Search results “Inflation and bonds”
Bonds, Interest Rates, and the Impact of Inflation
This educational video discusses the basics of bonds. People interested in investing should speak with their financial advisor. The video was produced by Mark Matos, a financial advisor in Naples FL. Blog: http://www.globalwealthconsultants.com/Blog.aspx Follow me on: Facebook: https://www.facebook.com/mark.matos Google+: https://plus.google.com/+MarkMatos1 Linkedin: https://www.linkedin.com/in/markamatos Twitter: https://twitter.com/MarkAMatos Music by Chris Zabriskie
Views: 4858 Mark Matos
Relationship between bond prices and interest rates | Finance & Capital Markets | Khan Academy
Why bond prices move inversely to changes in interest rate. Created by Sal Khan. Watch the next lesson: https://www.khanacademy.org/economics-finance-domain/core-finance/stock-and-bonds/bonds-tutorial/v/treasury-bond-prices-and-yields?utm_source=YT&utm_medium=Desc&utm_campaign=financeandcapitalmarkets Missed the previous lesson? Watch here: https://www.khanacademy.org/economics-finance-domain/core-finance/stock-and-bonds/bonds-tutorial/v/introduction-to-the-yield-curve?utm_source=YT&utm_medium=Desc&utm_campaign=financeandcapitalmarkets Finance and capital markets on Khan Academy: Both corporations and governments can borrow money by selling bonds. This tutorial explains how this works and how bond prices relate to interest rates. In general, understanding this not only helps you with your own investing, but gives you a lens on the entire global economy. About Khan Academy: Khan Academy offers practice exercises, instructional videos, and a personalized learning dashboard that empower learners to study at their own pace in and outside of the classroom. We tackle math, science, computer programming, history, art history, economics, and more. Our math missions guide learners from kindergarten to calculus using state-of-the-art, adaptive technology that identifies strengths and learning gaps. We've also partnered with institutions like NASA, The Museum of Modern Art, The California Academy of Sciences, and MIT to offer specialized content. For free. For everyone. Forever. #YouCanLearnAnything Subscribe to Khan Academy’s Finance and Capital Markets channel: https://www.youtube.com/channel/UCQ1Rt02HirUvBK2D2-ZO_2g?sub_confirmation=1 Subscribe to Khan Academy: https://www.youtube.com/subscription_center?add_user=khanacademy
Views: 495849 Khan Academy
Inflation is the bond investor's biggest enemy
Inflation is the bond investor's biggest enemy So inflation by far is a bond investor's biggest enemy. Conversely, inflation is a bond issuer's best friend. Unfortunately, bond investors run into problems when the largest debt issuer and the one who prints money are the same entity. The German hyper-inflation Most people are familiar with Germany's hyperinflation which occurred after World War I. This inflation was instigated by the German government which had war debts to repay. In the hyperinflation of 1923, prices rose by about 10 billion times. The benefits gained by debtors are easy to see in Germany's hyperinflation. If you're the German government and are heavily indebted, the interest payments alone will swallow all your tax revenues. Inflation, however, provides an easy way out for you. If this year one mark buys a loaf of bread, but next year it takes ten billion marks to buy that same loaf of bread, a multi-trillion mark debt soon becomes more "manageable" -- even insignificant. The German hyperinflation was only eliminated when Germany issued a new currency that was backed by gold and with the creation of a new, independent central bank that wasn't a puppet of the government. The problems with inflation There are of course, two big problems with governments that think that inflation will bail them out of their problems. First, lenders simply stop loaning money on a long-term basis. No lending means no investment and poor prospects for the economy. The other problem with inflation is it hurts the weakest people in society. Suppose you're a retired German worker in the early 1920s. You've saved maybe a hundred thousand marks, and between interest and tapping your principal you're able to survive. Unfortunately, inflation hits and your entire retirement stash of a hundred thousand marks, which took you a lifetime to accumulate, now won't even buy you a cup of coffee! Things aren't as bad for workers, because their wages are being inflated, but if you can't work, you become completely dependent on the crumbs the government or other organizations might throw your way. As you can see, inflation has severe consequences for bond investors and retirees. The US and the gold standard For a long time the ability of the US federal government to generate paper dollars was limited because these dollars had to be backed by gold reserves. While the US was on the classical gold standard from 1880 to 1914 inflation in the US averaged 0.1 percent annually. But the US began to back away from the gold standard in the 1960s as President Johnson decided to undertake the expensive Vietnam War and the War on Poverty. The United States began to print