Bonds 03 (Aug 12 - Jun 15)

Re: Bonds 03 (Aug 12 - Dec 15)

Postby behappyalways » Fri May 08, 2015 4:16 pm

European bond prices drop sharply in mass sell off
http://www.bbc.com/news/business-32622830
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Re: Bonds 03 (Aug 12 - Dec 15)

Postby behappyalways » Sun May 10, 2015 1:57 pm

Bond markets: Reverse speed

Bond yields are suddenly rising


RARELY can a market have changed direction with such speed. For most of 2015 European government-bond yields had been heading lower, with the German ten-year yield on a seemingly inexorable path towards zero. Shorter-term German bonds were already offering negative rates, meaning that investors who held the debt to maturity were bound to lose money.

Then, in the middle of April, the markets turned and yields started rising again (which means that bond prices fell). Germany’s ten-year yield is now back where it was at the start of the year. The sell-off has driven yields in the rest of Europe higher as well (see chart).

Higher bond yields would be good news if they were prompted by a sudden improvement in economic data. That might make investors more confident about owning equities, and less keen on the safety of government bonds. But there has been no great pick-up in the economic outlook of late. Analysts at Royal Bank of Canada have thus dubbed this “the wrong kind of sell-off”.

The reversal seems to be the result of a number of interconnected factors. At the start of 2015, yields were falling because of fears of deflation (linked to a plunge in the price of oil in the latter half of 2014) and because investors were anticipating massive demand for bonds from the European Central Bank as it began its quantitative-easing (QE) scheme in March. The prospect of QE also caused the euro to fall against the dollar.

With the euro falling and European bond prices rising, international investors may well have borrowed euros to buy European government bonds. An alternative strategy, known as the “carry trade”, saw investors borrow euros at low rates and put the money into higher-yielding assets such as equities to benefit from the spread, or carry, between the two.

Over the past month, many elements of those trades have turned sour. The oil price has rebounded, reducing the likelihood of outright deflation and thus relieving some of the pressure on bond yields. Talks between the European Union, the IMF and Greece have faltered, causing investors to lose some of their enthusiasm for European equities.

Weak growth in America in the first quarter, analysts assume, will lead the Federal Reserve to put off raising interest rates; that has undone some of the dollar’s gains against the euro. As a result, investors have unwound their carry trades, buying back the euros they borrowed and selling the risky assets they bought.

The big question is whether the very long bull market in government bonds is over. The yield on ten-year Treasury bonds has also risen sharply in recent months, from 1.64% at the end of January to 2.2% on May 6th. Before the financial crisis, the last time bond yields were that low was in 1950; over the subsequent 30 years, bonds lost seven-eighths of their value in real (ie, after-inflation) terms.

As yet, however, there is no sign of inflation; American prices have been flat over the past 12 months. When the Federal Reserve hinted at winding down its QE programme last year, a big sell-off in bonds, dubbed the “taper tantrum”, ensued—but it soon reversed.

Bears have been calling for a collapse in Japanese government-bond prices ever since the yield first fell below 1% in 1998. Although the Japanese government has piled up debt since then, a combination of an ageing population and deflation has kept yields low.

The bearish trade on Japanese government bonds has since become known as “the widowmaker”. That alone ought to prompt investor caution about making the same bet against government bonds in Europe and America.


Source: The Economist
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Re: Bonds 03 (Aug 12 - Dec 15)

Postby winston » Tue May 12, 2015 7:20 pm

VOLATILE BONDS

A sell-off in US Treasurys that was preceded by volatile trading in European bonds has rattled stock markets.

Weakness in bond prices, if sustained, could push up borrowing costs and drag on economic activity, which is already lackluster in many industrialized nations.

Federal Reserve chief Janet Yellen recently warned that long-term bond yields, which move in the opposite direction to bond prices, could quickly shoot higher once the Fed begins raising interest rates from a record low.

"Some of the recent volatility in bond markets has played a big role in the choppy price action in equities," IG strategist Stan Shamu said in a commentary.

Source: AP
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Re: Bonds 03 (Aug 12 - Dec 15)

Postby winston » Tue May 12, 2015 7:20 pm

VOLATILE BONDS

A sell-off in US Treasurys that was preceded by volatile trading in European bonds has rattled stock markets.

Weakness in bond prices, if sustained, could push up borrowing costs and drag on economic activity, which is already lackluster in many industrialized nations.

Federal Reserve chief Janet Yellen recently warned that long-term bond yields, which move in the opposite direction to bond prices, could quickly shoot higher once the Fed begins raising interest rates from a record low.

"Some of the recent volatility in bond markets has played a big role in the choppy price action in equities," IG strategist Stan Shamu said in a commentary.

Source: AP
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Re: Bonds 03 (Aug 12 - Dec 15)

Postby behappyalways » Thu May 14, 2015 11:52 am

Epic global bond rout is a QE success story - but it won't last
http://www.telegraph.co.uk/finance/comm ... -last.html
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Re: Bonds 03 (Aug 12 - Dec 15)

Postby winston » Sat May 23, 2015 8:52 pm

Bond-Buying Chaos Is Spinning Out of Control

By MICHAEL E. LEWITT

Source: Money Morning

http://moneymorning.com/2015/05/18/bond ... f-control/
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Re: Bonds 03 (Aug 12 - Dec 15)

Postby winston » Fri May 29, 2015 10:09 pm

This Billionaire Thinks Bonds Are Just as Worthless as Subprime

By Valentin Schmid

Source: Epoch Times

http://www.theepochtimes.com/n3/1372575 ... campaign=4
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Re: Bonds 03 (Aug 12 - Dec 15)

Postby winston » Wed Jun 03, 2015 4:04 am

The Coming Bond Collapse: Make a Killing – While Everyone Else Gets Killed

By Shah Gilani

http://www.wallstreetinsightsandindictm ... /#deeplink
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Re: Bonds 03 (Aug 12 - Dec 15)

Postby winston » Thu Jun 04, 2015 9:21 pm

20+ Year Treasury Fund (TLT) drops 11% over the past two months.
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Re: Bonds 03 (Aug 12 - Dec 15)

Postby winston » Fri Jun 05, 2015 6:23 am

Global markets get jitters as bonds sell-off goes on

A persistent sell-off in bond markets left financial market confidence weaker yesterday, with stocks lower globally and not even traditional safe havens, like gold and the Swiss franc, providing much refuge.

German 10-year Bund yields, the benchmark for European debt costs, rose to 2015 highs, fueling sharp falls in the region's stock markets on fears higher borrowing costs could hurt growth and profits.

Currency traders watched the euro burn past US$1.13 to a five-month high as the US dollar lost its overnight swagger.

That took the euro's surge over the last two days past 3 percent and with 10-year Bund yields testing 1 percent, market players had Wednesday's remarks from European Central Bank head Mario Draghi that volatility was here to stay ringing in their ears.

"Clearly these are very aggressive moves. Momentum is clearly with the [bond market] bears at the moment," said Patrick O'Donnell, an investment manager at Aberdeen Asset Management in London.

Greek shares fell 2.75 percent as uncertainty clouded the country's hopes of clinching an aid deal with euro-zone creditors in the coming days.

Greek Prime Minister Alexis Tsipras left talks with senior EU officials in Brussels on Wednesday saying a deal was "within sight" and that Athens would make a payment due to the IMF today.

But Eurogroup chairman Jeroen Dijsselbloem said the differences between Greece and its lenders were "still quite large."

Source: REUTERS
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