The interest rates, or coupons, that bonds pay differ due to a variety of parameters. If bond A pays a higher interest rate than bond B, this premium is referred to as spread.
Article on tag "interest rates"
A masterpiece
The US central bank Fed increased the Fed funds rate last Wednesday. The risky asset markets reacted to the move with an increase. At the same time, the US dollar depreciated. How can that be explained?
Equities: Threats and opportunities of rising interest rates
US interest rates are on the rise. It took the Federal Reserve Bank (“Fed”) twelve months, after the initial lift-off in December 2015, to make the second move, but for two reasons the odds of more frequent rate hikes over the next twelve months have increased.
US central bank confirms trend reversal
We have seen a number of trend reversals this year, one of them being the end of the negative growth surprises. The forecast of economic growth and inflation are currently not subject to downwards revisions any longer.
Emerging markets bonds in demand
Economic growth in the emerging markets has picked up substantially, while that in the industrialised economies has been rather stable. This has led to an increase in the growth differential in the emerging markets’ favour. Investor demand for emerging markets bonds has been on the rise in search of higher yields and interest rates.
Capital market review 2015
Capital markets experienced significant price fluctuations in 2015. While euro government bonds recorded a relatively good performance contrary to expectations, riskier bond segments such as high-yield corporate bonds were disappointing. Regionally speaking, stock exchanges recorded a very mixed set of performances. Emerging markets such as China and Brazil ended up on the disappointing side, whereas […]
Interest rate lift-off – Stay cool
Following last week’s surprisingly strong employment report, the odds that the US Federal Bank will start raising its policy rate at the next FOMC-meeting in December jumped to almost 70%. Of course, 70% is still short of 100%, but most observers believe that something terrible must happen in the next four weeks to make the […]
Bond investments in the current environment
After the recent, rather substantial corrections on the bond markets many investors were wondering: “Can or should I still invest in bonds or bond funds in view of possibly rising interest rates?” Let’s first have a look at the bonds with the highest quality within the Eurozone, i.e. German government bonds. Where have the prices […]
Is the Eurozone facing a turnaround in interest rates?
Eurozone government bonds have ensured very good performance returns in the past years. The asset class has benefited from the zero interest rate policy and the very expansive monetary policy of the European Central Bank. In recent weeks the prices of bonds from Eurozone countries have gone through a correction, above all German government bonds. […]
Changes in the market regime
The big trends of the past weeks such as the appreciation of the US dollar, the weakening oil price, falling yields, and the outperformance of Eurozone equities have reversed in the past days and weeks, in some cases drastically so. What is behind all of this? When both demand (i.e. economic growth) and supply (i.e. […]