Finance forum: Gov. bonds and Spread 39 articles - 3.623 readings

Government bonds are debt securities that nation states issue in financial markets in order to finance some of their activities and services. An interest rate is applied to the securities and depends on the term of the loan, but also on the economic stability of the country that issues it. The “spread” is the difference in returns between the interest rates on government bonds from different countries.

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Rates: western central banks do not stop

Posted on 20.06.2022

The latest to usher in a more restrictive monetary policy was the Swiss National Bank (SNB), which raised its key rate by half a percentage point on Thursday. The rate rose from -0.75% to -0.25%. By now, it is clear that all major western central banks have only one goal in front of them: to curb inflation. The SNB follows the example of the Federal Reserve The increase in interest rates (see also "What are interest rates?") by the SNB could be followed by further interventions in or ...

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The risks of higher interest rates

Posted on 07.06.2022

In the euro area, the inflation rate exceeded 8%. This will probably force the European Central Bank to raise interest rates. But what are the risks associated with an increase in these rates? Jan Gänger writes about this in an article on 'Capital.de' (but already appeared on 'ntv.de'). The assumption of a transitory inflation is outdated The predictions of a transitory inflation have been thwarted by at least two very far-reaching events: a) Russia's war against Ukrai ...

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A fresh look at euro investment grade spreads

Posted on 26.05.2022

We have all felt  the brunt of higher inflation rates and the European bond market is no exception. The narrative from the European Central Bank (ECB) is getting more hawkish and bond yields have responded to the expectation of higher policy rates.  An important question posed by investors is whether the higher yields available across each segment of the euro investment grade bond markets is attractive?

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The total return strategy and the need for very competent management

Posted on 23.05.2022

For some of the world's major central banks, containing inflation is now the most important goal. The measures put in place to combat inflation, moreover, are already having an impact on the financial markets. We write about this, reporting an analysis by the investment firm Capital Group (which also appeared on 'financialounge.com', in an article by Virgilio Chelli). Monetary tightening and government bonds  The tightening of monetary policies by several central banks, primar ...

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Bonds: what should one pay attention to?

Posted on 12.05.2022

After a period of relative marginality, the bond market has quickly regained an important role in the financial debate. In an advertorial published in 'Cash' magazine, Dominik Sacherer, Portfolio Manager Fixed Income at Baloise Asset Management, discusses some of the most important aspects related to this issue. Inflation and interest rates When talking about bond yields today, a premise is necessary regarding inflation, which in March reached 8.5% in the US and 7.4% in the Eurozone. I ...

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Some bond yields are catching investors' attention

Posted on 10.05.2022

For some time now, bonds have been attracting investors' attention. The focus on yields has increased mainly as a result of monetary tightening and rising interest rates. But where might some of the most attractive yields be focused today? Duncan Lamont, CFA, Head of Strategic Research at investment management firm Schroders, writes about this (the analysis was also picked up by "financialounge.com"). Rising rates and the price and yield of bonds The rise in key US rates (now at ...

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Investing amid high rates and possible recession

Posted on 06.05.2022

The war seems to have pushed away the possibility of a stable economic recovery and rekindled problems such as galloping inflation. An article by Swiss private bank J. Safra Sarasin outlining a possible investment route in this complicated situation appeared on finews.com. The strategy hinges on balancing the portfolio in favour of quality and defensive bond segments. Interest rates, commodities and inflation The war seems to have removed all doubts from the Federal Reserve, which raised ...

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Fed raises rates by fifty basis points

Posted on 05.05.2022

The Federal Reserve raised key interest rates for the second time in a row from 0.25-0.50% to 0.75-1%. The last time such monetary policy action was taken was over 20 years ago. Fed raises interest rates again The Fed's decisions and Jerome Powell's statements leave no room for doubt: the US central bank's number one objective is to combat inflation as much as possible. Powell and his staff were certainly impressed by the inflation figures for March, up 8.5%, a figure not seen sinc ...

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Race for government bonds? Watch out for real yields

Posted on 04.05.2022

The implementation of monetary tightening is bringing many government bonds out of negative yields. Many savers and investors see this as good news, as government bonds are considered very safe financial assets and ideal for long-term savings. However, as Vittoria Puledda also points out in an article published in the daily newspaper "La Repubblica", investors should not overlook the effect of inflation on the real yields of government bonds. Ten-year government bonds on the rise in m ...

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