For instance, did you know you could take a humble corporate bond yielding 7%, collect a yield of 10% and cash out with a 73% gain?
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The obvious example is in Greece, where ten-year bond yields reached 7% late last month.
When rates rose 200 basis points from there, a bond with a 7% coupon lost 21% of its value.
Fat chance: the IMF forecasts GDP growth to average just 0.5% a year and bond yields of 7.7% between 2012 and 2017.
You can easily find a junk bond fund yielding 7%, but if you spend that whole amount you are certain to get poorer over time.
And his ten-year-old Deutsche Municipal Bond Fund did 7.26%, versus 5.98% for the Lehman Five Year General Obligation Index, putting it in the top 4% of its class.
By the end of last week, the yield on Spain's 10-year bond hovered around 7%, the financial equivalent of being admitted to intensive care with a raging fever.
Government bond prices fell initially--with the yield on the benchmark 8.15% 2022 bond rising to 7.80% in a knee-jerk reaction from 7.74% earlier, before recovering to end at 7.74%.
Government bond prices also fell, with the yield on the benchmark 8.15% 2022 bond rising to 7.80% from 7.74% earlier, but later paring some losses to trade at 7.77%.
It sent Spain's cost of borrowing (for the sovereign 10-year bond) toward 7% -- a level which is regarded as unsustainable and has precipitated bailouts of other euro countries.
The 30-year bond has already lost 11.7%, while the popular 20-year bond etf TLT has lost 16.2% of its value since its peak in early September.
For example, if long term bond yields move to 7%, the loss will be 25%.
Over the past 15 years, the bond fund has returned 7.39%, compared to the 6.26% return on the benchmark.
Meanwhile, Spanish and Italian borrowing costs continued to rise to unsustainable levels Monday, with Spain's 10-year bond topping the critical 7% level.
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To be clear, unlike Italy's bond yields of nearer 7%, the rise in French funding costs does not put it on the critical list.
Spain is under mounting pressure with bond yields well over 7% on 10-year paper and if it needs a bailout, Italy may not be far behind.
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Mr. Gross's fund returned 4.16% for the year, its worst performance since 2006 and far behind the benchmark Barclays Capital Aggregate Bond Index's 7.84% gain, according to Morningstar.
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By comparison, JNK is beating the Barclays 3-7 Year Treasury Bond Fund (IEI), which is down 0.5 percent year-to-date.
Yesterday the Dow dropped almost 400 points as Italian bond yields surged past the 7% mark that is seen as the point of no return.
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On Wednesday, the yield on the 10-year government bond ticked briefly above the 7% level that many investors consider unsustainable, trading recently at 6.916%, according to Tradeweb.
Junk bond funds are yielding north of 7% and trading at a discount to boot.
The Italian bond rate reached a record of 7.48% last Wednesday, draining investor confidence and hastening Mr Berlusconi's departure.
The yield on the benchmark 8.15% bond due in 2022 rose to 7.45%, a two-week high, following the governor's comments.
At the end of March, Slovenia's 10-year government bond yields had climbed to around 7%, prompting fears it would need external support to finance itself.
Bond and bond fund allocations declined 0.7 percentage points to 18.3%.
Within days Spanish bond yields had again crossed the 7% threshold.
The yield on the 10-year government bond fell just below the critical 7% level to 6.99%, according to Tradeweb, well off the euro-era high of 7.17% reached on Monday.
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