more dollars than it had gold reserves to back up. Throughout the late 1960s everyone knew that inflationary pressures were building in the United States. The government maintained that the dollar was as good as gold, while at the same time was flooding the world market with dollars that really weren't backed by gold. The whole thing fell apart in 1968 when the US government refused to ship gold to so-called speculators at the official rate of $35 to the ounce. Meanwhile, real gold was trading in real markets for $43 an ounce. President Nixon officially rebuked any pretext of a gold standard in 1971 when he said that the dollar would no longer be convertible into gold at any price. The effects were immediate and obvious. On world-wide currency markets the dollar quickly lost 20 percent of its value, and Nixon had to impose wage and price controls in a vain attempt to stop inflation. Sell bonds during a war The inflation that accompanied the Vietnam War is proof that bonds are poor investments during a war. For some reason, when war breaks out people panic and trade their stocks for bonds. Apparently they think that bonds are safer than stocks. Stocks are generally less volatile than bonds, but buying bonds during a war almost always is a losing bet. Wars bring inflation, and stocks are the financial assets which are more likely to weather the ensuing inflation. And if you're in an area where the war is hot, think about buying hard assets like jewels which can be smuggled easily out of the country. The inflationary effects of war can be seen in America. America suffered serious bouts of inflation in 1920, the mid-1940s and the 1970s. These inflationary times occurred after major wars. In fact, the US recorded its highest level of inflation in 1946 when inflation reached 18 percent. Only strict rationing and price controls prevented inflation from reaching higher levels during World War II. In fact, the rent controls which eventually destroyed large sections of cities like New York got their start as World War II price controls. If you want to buy war bonds, fine, but you'd better write off a good chunk of your investment as a patriotic sacrifice because the war's inflation will eat away at the value of the bond. Copyright 1997 by David Luhman
Views: 760 MoneyHop.com
What Does Rising Inflation Mean for Bond Investors?
Bronze Rated M&G bond fund manager Richard Woolnough explains how macro factors such as rising inflation influence his investment process. Morningstar guest: Richard Woolnough, Manager of the M&G Optimal Income Fund. http://www.morningstar.co.uk -~-~~-~~~-~~-~- Please watch: "Should You Be Worried About the Economy?" https://www.youtube.com/watch?v=WUzqTPeI9IM -~-~~-~~~-~~-~-
Views: 484 Morningstar UK
Inflation Indexed Bonds - Explained for IAS || UPSC || Prelims
Mentorship Batch-2 has been launched. Enrol here - Full Validity - https://courses.sleepyclasses.com/learn/Mentorship-Programme-for-UPSC-2019? Partial Payment - https://courses.sleepyclasses.com/learn/Mentorship-Programme-for-UPSC-2019-----1st-Installment-? Welcome to Sleepy Classes. Creating IAS from the grassroots of our nation. Our Aim - To provide Top Quality GS Coaching FREE. The classes of entire UPSC content are being uploaded regularly, so that you don't need to spend lakhs of your Rupees on coaching classes. Paid Product (Test Series) - Test Series With Video Explanations - https://courses.sleepyclasses.com/learn/PRELIMS-TEST-SERIES-2019---With-Video-Solutions-? Test Series without Video Explanations - https://courses.sleepyclasses.com/learn/PRELIMS-TEST-SERIES-2019---Without-Video-Solutions-? You can also donate - https://milaap.org/fundraisers/SleepyClasses We are also available at - https://sleepyclasses.com/ Android App. Telegram - t.me/SleepyClasses UPSC || UPSC Preparation || UPSC Interview || UPSC Syllabus 2018 || UPSC Topper Interview || UPSC preparation for beginners || UPSC Exam || UPSC 2018 || UPSC Syllabus 2017 || UPSC motivational videos || UPSC preparation in Hindi || UPSC preparation lectures || UPSC preparation without coaching || UPSC preparation for working professionals || UPSC preparation for beginners in hindi || UPSC preparation channel || Sociology || Sociology lectures in Hindi || Sociology Optional for UPSC || Sociology Optional ||Sociology Lecture for IAS || IAS preparation || Free IAS UPSC Tests || Free IAS UPSC Questions || #UPSC #IAS #CivilServices
Views: 6805 SleepyClasses
[Economy Lecture] L2/P2: Inflation Indexed Bonds (IIB), Nominal vs Real Interest rates
1. What is the difference between nominal interest rate vs real interest rate? 2. Why do people invest in gold and real-estate during inflation? 3. Why is excessive gold-consumption bad for Indian economy? How to prevent it? 4. Differences between IIB an IINSS-C 5. Computation mechanism for interest paid on IIB, how is it linked with inflation? 6. Why are inflation indexed bonds (IIB) losing their sheen in 2015? Powerpoint available at http://Mrunal.org/download Venue: Sardar Patel Institute of Public Administration (SPIPA), Satellite, Ahmedabad, Gujarat,India Exam-Utility: UPSC CSAT, CDS, CAPF, SSC, IBPS, Banking, MBA interview
