The bond market is the venue in which debt securities are traded prior to maturity. An investor in the bond market buys a debt instrument, which stems from what is essentially a loan to a corporation or government. In exchange for this money, the bond investor receives an interest rate. Debt instruments make interest payments at fixed intervals and for a fixed period of time; therefore, they are called fixed-income securities. The interest rate that the issuer pays is called a coupon. At maturity, the full amount of capital is returned to the investor. For investors in the bond market, two main criteria for buying a debt instrument is duration and credit quality. Duration for the bond market represents the length of the investment; credit quality refers to how strong the borrower is and how able they are to repay the full amount of debt.
While many commentators are focusing on Greece and China, the former Chairman of the Federal Reserve is warning that America’s bond market is at risk of collapsing.Speaking with Fox Business on Friday July 10th, Greenspan said, “What people are not focusing on is we have a bond market bubble and when that decides to work its way off. Read More
How safe is your retirement from a financial market collapse? While six years of booming asset prices have lulled investors into a sense of complacency, a hidden risk could spark a bond and stock market crash in 2015.At least, that is according to billionaire investor Bill Gross. In a blog post published Tuesday, June 30th, the money maven. Read More
Over the past few weeks, U.S. bond prices have declined (close to a semi-crash), and their yields have skyrocketed. Don’t think because you are not directly invested in bonds that what’s going on in the bond market will not affect you. The bond market is much larger than the stock market and a bond market crash can have a major impact. Read More
Over the past six years, the Federal Reserve has been the major driver of the bonds market, snapping up $3.5 trillion in bonds. Thanks to the Federal Reserve and a number of other factors, investors are getting nervous and selling. In fact, they’re selling so much so that 10-year U.S. notes yields increased 40% since February.On May. Read More
The verdict is in…Last week, at the end of its regularly scheduled meeting, the Federal Reserve said:1) It would continue to reduce the amount of money it creates each month. The Fed said it will be out of the money printing business by the end of this year. By that time, the Federal Reserve will have created more than $4.0 trillion. Read More