As of Thursday, a 5 year AAA corporate bond has an interest rate of 1.21% and a 5 year AAA muni bond has an interest rate of 0.93%.
FORBES: Obama's Deduction Cap, Tax-Exempt Bonds, and Economic Illiteracy (WSJ Example)
Including, if you should so with, synthetics which all involve a currency transaction which mimics the movement of any bond, interest rate, stock, commodity.
FORBES: The European Financial Transactions Tax: An Interesting Detail
Even after a bump in recent weeks, the benchmark 10-year U.S. Treasury bond sports an interest rate of less than 2%.
When thinking about the cost of this kind of arrangement, many people would focus on the interest rate on the bond the government is issuing (just as they focus now on the interest rate on the promissory notes).
FORBES: How Much Would Ireland Benefit from Replacing the Promissory Notes with a Long-Term Bond?
The second reason for likely interest rate increases can be attributed to the correlation between the Federal Funds Rate and bond interest rates.
The movement in major government bond yields - the implied interest rate that countries pay to borrow money - was small - an indication that bond investors saw limited risks at the moment.
Another reason demand for the long bond has been so voracious is that a lot of investment banks still use them to hedge their corporate-bond positions and interest-rate swaps (between fixed- and floating-rate obligations).
This happens when a higher-yielding bond matures in a lower interest rate environment.
The point is that Italy's bond yield - the implicit interest rate it pays - is unlikely to fall decisively below the catastrophically unaffordable 7% unless and until the eurozone demonstrates that there is a bailout facility (of some sort) that has sufficient resources to lend to Italy if investors refuse to do so.
Debt has an obvious cost: the interest rate on a bond or loan.
As default risk is the primary driver of high-yield corporate bond prices, as opposed to interest rate direction, when the economy expands, the risk of high-yield corporate bonds defaulting is reduced and this is reflected in lower volatility.
' This might involving switching between both interest rates and currencies, trading a 10 year German bond for a 5 year Japanese one at a different interest rate, for example.
Yield factors in both the interest rate paid by the bond and the actual price of the bond.
FORBES: How To Get More Diversification With Less Interest Rate Risk
There are many reasons why the bond market is failing to send the interest rate signals deficit hawks expect.
FORBES: A Budget Deal Is Staring Them In The Face. Here's Why Congress Won't Take It In 2013.
There is ample liquidity out there and I think, for bond investors in particular, the low interest rate investor will try to find yield elsewhere.
Right now, he sees vast similarities between the bond market today and the low-interest rate world with high debt-to-GDP after World War II that led to a generational bear market in bonds.
FORBES: Burton Malkiel Advises Running From Bonds Into Dividends, Emerging Markets
And stick to shorter-term bond funds that have less sensitivity to interest-rate changes.
WSJ: As Many Stocks and Bonds Get Pricey, It's Time to Play Defense
Hopes of a halt to further interest rate hikes also spurred the bond market, with the yield on the ten-year Treasury falling .071 to 5.059%.
Investors would obviously be willing to pay considerably more for his bond than for a new bond issue in order to get the higher interest rate.
This strategy gives you the higher interest rate of the long term bond but also gives you flexibility to buy and sell the short term bonds if interest rates rise.
Last spring, the interest rate on a ten year government bond was more than 3%.
With any long-term bond the investor is at the mercy of interest-rate fluctuations.
The current interest rate on a 20 year treasury bond is 3.06%.
That means contributions to 401(k)s and other retirement plans, as well as itemized deductions for charitable giving, mortgage interest and state and local taxes would be hit by the 28% limit and municipal bond interest would only be exempt at the 28% rate.
FORBES: Obama Budget Aims To Raise $580 Billion In New Taxes From Old Ideas Targeting Rich
If you assume the worst is over, the bond markets of Spain and Italy offer a nice interest-rate pickup for investors over the alternatives.
At one point today the interest rate on a 10-year Spanish government bond had risen to 6.8% - the highest since the euro began.
As the Italian economy slows, as many expect it will, the ECB may be forced to expand its balance sheet again with interest rate cuts and possibly some form of sovereign bond purchasing, which we ever more ironically refer to as QE.
FORBES: Outlook For A Weaker Euro As Concern Moves Toward Rome
And while Tuesday's bond sale went well, at a 5.7% annual interest rate, Portugal paid dearly for it.
应用推荐