You ignore the views of the chief world economist – Alan Greenspan at your own peril! Financial markets are addicted to his theories about how things work: be it the end of inflation, the miracle of productivity and that the greatest economy in the world will be able to deal with any challenge. Last wednsday, the US Treasury bond market was not amused to find out that « the Maestro » was unable to explain why 10 year government bond yields are as low as they are at the moment. In semi-annual testimony before the US congress he created some new wall street-jargon calling the current state of things the « bond market conundrum ». T-bonds promptly sold off in response to his slicing and dicing the question. As in 1996 when he briefly spooked the equity market whith his remarks about « irrational exuberance » his fundamental point is true: bond yields are very, very low. The real question is, whether they are too low for the biggest buyers of US treasuries: Asian Central Banks. With the US dollar weakening yet again over the last few weeks, they are more likely to keep up the pace of bond buying than not. One way to profit from this is for example through going long the Treasury bond future or to buy a certificate that mimics the behaviour of the bond future contract with a stop loss protection (for example: ISIN NL0000414985 from ABN Amro with a leverage of around 12: One basis point move in yield is worth around 1.2% in price of the certificate: if yields go back to 4%, that^s a 25% gain!!).
(12 commentaires)
Les commentaires sont fermés.
Wow, Jean ! I’m absolutely thrilled ! A 25% gain on bonds thanks to asian banks investing their dough ! Please tell us more !
Hello, Neat post. There is a problem together with your
website in internet explorer, could test this? IE nonetheless is the marketplace leader and
a good component to folks will omit your great writing due to this problem.
Thanks a lot for sharing this with all of us you actually recognise what you are
talking about! Bookmarked. Please additionally discuss with my web site =).
We can have a hyperlink exchange arrangement between us
Excellent way of describing, and good piece of writing to take data concerning
my presentation subject, which i am going to present in university.
All types of investments include certain risks.
Now it is time to decide your specific investments.
Wow that was unusual. I just wrote an really long comment but after I clicked submit my comment didn’t show up.
Grrrr… well I’m not writing all that over again. Regardless, just wanted
to say superb blog!
Schwab Clever Portfolios invests in Schwab ETFs.
Traders do pay direct and oblique prices.
All varieties of investments come with certain dangers.
Financial advisors business is individuals business.
That is true for investment advice as nicely.