Questions tagged [bonds]

Bond markets and legal aspects of bonds. For government debt use the tag "government debt" unless the fact the the debt is in the form of bonds has significance.

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27 views

Why is market absorption of issued US Treasury Bonds (with the Fed purchase plan) a problem?

Financial market reports suggest that there are uncertainties about the Federal Reserve's ability to absorb new US Treasury Bonds issued in larger quantities to support the US government's growing ...
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1answer
22 views

How do U.S. treasury yields impact yields of other sovereign debt markets?

I read somewhere that when the U.S. Treasury yields rise, it will also have a "gravitational pull" on yields of other sovereign debt markets. For example, when the U.S. Treasury yields rise, ...
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Is the debt owed to resourceful producers by resourceless consumers practically irrepayable?

Here is my argument for the debt owned by resourceless consumers to resourceful producers (as currency, bonds, loans, or other means). Is it correct? If not, where am I going wrong? Economic value is ...
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26 views

Are there any financial instruments/ options that allow you to short bonds that are compiled of state owned municipal bonds? [closed]

Is there an option equivalent to credit default swaps that are made up of state owned municipal bonds. Is there an index that is compiled of more than a few state's municipal bonds? I want to bet ...
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19 views

Understanding the “Treasury auction results” press release

This is the press release for a recent 30-Year bond auction results: https://www.treasurydirect.gov/instit/annceresult/press/preanre/2020/R_20201112_5.pdf I cannot figure out how the price is ...
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6 views

Are government bonds ever profitable

With most government bonds having interest rates being rather low, (0.254%) This being a whole 1.75% below target inflation (To clarify all rates are UK rates, and UK target inflation is 2%), and 1.54%...
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1answer
26 views

How does QE effect the collaterals?

For instance, the ECB accepts green bonds as collateral. And also they are more likely to include green bonds in a QE program. Does this face make a green bond more valuable? How would it work in a ...
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3answers
52 views

What happens when government bonds purchased as part of central bank quantitative easing (QE) reach maturity?

Does the central bank ask the government to pay or are they rolled over?
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35 views

What is the relation between the USD Swaps Rates and US treasuries?

I understand a swap rate is the fixed leg on a IRS (source), and a swap spread is the difference between a swap rate and the interest rate of a US treasury of the same/similar maturity. (source) I ...
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1answer
42 views

Why would governments sell bonds when the economy is in recovery? [closed]

China confident of meeting 2020 fiscal targets, CGTN, 7 August 2020. The article states that China is selling "special government bonds". Why do this? Especially when economy is just ...
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1answer
45 views

How does buying bonds reduce bond yield?

I read that Japan rapidly increased the printing of Yen and used the money to buy government bonds. How did this action reduce the yields of their government bonds and prevent them from having a debt ...
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36 views

Does bond yield always equal the prevailing bank interest rates?

Does a bond's yield (principal and coupon rate) always equal the bank interest rate?
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63 views

Why did the US credit rating downgrade in 2011 decrease US government bond yields?

I'm not sure how bond yields were decreased by the US credit rating downgrade in 2011. Since the credit rating is down, shouldn't the yields increase since the US government wants to attract more ...
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34 views

Was there a drop in liquidity in the corporate bond market during the Global Financial Crisis?

It is often said that the increase in the perceived default risk led to a fall in the demand for the corporate bonds. This led to the fall in their prices and hence, their interest rates rose ...
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1answer
26 views

Why are the YTMs of TIPS of longer maturities more sensitive to current interest rates and inflation rates?

According to this website, the yields of TIPS of longer maturities are greater than that of TIPS of shorter maturities. It seems counterintuitive since yields of longer-maturity bonds, which are based ...
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1answer
22 views

Even at the break-even inflation rate, isn't the YTM of a TIPS greater than that of a normal treasury bond?

