Comments on: Crisis forgotten in bond-buying frenzy

By: ARJTurgot

ARJTurgot — Thu, 08 Apr 2010 14:52:03 +0000

Wrong. Bonds only look easy. You seem to be focused only on government bonds. What we have now seen is that risk assessments on corporates are meaningless, and that you can leverage bonds in creative ways that we haven’t recently in equities. The basic components of business ARE simple, it’s the different way those components get sliced and diced that make life complex. Also, in the end, everything is positively (and, it seems, strongly and surprisingly) correlated.

My kingdom for some accurate implied volatility data.

By: Gotthardbahn

Gotthardbahn — Tue, 06 Apr 2010 15:37:12 +0000

Bonds are easy: Strong economic growth, central bank raises rates, bond prices fall due to selling by investors and yields rise. Weak economic growth, central bank cuts rates, bond prices rise due to buying by investors and yields fall.
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Bond prices are based on a spread over benchmark government bonds in the same term. That spread is added to the yield on gov’t bonds and, given the coupon and maturity date, worked backwards on the bond in question to determine its price.
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Bonds priced above par have a yield lower than the coupon, bonds priced below par have a yield above the coupon.
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Next question?

By: jollypants

jollypants — Tue, 06 Apr 2010 15:05:41 +0000

“Lenders do not seem to be good learners. To judge from the credit market, the 2008-9 crisis might never have happened.”

… They learned that the Federal Government will bail them out, so why should they bother making sensible loans?

By: love91

love91 — Sat, 03 Apr 2010 15:07:08 +0000

The surging cash around the world will spur inflation at some point

By: love91

love91 — Sat, 03 Apr 2010 14:31:21 +0000

too much cash flying around the world is going to spur inflation

By: love91

love91 — Sat, 03 Apr 2010 14:26:43 +0000

There is too much cash flying around the world looking for places to invest

By: Ghandiolfini

Ghandiolfini — Sat, 03 Apr 2010 09:41:08 +0000

…and how it is used in the Worldwide carry trade (parities) and currencies to create liquity ?

By: Ghandiolfini

Ghandiolfini — Sat, 03 Apr 2010 09:30:58 +0000

…9. Before and after tax effects, compared to dividends and capital growth;
10. Inverse relationship between rates and bond prices.

& 100 year graphs, please !

By: Ghandiolfini

Ghandiolfini — Sat, 03 Apr 2010 09:20:22 +0000

People don’t understand how bonds work. It is too abstract. Tell us about:

1.Coupon/face value;
2.Why there are actually returns as the trade
values/units are so high, so the interest is high;
3.The Fisher-effect – nominal less inflation = real
rates;
4.Rates: downward and upward sloping;
5.The yield curve;
6.Types of bonds;
7.Context of bonds;
8.The inverse relationship between share/stock and bond prices.

By: love91

love91 — Sat, 03 Apr 2010 02:46:33 +0000

$1.3 trillion left money market funds and into equities and bonds last week