How Delayed Monetary Accommodation Can Cause a Recession
Retracting monetary accommodation on time is crucial as well. This was the chief reason why three dissents took place in the September FOMC.
Securities
Market Realist has the latest news and analysis on debt securities, from bonds to exchange traded notes.
How Does a Strong Dollar Impact International Bonds?
When we talk about the relationship between the US dollar and bonds and how currency movements impact bonds, we’re essentially talking about international bonds.
Why Did Treasury Bonds Record a Fall in Yield?
The yield on US ten-year Treasury securities fell below the 1.6% mark for the first time on September 26, 2016 due to a rise in demand.
Will Treasury Inflation-Protected Securities Be a Game-Changer?
According to Bloomberg, Treasury Inflation-Protected Securities (or TIPS) have generated a year-to-date return of 6.3% compared to 4.7% by the broad Treasury market.
Diminishing Opportunities in Asia: What You Need to Know
The balance of countries in Asia present more interesting opportunities. To better focus our discussion, I’ll concentrate on investment grade markets.
Yield Curve Is Steepening: What Does It Indicate for the Market?
In this series, we’ll compare yields across various developed markets (EFA) (VEA). We’ll also look at how a steepening yield curve affects the financial sector (XLF).
How the Fed’s Shifting Stance on Rates Affects Gold
The Fed’s Shifting Stance on Rates The summer doldrums came late this year for gold and gold stocks. Now that the U.K. Brexit decision is old news, the markets are again obsessed with the Federal Reserve’s (the “Fed”) shifting stance on rate decisions. Although the Fed’s tone had been dovish on rate increases following the […]
Why Caution Holds the Key
The UK has taken over other countries as the most sought-after bond market destination, especially after the Brexit vote.
How Holding Duration Is Risky during Rising Inflation
Moving on to the fixed income space, the Janus team sees holding duration in portfolios as a risk.
Why Janus Thinks Ignoring Inflation Is a Mistake
In this series, we’ll look at the Janus Asset Allocation team’s views on inflation, policy measures, and asset allocation (ITOT) (NEAR), given its assertion that inflation pressures are building.
Microsoft Issued the Most High-Grade Bonds Last Week
Microsoft (MSFT) issued Aaa/AAA rated high-grade bonds worth $19.8 billion through seven parts on August 1, 2016.
Mortgage Rates Didn’t Move despite a Volatile Bond Market
Lately, mortgage rates and bond yields have shown a weak correlation. Treasury yields have fallen in the past month, while mortgage rates have been steady.
How’s Annaly Capitalizing on Commercial Real Estate?
By investing in commercial real estate, Annaly Capital is increasing its returns. At the same time, it’s taking on credit risk.
Real Estate Market Hot in the West, Cold in the Northeast
Home prices in the Pacific and Mountain states have outperformed prices in the rest of the country over the past two years.
Low Yields: The Reason Lies outside the United States
The reason for low yields lies outside the United States. Global yields have been heading south over the last ten years.
Mortgage Rates Rise with the Bond Market
Lately, mortgage rates and bond yields have shown a weak correlation. Treasury yields have fallen over the past month, while mortgage rates have been steady.
The Relationship between TIPS and the Break-Even Rate
Between Jan 2014 and September 2015, the break-even rate was higher than the CPI inflation rate, as markets were surprised by the sudden dip in oil (USO) prices.
What Does the Break-Even Rate Suggest?
The break-even rate is the difference between the yields of ten-year Treasuries (IEF) (TLH) and ten-year TIPS (VTIP).
Why Do Housing Starts Remain Muted?
Housing starts and building permits came in around 1.2 million—towards the top end of a narrow range over the past year.
How Might Yields React to a Dot-Com Bubble Situation?
During the 1999–2002 dot-com bubble crisis, the US 2-Year Treasury yield fell by 74%. It made a high of 6.9% in May 2000 and a low of 1.8% in September 2002.
Richard Bernstein Discusses the Risk of Seeking Safety
In his July 2016 Insights newsletter, Richard Bernstein stated, “Safe investments are safe until everyone wants them.”
Municipal Bonds Are the Ballast to Equity Risk
Historically, investment-grade and high-yield municipal bonds (MUB) have a very low correlation with most other asset classes.
Why Municipal Bonds Are Immune to Market Volatility
Generally, municipal bonds (SUB) are immune to market volatility, thus providing considerable support to a portfolio.
Yield-O-Philes Face a Difficult Challenge
Yields remain at unattractive levels. This has caused yield-thirsty investors to flock to high-dividend-yielding stocks, driving their valuations higher.