At a the break-even rate of inflation, the semi-annual interest payments from a TIPS and a normal government bond would be roughly equivalent. However, the principal amount originally invested in the ...
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59 views

How does the Fed's stimulus push stocks markets higher?

I read that the Fed’s stimulus last March has contributed to a spectacular rally in stock markets. And indeed S&P500 has increased a lot since March. But how does the mechanism work? How does the ...
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48 views

Does China issue treasury bonds too?

The USA is issuing a lot of treasury bonds and investors are buying it. But does China issue such bonds too? If yes, then how many such bonds did they issued and who are the largest owners of those ...
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32 views

Are coupons all semi-annual?

How do coupons get priced in together?
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1answer
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How do you benefit from a fall in interest rates in general as a creditor of public bonds?

I’m reading about England debt in 1819 and how interest rate benefited its creditors. The country had a public debt of more than 250% of the GDP. With peace at last achieved, London is faced with a ...
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36 views

How could Euro bonds serve as a “safe haven” asset in the long run?

The German Bund has been the major safe-haven asset in the Eurozone despite the advent of the Euro. However, I noticed that there is mounting anticipation around a potential 750 billion worth of Euro ...
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Are quantitative easing and helicopter cash really different tactics? And how does QE relate to Modern Monetary Theory?

I've been trying to get a clear understanding of exactly what economists mean by Quantitative Easing (QE). It seems to me that different people mean different things by it. I find simplistic analogies ...
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2answers
35 views

Bondholder vs purchaser of bond

Kindly clarify if the term bondholder refers to the bond issuing authority or the person who purchases the bond. Context: if there's inflation in the economy, bondholder will lose and the person who ...
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1answer
73 views

Is the money market model based on assumption of no interest rate targeting on the part of the central bank?

This is quote from Gregory Mankiw's macroeconomics text about mechanism of formation of the interest rate in the money market model: How does the interest rate get to this equilibrium of money supply ...
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1answer
29 views

Is there inverse relationship betweet prices of interest-bearing assets and the interest rate?

I was wondering about why investors converting out of interest-bearing assets into money in the money market cause the interest rate to increase. Then I remembered that there is inverse relationship ...
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1answer
47 views

Are government bonds internal or external debt?

I was watching this video and since it's a bit oversimplified I wanted more information. I was curious because internal debt is in the local currency from local lenders, while external debt is in a ...
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1answer
65 views

Nelson-Siegel-Svensson method

I am a college student and I have recently learned about Nelson-Siegel-Svensson method which is used by the German Federal Bank to determine the yield curve. I have to generate yield curves of ...
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1answer
36 views

What does the Fed do with their profits?

As far as I understand the system the Fed prints money which it then uses to buy bonds. Bonds are basically statements of debt meaning that the Fed receives interest from the parties it has bought the ...
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2answers
55 views

Why does the Fed feel the need to reduce its balance sheet? [closed]

Why does the Fed feel the need to reduce its balance sheet? What is the problem with the Fed having a large balance sheet long term? What would happen if the value on the Fed's balance sheet ...
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1answer
36 views

Real yields and growth [closed]

Found the following very interesting statement on bond prices, "The yield on a risk-free government bond should equal the growth in nominal GDP since that represents the opportunity cost of holding a ...
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1answer
57 views

What determined the “cost of borrowing money” or the interest rate in a gold-based economy

In the modern economy, the central bank decides the cost of borrowing money using interest rates along with other several tools and technic. But I was wondering, in a gold-based economy (not the gold ...
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28 views

In credit easing, how do central banks avoid allegations of unequal treatment?

In credit easing, central banks purchase private assets such as corporate bonds. How do central banks choose which corporate bonds to buy? If the central bank buys bonds of one company but not those ...
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28 views

Why does US Treasury Bond Futures Chart show two separate curves?

I was surprised to see following on Yahoo Finance. Why did the chart branch into the green and orange functions? Does the chart show 2 separate prices on the chart?
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1answer
40 views

What is the effect on GDP when foreigners buy lots of domestic bonds?

