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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31 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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98 views

Why does the inverted yield curve occur with US Treasury securities?

I have always thought that US securities were considered nearly risk free as the government will almost always pay them back. So why is it the case that investors currently view short term securities ...
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1answer
74 views

Is it fair to compare 1950 US economy to 2016 US economy?

In the last 2 days, bond market has declined a bit. All major news outlets published articles like these: Can We Ignore the Alarm Bells the Bond Market Is Ringing? Such an event in bond market ...
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1answer
53 views

negative interest rate lending ripple effects

I was attempt to describe the ramifications of negative interest rates across benchmarks. I can foresee the business practice changes amongst holders of government bonds, savings accounts, ...
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51 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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27 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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37 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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26 views

Interest rate, bond problem

I am trying to solve the following problem: Debtor issued a bond on 20 000€ (including interest rate) with maturity rate of 8 months and interest rate of 8% per annum. Month later, the creditor ...
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1answer
36 views

JNK and SPY price movements question

I am looking at the graph of JNK and SPY prices close prices since 2008. From 2008 to 2011, the two prices seem to move together. However, somewhere in the beginning of 2012, the prices all of a ...
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13 views

Bond prices and Brexit

Hope this isn't too simple a question. I read an article that stated that the UK government and EU have reached a draft agreement for a Brexit deal, leading to the following market movements after ...
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26 views

How to determine the default probability of a county in a bond that is not in its native currency?

Consider the following case: Country P uses the currency Euro and gives p percent interest on a one year bond issued in Euro. Country Q uses the currency TL and gives q percent interest on a one ...
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1answer
268 views

Wealth - Bond Market and Liquidity Preference Framework

I've been told that an increase in wealth will lead to an increase in both the demand for Bonds determined by the Theory of Asset Demand. This should shift the bond curve to the right, increasing ...
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310 views

How will perpetual floating rate bonds respond to tighter capital requirements?

Floating-rate perpetual bonds will tend to rise or hold value with increasing market interest rates (in contrast to fixed rate bonds, which tend to exhibit and inverse relationship between price and ...
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68 views

Bonds with embedded options pricing via binomial model

Notation: t - time; G(t) - zero-coupon yield curve; $r$, $r_d$, $r_u$ - interest rates. The task is to find market price of a bond for today, while knowing the price of a number of other bonds. ...
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42 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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34 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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57 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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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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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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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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1answer
32 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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1answer
39 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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9 views

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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2answers
52 views

Correlation between nominal bond returns and growth

I read the following passage and the bolded section has me confused: In theory, assets earn a low (or negative) risk premium if they tend to perform well when the economy is weak. When growth ...
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27 views

demand for money

I am currently studying the demand for money by Blanchard. this model assumes that the amount of money held is basically related to transaction levels and the the attractiveness of bonds. i.e.: ...
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50 views

How do treasury bill auction work?

So i am having a couple of issues understanding the auctions of treasury bills. I know that the treausury accepts the bids offering the highest price. The treausury accepts the competitive bids in ...
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30 views

Why don't we have many-to-many lending yet?

Trying to research this for some time, but can't really find anything relevant. As it currently stands borrowing can be one-to-one: 1 customer borrows money from 1 bank. And can be one-to-many: 1 ...
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1answer
64 views

Euro BUND Future CTD Bond

I'm trying to understand valuation of the Euro BUND Future. As to my understanding, the price of the future should be: The price of a government bond issued by the Federal Republic of Germany That ...
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1answer
227 views

Printing Money vs. Issuing International Bonds

I'm reading Niall Ferguson's The Ascent of Money and I had a question about the economic difference between printing money vs. selling bonds to foreign entities. At one point in the book, the author ...
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1answer
81 views

Forward rate discounts

I'm working with the following task: "You are convinced that the bond market is dominated by long-term investors. Hence, you have your own view on the liquidity premium/discount that forward rates ...
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41 views

Data source for a corporate bond yield curve?

Yield curves are a valuable tool for economic analysis. It is particularly interesting to analyse the difference between Government Debt yields and Corporate Debt yields (credit spreads). This gives ...
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48 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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2answers
95 views

Private Investment Impact on Bond Yields

From Japan to the US to Germany, we are currently seeing longer term bond yields falling at an alarming rate. I tune into a fair bit of economic commentary, and can often come to some sort of ...
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2answers
31 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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1k views

What is the difference between quoted price and theoretical value of a bond?

When we refer to "quoted price" of bond, or "clean price", it is equivalent to refer to his "present value" or "theoretical value", which corresponds to the price that I invest in the bond? For ...