach recently in a CNBC interview.
Knowing the Treasury discount rate and yields before investing
Investors can take an informed decision by knowing the rate of return on their investment.
Why some companies may “prefer” to issue preferred equity
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
All oil is not created equal – why differences in crude matter (part II)
Differences in crude’s density, sulfur content, and production location can vastly affect the price which it commands on the market.Financials Must-know variants in developed market international bond funds
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.Financials Why do floating rate notes, or FRNs, differ from leveraged loans?
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.Financials Richard Fisher explains why excess reserves can create velocity
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.
How do interest rate expectations impact financial markets?
The inflation and interest rate expectations of consumers and firms are important variables determining bond prices.Financials Investing in fixed income: What motivates bond investors?
We can understand the investment objectives of fixed income investors in terms of returns, risks, and constraints. There are two categories of investors.
The Fed taper: How quantitative easing affects the yield curve
QE is an unconventional form of monetary easing—the Fed’s way of putting in more money into circulation in the economy.
Gundlach Discussed the Fed, Trade Deal, and Gold
Gundlach thinks that we’ve already seen a bottom in interest rates for 2019. US Treasury yields have been hitting lows in 2019.
The Dollar Is Strengthening: How Will It Affect Markets?
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.
Can the US-China Trade War Spiral into a Crude Oil War?
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.
Buffett versus Dalio on Gold: Whose Advice Should You Take?
When it comes to investing in stocks, Berkshire Hathway’s (BRK.A) chair, Warren Buffett, and Bridgewater’s founder, Ray Dalio, have similar advice.
Is the Market Worried about an Overheating US Economy?
Federal Reserve Chair Jerome Powell’s speech did little to assuage investors’ concerns regarding the overheating of the US economy.
What’s the Impact of Interest Rates on Precious Metals?
Monetary policies have been crucial in determining the movement in precious metals.
US Dollar Index and Treasury Yields in the Early Hours
The US Dollar Index started Thursday on a mixed note and traded with weakness in the early hours.
Why Economist Argue That Tariffs Are Bad for the Economy
The recently proposed import tariffs on steel and aluminum imports by US President Donald Trump are an effort to protect the interests of US manufacturers.
FOMC’s Review of Economic Situation Signals Strong US Economy
As per the FOMC staff report, inflation (TIP) in the US remained below the 2% target.
Why Quit Rate Indicates a Strong US Employment Market
As per the latest JOLTS report, total separations for December were 5.2 million, which is 3.6% of the total workforce.
Is the Leading Credit Index Signaling Any Business Cycle Changes?
This constituent of the LEI is an economic model, constructed by modeling changes in six financial market instruments.
US Dollar Index and Treasury Yields Early on January 26
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%.
Why Bill Miller Thinks Bond Bull Market May Be Coming to an End
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.”
US Dollar Index and Treasury Yields Are Mixed in the Early Hours
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.
Are Bond Yields Set to Move Higher this Week?
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.
Why Did the Consumer Price Index Rise in December?
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%.
Analyzing the Producer Price Index in December
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.
Your Guide to the US Debt Ceiling
The current debt ceiling is likely to be breached on January 19, and once that happens, the US Treasury must stop issuing any new debt (SHY).
US Dollar Index and Treasury Yields on January 17
The US Dollar Index is trading above opening prices with stability. At 5:30 AM EST on January 17, the US Dollar Index was trading at 90.6.