I am trying to figure out the effect on GDP of foreigners buying lots of domestic bonds. From what I understand, when foreigners buy lots of domestic bonds: They need to convert their foreign ...
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3answers
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When the federal reserve buys bonds or other assets from banks, do the banks make a profit?

My understanding is that the federal reserve is injecting money in the market by buying bonds and debt from banks. Do the banks make a profit on the sale of their bonds or corporate debt to the feds?...
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Why do people buy negative interest rate bonds?

I get that people buy long term government bonds, because of how safe it is, and if there would be a recession the government would just print more money and could pay it back. But why would anyone ...
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18 views

What estimation method is best to conduct event study on non standard monetary policy?

I have collected bond yield data from 01/01/2008:31/12/2019 for several euro-zone countries. I would like to conduct an event study analysis of the main Non standard measures announced by central ...
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1answer
46 views

Where can I find charts with the amount of treasuries in existence?

Is there a place where I can see a chart with the amount of treasuries in existence organized by treasury type? Ideally it would be a resource that has multiple charts (for bills, notes, bonds etc...)...
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Do states compete with each other when they emit debt?

Let's say that, for some reason (a crisis or similar), many first-world countries' states need to emit public debt to be able to pay the services the normally provide (pensions, health etc.). As I ...
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2answers
64 views

Why is the Australian Government financing the stimulus via debt rather than the RBA?

The Australian Government is engaging in quantitative easing for the first time. The RBA is creating money that is being used to buy bonds on the secondary market so that there is enough liquidity for ...
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2answers
68 views

The government is issuing massive debt for coronavirus relief - why aren't interest rates rising?

As I understand it, the US Treasury Department issues bonds to pay for the government's coronavirus rescue spending. I might have thought that such a large input to the fixed income market on the ...
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1answer
14 views

What is core government debt?

In fixed income, the yield on the 10-year US Treasury fell 0.07 percentage points to 0.56 per cent as investors retreated to the safety of core government debt From : https://www.ft.com/content/...
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38 views

Why the treasury is buying back its treasury securities during the coronavirus economic crisis?

I have read today that the treasury of my home country (not the US) started to buy back a significant amount of its Treasury securities (bonds, notes ...) from their owners. My question is what ...
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2answers
75 views

Clarification on amortization of constant payments

I have found this formula on wikipedia : $$P=C_k(1+i)^ {(n-k+1)}$$ which describe the constant payment that has to be paid every year ($C_k$ is the part of the initial loan that is extinguished with ...
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39 views

How to Calculate Bond Yields

According to Bloomberg, the coupon rate on a 10-year UK government gilt is 4.75%. Bloomberg also states that the yield is currently 0.47%, and the market price £144.57. The UK Debt Management Office (...
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2answers
54 views

Dynamic of 10 year UST given supply shock of the bonds that the Fed will buy into

It looks like the US government are gonna issue a lot of bonds in the near future. Basic demand/supply implies that this will lower the price of those bonds i.e higher yields. At the same time it ...
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1answer
67 views

Understanding Bond Yields

According to Bloomberg, the coupon rate on a 10-year UK government bond is 4.75%. Bloomberg also states that the yield is currently 0.55%, and the market price £143.51. But if the following formula ...
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2answers
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Why does Samuelson say common stocks are better than bonds and preferred stocks during inflation?

I’m reading the first edition of Paul Samuelson’s Economics (1948). In Chapter 6, “Business Organization and Income,” after describing bonds, preferred stocks, and common stocks, he writes: To test ...
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List of stock and bond indexes for countries

I am doing some master`s degree research and looking for the list of stock/bond indexes for developed and developing countries. So the excel-file I should gather in the end will look like this: ...
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162 views

Most significant factors in the price of a goverments bonds

As a follow up on Long-,short-term interest rates and inflation. Inflation is clearly a factor(tho not possible to model mathematically) when it comes to the market price of a bond. I can think of ...