Views: 270821 Mrunal Patel
Introduction to the yield curve | Stocks and bonds | Finance & Capital Markets | Khan Academy
Introduction to the treasury yield curve. Created by Sal Khan. Watch the next lesson: https://www.khanacademy.org/economics-finance-domain/core-finance/stock-and-bonds/bonds-tutorial/v/relationship-between-bond-prices-and-interest-rates?utm_source=YT&utm_medium=Desc&utm_campaign=financeandcapitalmarkets Missed the previous lesson? Watch here: https://www.khanacademy.org/economics-finance-domain/core-finance/stock-and-bonds/bonds-tutorial/v/introduction-to-bonds?utm_source=YT&utm_medium=Desc&utm_campaign=financeandcapitalmarkets Finance and capital markets on Khan Academy: Both corporations and governments can borrow money by selling bonds. This tutorial explains how this works and how bond prices relate to interest rates. In general, understanding this not only helps you with your own investing, but gives you a lens on the entire global economy. About Khan Academy: Khan Academy offers practice exercises, instructional videos, and a personalized learning dashboard that empower learners to study at their own pace in and outside of the classroom. We tackle math, science, computer programming, history, art history, economics, and more. Our math missions guide learners from kindergarten to calculus using state-of-the-art, adaptive technology that identifies strengths and learning gaps. We've also partnered with institutions like NASA, The Museum of Modern Art, The California Academy of Sciences, and MIT to offer specialized content. For free. For everyone. Forever. #YouCanLearnAnything Subscribe to Khan Academy’s Finance and Capital Markets channel: https://www.youtube.com/channel/UCQ1Rt02HirUvBK2D2-ZO_2g?sub_confirmation=1 Subscribe to Khan Academy: https://www.youtube.com/subscription_center?add_user=khanacademy
Views: 348046 Khan Academy
How Interest Rates Affect the Market
Investors should observe the Federal Reserve’s funds rate, which is the cost banks pay to borrow from Federal Reserve banks. What's going on with Japan's interest rates? Read here: http://www.investopedia.com/articles/investing/012916/bank-japan-announces-negative-interest-rates.asp?utm_source=youtube&utm_medium=social&utm_campaign=youtube_desc_link
Views: 73174 Investopedia
Bonds & Yields - part 3 (Hindi), Inflation vs Interest rates, बॉन्ड्स और यील्ड - 3
This video explains the relationship between inflation and interest rates along with bond prices and rates. This video explains inflation and its effect on interest earned by investors. यह विडियो महंगाई दर और इंटरेस्ट रेट के बीच के सम्बन्ध को समझाता है, की किस प्रकार से महंगाई दर के बढ़ने और घटने का असर इंटरेस्ट रेट आदि पर पड़ता है.
Views: 7525 Rajiv Dharmadhikari
What are Treasury Inflation Protected Securities (TIPS)?
http://www.learnbonds.com/treasury-inflation-protected-securities-tips/ - Many people are concerned about inflation and looking for an investment which will protect them. Treasury inflation protected securities (TIPS) are designed to protect investors from inflation.
Views: 7714 Learn Bonds
Stock and Bond Market Correlation: How to Handle Inflation in Investment Analysis (1997)
Much effort has gone into the study of financial markets and how prices vary with time. Charles Dow, one of the founders of Dow Jones & Company and The Wall Street Journal, enunciated a set of ideas on the subject which are now called Dow Theory. Modigiliani's books: https://www.amazon.com/gp/search?ie=UTF8&tag=tra0c7-20&linkCode=ur2&linkId=a3df9c167e859249c471fa08d652e1d7&camp=1789&creative=9325&index=books&keywords=franco%20modigliani This is the basis of the so-called technical analysis method of attempting to predict future changes. One of the tenets of "technical analysis" is that market trends give an indication of the future, at least in the short term. The claims of the technical analysts are disputed by many academics, who claim that the evidence points rather to the random walk hypothesis, which states that the next change is not correlated to the last change. The role of human psychology in price variations also plays a significant factor. Large amounts of volatility often indicate the presence of strong emotional factors playing into the price. Fear can cause excessive drops in price and greed can create bubbles. In recent years the rise of algorithmic and high-frequency program trading has seen the adoption of momentum, ultra-short term moving average and other similar strategies which are based on technical as opposed to fundamental or theoretical concepts of market Behaviour. The scale of changes in price over some unit of time is called the volatility. It was discovered by Benoît Mandelbrot that changes in prices do not follow a Gaussian distribution, but are rather modeled better by Lévy stable distributions. The scale of change, or volatility, depends on the length of the time unit to a power a bit more than 1/2. Large changes up or down are more likely than what one would calculate using a Gaussian distribution with an estimated standard deviation. http://en.wikipedia.org/wiki/Financial_market The bond market (also debt market or credit market) is a financial market where participants can issue new debt, known as the primary market, or buy and sell debt securities, known as the secondary market. This is usually in the form of bonds, but it may include notes, bills, and so on. The primary goal of the bond market is to provide a mechanism for long term funding of public and private expenditures. Traditionally, the bond market was largely dominated by the United States, but today the US is about 44% of the market.