Questions tagged [government-bonds]

for questions that relate to government bonds. It is recommend you use a country tag or state what country you are referring to. A government bond is a bond issued by a national government, generally promising to pay a certain amount on a certain date, as well as periodic interest payments.

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26
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3answers
3k views

What does “Yield Curve” mean?

In the financial news we often read about the Yield Curve. What exactly is it?
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4answers
182 views

Understanding bond ETFs

I am failing to understand the bond ETFs. I somewhat understand stock ETFs: ETFs own stocks, I buy a part of ETF, therefore, I also indirectly own stocks. When I sell my share of ETF, the ETF gets ...
2
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1answer
145 views

How does Massachusetts tax selling US Treasury Bills before maturity?

If I buy a 4-week US Treasury Bill at auction and hold it to maturity, the interest I earn is state-tax-free. Just to put a number on it (even though I know rates aren't actually that high right now), ...
2
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1answer
183 views

Understanding UK Gilt

I have been reading about UK Gilt and have some questions understanding it. For instance, the TREASURY 3,3/4% 2019 Gilt has a coupon of 3.75%. The maturity date is September 7th 2019. Interest is ...
2
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2answers
54 views

Leveraging macroeconomic trends

Let's say I have strong reasons to believe that an economic sector of a particular country will increase/decrease in the next few years. How can I leverage this information financially? Should I ...
5
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2answers
259 views

Is there a catch in investing in treasuries close to maturity date?

Is there a catch to invest to treasuries close to maturity date? I don't want to lock the money for a long time, b/c the interest rate probably will go up. But I am concern that it's not that simple. ...
2
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4answers
139 views

Elementary question about emergency fund and US Treasurys

Consider the following strategy for maintaining an emergency fund: continually reinvest ~$40k in 1-month US bonds at ~2.5% APY pay up to ~$10k using credit cards in case of emergency pay off credit ...
1
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1answer
201 views

Correct interpretation of side-by-side graphs of intra-day fluctuations of stocks and bonds

At the end of the day on Tuesday, February 6, 2018, a snapshot of the Dow and 10 year Treasuries was as below: At the dip of the stock market on Tuesday, there was also a dip in the yield of the 10-...
9
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2answers
8k views

Can an American birth certificate be redeemed for money?

Can an American birth certificate be redeemed for money? Why is it printed on bond paper?
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2answers
233 views

Why don't investors in negative-yielding government bonds put money in positive-yielding government bonds instead?

According to this news article, USD10 trillion has been put into negative-yielding long-term government bonds. https://www.ft.com/content/b131da2e-4f02-11e9-b401-8d9ef1626294 Why don't these ...
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2answers
63 views

Mutual Fund or Municipal Bond

I am new to this Bond's so, I am not sure which one is a good investment like state or federal bonds? Is it worth to Invest now?
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2answers
359 views

Why is the yield to maturity of a long-term STRIP typically lower than that of a short-term STRIP?

Why is the yield to maturity (YTM) of a long-term STRIP typically lower than that of a short-term STRIP?
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2answers
37 views

How does the price of a long term treasury bond effect the value of your investment?

The most important thing to point out about bonds is their interest rate and face value fluctuate like a see-saw, when interest rates are high the face value is lower, when the face value is high the ...
0
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1answer
79 views

Easy ways to hedge against debt overleverage and potential inflation as a personal economic agent

Every prediction is correct... at some point in the future. However, there are economical indicators that would be considered teaching points if a financial crisis were to occur at any point in the ...
0
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1answer
70 views

Treasury bond yield

I am trying to learn about valuation and yields for treasury bonds. For the Treasury Bond maturing on 11/15/2018, initially sold in 1988 with a 9% coupon, it states that the yield to maturity is 1.66%....
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0answers
38 views

Buy shares and bonds in non citizens countries

I am from Sri Lanka and I invested in stock market and bond in Sri Lanka. But I really like to buy other countries shares and bonds. Is it possible to buy those thing without citizenship. I know ...
23
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5answers
7k views

Why invest in long term government bonds when the yield curve is inverting?

The New York Times has noted that the US is heading toward an inverted yield curve, which is one of the precursors for a recession. The yield curve is said to be inverted when long term government ...
4
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1answer
103 views

Which particular 10-year note does the daily 10-year treasury note yield refer to?

