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desertorchid

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  1. There is no real reason for Bonds to keep going down, most bonds are pretty secure in terms of value, but will adjust to inflationary expectations. Personally I just cannot see the potential for wage inflation in the west which is a prerequisite to sustained inflation.
  2. They don't and its an incorrect statement. Although if bond prices are falling, it would only really be because of lack of liquidity (not likely now) or inflationary expectations. If the financial markets believe inflation is coming , then CB'c will as well (they are essentially from the same mindset), therefore "forced" to raise rates. However, as happened in 2010 and already been admitted now, CB's will hold off raising rates to maintain medium term inflationary pressures. It is true however, that the FED kind of leads the way on this.
  3. I will be interested to watch your observations unfold and try to contribute when time allows. Love this comment and feel it is something that ties many dosbodders together: "I am, perhaps unusually, someone who can handle unlimited freedom without causing anyone else any problems, probably as I have no desire to control or change anyone. More than just finding it benign, I run on freedom like it is some kind of high-octane fuel, and I treasure it as a principal good in my life." Just an early thought: If you do go on a journey such as this one try and keep a very open mind. Investin
  4. In essence, the government would be quite happy for house prices to be double what they are from today. Its horrific to watch but they have been pulling these stunts for a couple of decades now and there is no way they will stop.
  5. If you could buy at par, yes, but they're exchange traded so their price will fall as inflation rises along with other treasuries
  6. Traditionally there is an inverse relationship between bond prices and stocks. Price movements depend on the risk attitude prevailing in the market at a particular time. It has been risk on for a few weeks now with stocks, bitcoin heading up, this fund has actually lost over 10% in recent weeks. Yesterday was just a slight pullback with the DOW losing most of FEB gains and funds like this getting a small reprieve, hence the 2% rise.
  7. To be honest I am not clear what you think your missing here. Where the interest rate is increased by RPI.- Bond prices may change according to the risk associated with them The coupon and principal will automatically keep pace with inflation.- The coupon rate on an openly traded bond will not change. YTM will. In the primary market, coupon rates may change on new issuances to "get them away" Eventually the regular interest payments will be higher than the recently increased US Treasuries long term yield of 1.5% and the principal is protected against inflation as
  8. Yes, you must consider YTM and not coupon rate. The mantra pre- QE was always "the market sets rates not the CB's", and to an extent this still true. Bond prices are still essentially dictated by the financial markets. "Temper tantrums " as we are seeing again now are the heightened anxieties shown by possible future inflation and impact on borrowing costs. In the 2009 aftermath, these emotional outbursts were intermittent but were ultimately tamed by post downturn inflation being reasonably muted and short term (although did go above 5% in the UK and Mervyn King had to hold his nerve).
  9. They don't, but to think medium term inflation is baked in is equally foolhardy. The last 2 decades have consistently had false alarms on inflation. Holding bonds has been a one way bet in that time.
  10. No Sage but would hazard a guess 9O% of the population haven't a clue what bonds even are.
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