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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19
votes
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 ...
27
votes
3answers
3k views

What does “Yield Curve” mean?

In the financial news we often read about the Yield Curve. What exactly is it?
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 ...
24
votes
5answers
8k 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 ...
2
votes
3answers
905 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 ...
14
votes
4answers
306 views

For an investor, what's the appropriate response to the U.S. Debt downgrade?

So the S&P has downgraded United States debt from it's AAA status. There have been other threads discussing why/when a downgrade will happen, as well as possibility of default. Instead, I want to ...
8
votes
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 ...
4
votes
1answer
3k views

Can someone explain how government bonds work?

Can someone explain, for irresponsible investors, the maths behind government bonds as presented here? I am assuming that the "coupon" is the yearly interest paid on the original price. Since this is ...
3
votes
1answer
685 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 ...
12
votes
3answers
408 views

Why did one-year notes pay more than 10-year notes during the 1980's crisis?

Why did one-year notes pay more than 10-year notes during the 1980's crisis? During the early 1980's, one-year T notes paid more than the 10-year T note, which implies that nobody wanted to buy the ...
9
votes
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?
5
votes
1answer
283 views

Who sets the prices on government bonds?

I noticed my country Greece wanted to sell bonds last year and they were stating "If they go above 7% we won't sell.". But who sets the price if not them? Why can't they say "the price is 5% and if ...
4
votes
1answer
88 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 ...
3
votes
3answers
246 views

Why would one buy a bond with negative rate? [duplicate]

I see presently that many countries outside the U.S. have negative rate government bonds. So you buy one for $101 and in 5 years you get $100 back (face value). (I picked numbers for simplicity). I ...
2
votes
2answers
170 views

US treasuries yield on economy news

When looking at say Bloomberg or CNBC news on televison, one often sees different yields for US treasuries pop up. I.e What does this represent? I.e how are these numbers determined? It cant be ...
1
vote
4answers
120 views

Locking in rates during yield curve inversion

While reading multiple articles about yield curve inversion, a common theme is that investors seeing an economic slowdown in the future which generally means lower interest rates so they want to lock ...
0
votes
1answer
116 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 "...