7 ms·

Could you expand for those not in the know?

• shoover 10y ago
  There was a relatively large upward movement in yields today (and corresponding downward movement in price). I bought a few with cash on hand in the retirement and college savings accounts. From Google Finance: Bonds [yields] 3 Month 0.42% +0.02 (5.00%) 6 Month 0.53% +0.03 (6.00%) 2 Year 0.90% +0.07 (8.43%) 5 Year 1.48% +0.12 (8.82%) 10 Year 2.07% +0.12 (6.15%) 30 Year 2.86% +0.10 (3.62%)
  • illumin8 10y ago
    This is actually much more indicative of the economic direction the market thinks we will be headed in. Hint: it's not good. The bond market is extraordinarily efficient at pricing risk, and right now, they're beginning to price a significant risk of a long-term US default.
    • b_emery 10y ago
      So buyers of these things think interest rates will be lower in the future (eg due to poor economy and further stimulus perhaps?)
      • shoover 10y ago
        Yes, or at least as insurance in case interest do go lower.
• alecco 10y ago
  There is a selloff so the price is lower. Bonds pay an interest (in coupons). There is the face value (par). But you don't buy/sell bonds at face value, you buy them at market value. So what's interesting is the yield = coupon amount / market price (or just price). Relative to other bonds US treasuries are a lot less attractive today. http://www.investopedia.com/university/bonds/bonds3.asp http://www.investopedia.com/university/bonds/bonds3.asp http://data.cnbc.com/quotes/US10Y http://data.cnbc.com/quotes/US10Y But the price is not that simple. Since bonds are paid periodically, the market price factors in the next coupon. Would you buy a bond at the same price 1 day before paying coupon than the day after? Of course not! So market price is called "dirty" because it has the next coupon implicitly considered. There are different ways to make it a "clean" price, depends on the country.