Why would you invest $100 into a Bond that only returned $99.75?
It hasn’t been 150 years since the last rate hike, only 7 years, but it sure feels like 150 years 🙂
It’s hard to overstate the amount of money that has been rushing into the debt of developing nations.
Bond prices go up. Bond prices go down. Why the USA Treasury yields are changing might have to do with the Fed selling its holding of Treasuries.
With just three months left in 2016, Vanguard & Wells Capital want to lock in profits for the year and they fear the relatively high valuations for investment-grade and junk debt from companies.
In your portfolio, be very careful, if/when replacing the Fixed Income component of your portfolio with Common Stock.
October 1st 2016 may mark the end of the 30 year (plus) run in the Bull Market for Bonds. 4Q16 is just starting and it looks like the Bank of Japan’s decision to not keep lowering interest rates may have signaled the end of the Bond Bull.
Central banks are keeping interest rates nearly as low as they did after the deep cuts of late 2008 and early 2009. This hurts ‘savers’ and doesn’t always stimulate growth.
The old ratios, that worked during a period of 30+ years of declining interest rates, will probably not work in a period of rising interest rates.
Quest for Yield … might actually yield Corporate Debt that is not asset backed.