Yield for Yields! Where Can You Find Yields Today?
Not only are European stocks cheaper than American ones, they also offer more attractive dividend yields.
What the World Bank Thinks Now about US Economic Growth
The World Bank expects the pace of US economic growth to be 1.9% this year—a sharp correction from the 2.7% pace the bank projected in January 2016.
Yield Is the Workhorse of Municipal Bond Returns
Over the years, average returns from municipal bonds (CMF) are in line with the broader index. They outperformed in some years and underperformed in others.
Are Municipal Bonds Really for Me?
Municipal bonds (MUB) have provided an excellent return in the past year. The returns are even better if we account for their tax benefits.
How Inflation Expectations Affect Gold Prices
In the 1990s and 2000s, when gold prices tracked inflation, although the correlation seems to be a bit weak compared to the 1970s and 1980s.
How Rising Real Yields Could Affect Equities
Since the start of 2015, the S&P 500 and real yields have had a high negative correlation. Falling real yields have encouraged investors to take more risk in search of higher returns.
Why Is ‘Carry’ Compressed in Financial Markets?
In his investment outlook for June 2016, Bill Gross asserted that “carry” is compressed in nearly every form. It has more risk than return.
Bill Gross Talks about Compressed ‘Carry’ in Financial Markets
In his latest monthly investment outlook for June 2016, bond market veteran Bill Gross talked about “carry” in financial markets.
Bill Gross Reviewed Close Calls That Dotted a ‘Magnificent Era’
In his monthly investment outlook for June 2016, Bill Gross outlined that money managers who have decades of experience witnessed a “magnificent era.”
How Does a Rate Hike Impact Insurance Stocks?
Interest rates are a key performance driver for life insurance companies, affecting their margins, hedging costs, and product sales.
Why Is the Median Income to Median Home Price Ratio Elevated?
The recent 5.5% year-over-year gain for home prices has put the FHFA House Price Index about 3% above its April 2007 level.
Fundamental Market Demand Rose for 4-Week Treasury Bills Auction
The US Department of the Treasury conducted the weekly auction of four-week Treasury bills (or T-bills) on April 26.
Why TIPS Are an Attractive Investment Option Right Now
Asset managers have warned that costs may rise. They recommend inflation-linked securities such as Treasury inflation-protected securities (or TIPS).
Why Millennials Are Often Called ‘the Unluckiest Generation’
A population of 80 million strong in the U.S., millennials – those born between 1980 and 1999 – are breaking with tradition.
Treasury Yields Could Stay Low: Here’s Why
The ten-year Treasury (IEF) yield has plunged in recent weeks. It dipped from 2.3% at the start of this year to ~1.6% currently, in a risk-off trade.
What Are the Traditional Measures of Labor Productivity?
Labor productivity is an important tool to measure the strength of a country’s economy. Policymakers often use this indicator to compare output efficiency during a particular period.
The Effect of an Interest Rate Reversal on Insurance Companies
Interest rates are a key performance driver for life insurance companies. They affect their margins, hedging costs, and product sales.
When Are Preferred Shares Appropriate for Your Portfolio?
Treasuries (TLO) add ballast to a stock-centric portfolio while providing low yields.
Credit Risk and Interest Rate Risk Have a Negative Correlation
Credit markets tend to improve when the economy is improving. The possibility of a default on corporate bonds (LQD) drops, thus causing their yields to fall.
Own Bonds across Credit Quality to Diversify Your Portfolio
Adding bonds across credit classes helps diversify your bond portfolio. The weight of each category depends on your risk appetite and the business cycle.
Higher Volatility: You Need to Rethink Your Portfolio Strategy
Higher volatility calls for you to rethink your strategy. After being calm for most of 2014, both bonds (AGG)(BND) and stocks have experienced volatility this year.
REIT Outlook: Fannie Mae Securities Close at 104 1/32
Fannie Mae TBAs started the week at 104 15/32 and gave up 7/16 to close at 104 1/32. The ten-year bond yield increased by 7 basis points.
The Impact of Rising Interest Rates on TIPS
With interest rates likely to go up by the end of the year, TIPS with shorter maturities look more attractive.
Comparing Treasury Inflation-Protected Securities and Treasuries
Yields on TIPS remain close to 0%, making them unattractive for some. However, considering that inflation rates could go up and remain there, these securities look attractive.
What Do Declining US Real Interest Rates Mean for Gold?
Gold is used as an investment alternative because investors perceive it as a way to protect money’s purchasing power.
The Must-Know Risks of Fixed Income Investing
There are no free lunches. The risks involved in fixed income investing are two-fold.