Question might be a bit obscure. The yield of the 10-year treasury note is reported daily on TV and in the papers. Since there are notes with different maturities in circulation, also more importantly,...
3
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1answer
99 views

Asset Allocation, Risk Free Part with Negative Yielding Bonds

I read a few books about asset allocation, e.g. Bernsteins's Asset Allocation states that mixing bonds with stocks lowers the risk significantly but only decreases the profit slightly. So there is a ...
2
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2answers
297 views

Why are some medium term UK government bond (gilt) prices seemingly so disparate?

Looking at UK government bond prices and picking out one example of what I mean: Coupon Maturity Trading price Treasury 8% 2021 8 07-Jun-21 123.08 Treasury 4,3/4% ...
2
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1answer
66 views

How bidders determine price for T-bills?

Let's take for example 4 week T-bill issued today, 3/1/2018 (https://www.treasurydirect.gov/instit/annceresult/press/preanre/2018/R_20180227_1.pdf). Price of t-bill is determined on auction by ...
3
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1answer
625 views

Understanding bond margin, carry trade fundamentals

US Treasuries that have less than 6 months till maturity allow for 100x leverage, as the regulatory requirement is to put 1% of the market value down for each bond. So a $1,000,000 account could hold ...
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1answer
72 views

Are T-Bills “coupon equivalent” rates based in annual terms?

According to treasury.gov, the "coupon equivalent" for a 1 month (4 weeks) T-Bill issued today is 0.99%. I happened to have purchased a 1 month T-Bill today for $99.9246. By my calculation that ...
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1answer
85 views

How will interest rate changes affect my government bonds ETF?

I have two government bond ETFs as part of my portfolio. These are IBTS and IBGS, that have 1-3 year bonds of the US and Europe. What happens if interest rates become higher? Will these lose value ...
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1answer
56 views

What causes US Treasury I bond fixed interest to increase? [closed]

I've been reading about Series I Savings Bonds on treasury direct. It seems that the return on an investment is given by the composite rate which is given by the formula: Composite rate = [fixed rate ...
0
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1answer
108 views

Yield curves and Bonds

Just struggling with putting the two together and google seems to be failing me. (1) Are the yields on yield curves annual continuously compounded rates, effective rates or something else like a "...
6
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2answers
24k views

How does the 10 year U.S. Treasury bond work?

Can someone explain to me how these bonds work? Are they released to the public at a certain price (face value) and interest rate, and the face value is what traded on in the market place, resulting ...
1
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1answer
500 views

What happens when I buy Continuously-Callable bonds

I am looking at this bond: ILLINOIS ST GO 5% 04/01/2028 Callable (452152K59) Continuously-Callable on 07/04/2017 @ 100.00000 The price of this bond right now is $100.05000 (YTM=4.993%). In ...
3
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1answer
168 views

Does taxation of Treasury Inflation Protected Securities (TIPS) undermine their function as protection against inflation?

From this document from Vanguard: TIPS are taxed in a slightly different manner than conventional Treasury bonds. The periodic inflation-based “gross-up” in the principal of TIPS is taxed at ...
2
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1answer
131 views

Bond ETFs as a means to achieve risk parity

Background One of the investors that I really look up to is Ray Dalio. He has stated that a 50/50 stock to bonds allocation does not acheive risk parity because 80% of your risk is still in your ...
0
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1answer
100 views

Should I Be Worried About A Government Default? [closed]

Is this actually true and if so, should I be worried about a default since I own quite a few US bonds? I can't see how this is sustainable at all. I asked my financial adviser and she laughed. What ...
21
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3answers
9k views

Bought agency bond (FANNIE MAE 0% 04/08/2027), now what?

I just bought 15 of these for $10,677 through my brokerage firm. It says 3.3% interest. I have no idea how this works. But I trust it is gov bond and will pay 3.3%. Can anyone explain how it works? ...
2
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3answers
10k views

What effect would currency devaluation have on my investments?

I am curious what effect currency devaluation has on the value of my various investments/assets. For instance, I have retirement savings in mutual funds, growth stocks, and bonds. First, let's ...
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1answer
422 views

How do I short government bonds?

