By Associated Press | | PUBLISHED: August 21, 2019 at 4:31 pm | UPDATED: August 21, 2019 at 4:31 pm Imagine lending money to someone and having to pay for the privilege of doing so. Or being asked to invest and informed of how much money you’ll lose. Sounds absurd, but increasingly that’s the global bond market these days. A rising share of government and corporate bonds are trading at negative interest yields — a financial twilight zone that took hold after the financial crisis and has accelerated on fear that a fragile global economy will be further damaged by the U.S.-China trade war. On Wednesday, for the first time ever, the German government sold 30-year bonds at a negative interest rate. The bonds pay no coupon interest at all. Yet bidders at the auction were willing to pay more than the face value they would receive back when the bonds mature. The sale added to the mountain of negative-yielding bonds around the world that investors have gobbled up, … [Read more...] about When interest rates go below 0%, it’s time to worry!
Why bond prices fall when interest rates rise
By: John Stepek 04/03/2019 This article is taken from our FREE daily investment email Money Morning. Every day, MoneyWeek's executive editor John Stepek and guest contributors explain how current economic and political developments are affecting the markets and your wealth, and give you pointers on how you can profit.Sign up free here. Developed world government bonds are the most boring asset class out there. If you lend your money to a typical developed world government with its own currency, you expect to get it back. This is why the yield on these bonds is sometimes referred to as a “risk-free” rate – it’s the return you can expect for taking the least risk possible. That’s also why they’re boring. But they’re also very important. So let’s see why they’ve been creeping into the news this week. British government bond yields are rising – but it’s not just about Brexit Gilt yields (the interest … [Read more...] about Interest rates around the world are quietly creeping higher – why?
Sections SEARCH Skip to content Skip to site index Your Money Log In Subscribe Log In Today’s Paper Your Money | Here’s What the Fed’s Halt on Interest Rates Means for Your Wallet Supported by There are consequences whether you have a savings account or a credit card (or both). ByTara Siegel Bernard Jan. 31, 2019 The Federal Reserve indicated on Wednesday that it was done raising interest rates for the foreseeable future, after a run of incremental increases that began to affect the typical consumer’s wallet. The decision will hold the central bank’s benchmark for short-term rates to a target between 2.25 and 2.5 percent, the level it reached in December after steadily climbing since the end of 2015. That is the target for the federal funds rate, the interest rate that banks and depository institutions charge one another for overnight loans. It influences how banks and other lenders … [Read more...] about Here’s What the Fed’s Halt on Interest Rates Means for Your Wallet
David Mchugh, Ap Business Writer Updated 3:50 am PST, Monday, January 21, 2019 The sun rises behind the buildings of the banking district in Frankfurt, Germany, Sunday, Jan. 20, 2019. The sun rises behind the buildings of the banking district in Frankfurt, Germany, Sunday, Jan. 20, 2019. Photo: Michael Probst, AP Photo: Michael Probst, AP Image 1 of / 1 Caption Close Image 1 of 1 The sun rises behind the buildings of the banking district in Frankfurt, Germany, Sunday, Jan. 20, 2019. The sun rises behind the buildings of the banking district in Frankfurt, Germany, Sunday, Jan. 20, 2019. Photo: Michael Probst, AP Interest rates could stay lower for longer in Europe 1 / 1 Back to Gallery … [Read more...] about Interest rates could stay lower for longer in Europe
11/01/2019 A convertible bond is a fixed-rate instrument that can convert into shares at a specific share price, which is preset by the issuing company at a premium over the current share price. The bond also has a coupon, but the interest rate is lower than a normal bond’s, because the conversion feature gives it an equity upside. Convertibles therefore have an equity correlation and can move with the underlying share price, but also have a ‘bond floor’ – i.e. a price below which they cannot fall (unless the company loses creditworthiness) due to the interest rate they are paying. This hybrid bond-equity make-up can shape convertibles into a flexible and attractive vehicle, providing excellent investor opportunities. It optimally protects an investor’s initial investment on the downside but also lets them make the most of the upside as the company’s shares increase in value. Introducing different varieties of convertible Some operate way below … [Read more...] about Why we believe in convertible bonds for 2019