During the Cold War, when the world was lurching ever-closer to the doorstep of a nuclear holocaust, disaster preparedness was an abiding virtue of every American family. Once the stand-off with the Soviet Union gave way to the 21st century, this high alert about potential war or crises later came to be applied to retirement […]
If you had to pick a field as an exemplar traditionally known for its ethical behavior, money managers (the groups that run hedge funds) are probably not your best choice. However, hedge funds are facing a much more existential threat: Since the financial crisis, hedge funds have had a difficult time outperforming “the market”—i.e. passively investing in […]
When the economic policies of the country are debated, it usually comes down to fiscal and budgetary concerns: How much do we spend? How much debt do we take on? Over the past several years, the “recovery” of the U.S. economy has been fueled by rising debt, ultra-low interest rates, and profligate spending. The recent […]
Amid an increasingly risk-off environment for investors, money has steadily flowed into the government bond market at an alarming pace over the last few years. This is especially true for U.S. Treasurys with a longer duration (10 years or more) as investors chase the higher yields they offer. However, there’s reason to believe this market […]
Japanese Prime Minister Shinzo Abe, who with the Bank of Japan (BOJ) Governor Haruhiko Kuroda has embarked on an unprecedented amount of quantitative easing known as “Abenomics,” won over enough voters to recently earn reelection for his government. This is widely seen as a mandate for him to continue his aggressive, accommodative economic policies. Yet […]
As bond yields continue to plunge to historical lows, investors are getting fleeced. The more that uncertainty, fear, and uneven economic growth drive investment into the bond market, the more potential income is being forfeited.
If you follow the financial news, you know that everyone is talking about rate hikes (or the possibility thereof) right now. It would seem to the casual observer that everything is tied to whether or not the Federal Reserve decides to raise interest rates.
The question on the mind of market participants is whether or not the Fed will decide to pull the trigger on interest rates at some point this year.
The European Central Bank’s policies of negative benchmark interest rates in addition to a massive bond buying program have distorted the European Union’s fixed asset market to the point of failure. Some government bond yields are so far into the negative, that the ECB itself is prohibited from buying them. The results of these logic-defying […]
It’s not just the unprecedented low yields on sovereign debt that is plaguing the credit markets. Corporate bonds are likewise stuck in negative territory in many cases, confounding investors’ attempts to eke out some meager return while parking their money in a supposedly safe place.
If there’s any one axiom about monetary policy that has held true lately, it’s that volatility and uncertainty are the only constant. You can throw everything else out the window. First, the Federal Reserve was on track for tightening policy; now the Fed is rapidly backtracking from that position. The Fed’s international counterparts were already […]
Guggenheim Partners LLC is one of the largest investment and financial management companies in the world. The company’s chief investment officer (CIO), Scott Minerd, has recently made a habit of accurate predictions when it comes to key market movements.
News that the 10-year Japanese bond plunged to a negative yield has put the focus on what some are calling the most visible effect of the failure of the latest and most controversial central bank policy, negative benchmark interest rates. Record negative yields in government bonds across the globe are showing that investors have so […]
Major emerging markets have plunged into contraction, one after another, over the last 18 months. From China to Russia to Brazil, these once-promising opportunities for investment have been oozing losses and trying to stanch the bleeding from more than one place. Junk bonds, a popular asset when investors are searching for better yields, have crumbled […]
The warnings were ignored by investors hungry for yield, and now there are too many panicked people trying to escape through a tiny door. It sounds like a zombie B-movie, but it’s the reality of a junk bond market this week that has seen big funds stop redemptions, or fail altogether. Investors large and small, […]
As the December Fed policy meeting creeps ever-closer, some of the largest bond traders are bracing for a storm. That’s not to say that there will be an upheaval in the bond market, but “better safe than sorry” appears to be the mantra, at least in the short term. The imminent rise in benchmark interest […]
For many traders and investors, long-term Treasury notes (i.e. U.S. government debt) are the only game in town when it comes to safety. This is true even of some who do not entirely shun the precious metals. This conviction, however, as we have seen, has been shaken by recent dislocations in the bond market.
U.S. Treasurys, frequently cited as the safest asset in town, are increasingly getting caught in a liquidity crunch. The widening gulf between older, so-called “off-the-run” Treasury notes and their “on-the-run” counterparts is a signal that the U.S. bond market is in turmoil.
During the 17th century, corporate bonds were sometimes issued as perpetual securities. In other words, they continued to bear interest into perpetuity—forever. Granted, in most cases, the bonds would be defaulted on by the issuers at some point—in many cases, once government entities got involved. However, in one exceedingly rare case, there is a goat-skin […]
As the Fed’s first interest rate hike looms, corporate bonds are coming under more scrutiny. Issuance of corporate bonds has exploded, thanks to ultra-low interest rates provided by central banks. With Treasury yields set to rise, corporate bonds will have offer greater returns in order to justify their risk. The question is, can these companies […]