Perhaps it's because I've just watched The Big Short, but I'm bearish on Italian Government bonds right now. How would I go about shorting government bonds?
3
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3answers
1k views

Do governments support their own bonds when their value goes down?

I'm far from expert in finance, so please bear with me. It's my understanding that a company who issued stock typically support it when the stock price go down. Does the same thing happen with ...
0
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1answer
150 views

Explain this passage from The Intelligent Investor?

Reading The Intelligent Investor and came across a passage (pg 48) which I felt I couldn't fully grasp. I'd appreciate it if someone could explain it using simpler language: Toward the end of 1971 ...
4
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1answer
87 views

Does it make any sense for UK private investors to hold gilts directly and outside of a tax wrapper?

According to my understanding of gilts (which is in accordance with the answers here), private investors in UK gilts paying a premium on the redemption price (for example 2% T20s currently report a ...
5
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2answers
865 views

How to read bond yield quotes? What do the time, coupon, price, yield, and time mean?

I am newbie in finance and I recently saw Bloomberg bond yields quoted as follows: Can anyone specify what "1 month" and "1 year" mean? What do coupon, price, yield and time (EDT) mean?
25
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6answers
3k views

Why would I buy a Bond at a Negative Interest rate?

I read that France is selling bonds at Negative Interest Rates, and more recently Germany Started in 2016. I understand why this is beneficial for France, but why in the world would I pay money to ...
8
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2answers
1k views

How do UK Gilts interest rates and repayments work?

I'm looking at UK Gilts and trying to understand how the interest rates and repayments really work. As I understand, if I buy £100 of a "5% Treasury Gilt 2020" it means I will get 5% interest each ...
1
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1answer
629 views

How do short term treasury bills work?

I'm trying to understand what return I'll get on 1 month treasury bills. I want to invest in something that has minimal risk, minimal management, and flexibility to get my money out. I'm looking at ...
1
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2answers
289 views

How are bonds affected by the Federal Funds Rate?

My question is how do bonds react to changes in the Federal Funds Rate? Specifically, government bonds, because I don't see corporate bonds being affected as drastically. I've done research, but for ...
18
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4answers
13k views

Why would anyone buy a government bond?

In my country, the interest rates on government bonds are currently 2 - 3%, but I have money in a term deposit at the bank which earns 4% interest. I don't understand how this can be possible. Why are ...
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2answers
166 views

How do government bond yields work?

Let's take the following quote from Bloomberg: Russian government bonds rose, pushing the yield to the lowest level in almost three weeks, as inflation data boosted speculation the central bank may ...
5
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3answers
1k views

How does a 2 year treasury note work?

The current prices of a 2 year seem to be near the 52 week low. Is that good? Let's say I had $1,000 to spend and I put it all in 2 year treasury notes. Could I sell them in a year like stocks (if ...
4
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2answers
436 views

Are AAA private-sector corporate bonds safer than government bonds?

Conventional wisdom says that government bonds are the safest investment there is. But the Indian government is rated only one level above junk. Aren't AAA-rated bonds of Indian companies safer? Haven'...
2
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1answer
549 views

If I cash in a U.S. treasury bond before maturity, do I lose out on the difference in face value and purchase value?

I have a 30-year U.S. treasury bond (series EE) that is about 3 years away from maturity. I'm considering cashing it in. However, the purchase value was half the face value. If I cash it in, would I ...
2
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3answers
834 views

Basic understanding of bonds, values, rates and yields

I'm looking for a very simplistic (ELI5) explanation of how bonds work, but I'm not sure I have the basics correct. As I understand it, a bond is basically a IOU or loan. Any company, government or ...
5
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6answers
1k views

10-year real Treasury bond yield: How can it be zero, or negative?

How can the 10-year real Treasury bond yield be zero, or negative? That's like giving out money for free, right? Does that mean that people expect the value of the dollar to go up (deflation)?
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0answers
209 views

Is interest from US Savings Bonds subject to nonresident alien tax withholding?

A person received some US Series EE Savings Bonds when he was a child. He was always a nonresident alien for US tax purposes and he is not from a treaty country. The Bonds matured in 2001 and has ...