[1] As of 2009, the size of the worldwide bond market (total debt outstanding) is an estimated $82.2 trillion,[2] of which the size of the outstanding U.S. bond market debt was $31.2 trillion according to Bank for International Settlements (BIS), or alternatively $35.2 trillion as of Q2 2011 according to Securities Industry and Financial Markets Association (SIFMA).[2] Nearly all of the $822 billion average daily trading volume in the U.S. bond market[3] takes place between broker-dealers and large institutions in a decentralized, over-the-counter (OTC) market. However, a small number of bonds, primarily corporate, are listed on exchanges. References to the "bond market" usually refer to the government bond market, because of its size, liquidity, relative lack of credit risk and, therefore, sensitivity to interest rates. Because of the inverse relationship between bond valuation and interest rates, the bond market is often used to indicate changes in interest rates or the shape of the yield curve. The yield curve is the measure of "cost of funding". http://en.wikipedia.org/wiki/Bond_market
Views: 5066 The Film Archives
How Interest Rates Are Set: The Fed's New Tools Explained
The Federal Reserve has kept interest rates at near zero since the 2008 financial crisis. To raise them, it has come up with a new set of tools. A WSJ explainer. Subscribe to the WSJ channel here: http://bit.ly/14Q81Xy More from the Wall Street Journal: Visit WSJ.com: http://www.wsj.com Follow WSJ on Facebook: http://www.facebook.com/wsjvideo Follow WSJ on Google+: https://plus.google.com/+wsj/posts Follow WSJ on Twitter: https://twitter.com/WSJvideo Follow WSJ on Instagram: http://instagram.com/wsj Follow WSJ on Pinterest: http://www.pinterest.com/wsj/ Don’t miss a WSJ video, subscribe here: http://bit.ly/14Q81Xy More from the Wall Street Journal: Visit WSJ.com: http://www.wsj.com Visit the WSJ Video Center: https://wsj.com/video On Facebook: https://www.facebook.com/pg/wsj/videos/ On Twitter: https://twitter.com/WSJ On Snapchat: https://on.wsj.com/2ratjSM
Views: 164733 Wall Street Journal
7 Painful Ways to Lose Money Investing in Bonds
Did you know that there are 7 different ways to lose money investing in bonds? That’s right, investing in bonds isn’t always a safe and low-risk investment. However, once you know and understand the risk associated with bond trading, then the chances of you losing money go down drastically. To download your FREE Report called, “The 7 Ways To Lose Money With Bonds”, check out: http://www.retirementthinktank.com/bondreport Now bonds have traditionally been viewed as a very safe way to create a steady stream of cash flow, and many brokers and financial advisors recommend bonds as part of a solid balance to any financial portfolio. And all of that is true…most of the time. The big issue with bond risk (and how people lose money with bonds) is when any of these 7 risk factors arise. And even worse, when any of the 7 risks combine at the same time, it can prove catastrophic. I will give you a basic review of the 7 different ways to lose money in bonds here: 1. Lack of Liquidity in bonds – Although the bond market is larger than the stock market in total value, there are far fewer bond traders and bond investors comparatively speaking. So when issues arise with a certain bond (like a city or municipality defaulting on their bonds, bankruptcy, etc), it can leave the average investor high and dry with no one to sell their bond to. 2. Interest Rate Fluctuations – Bond prices are inversely related to interest rates, so when interest rates rise, bond prices (the price that you buy and sell bonds) goes down. And with interest rates close to all-time lows today, this is a bubble just waiting to pop once interest rates start rising. And if they rise quickly, watch out bond prices! 3. Bond Creditworthiness – This is an important issue as the creditworthiness of the bond issuer determines the yield, and thus your risk/return. For instance, you might not get a great return on a United States Treasury bond, but you can sleep at night knowing there is little chance it will default. On the other hand, you can get hundreds of times more yield on a low-grade junk bond, but the chances of you losing money (or even all of your investment) go up significantly compared to a US Treasury bill. 4. Inflation / Hyperinflation – Generally speaking, inflation usually means higher interest rates. And since we know that interest rates are inversely related to bond prices, high inflation can destroy the value of your bond. Not to mention, in times of inflation the cost of everything (consumer goods) is going up, while your bond investment doesn’t. So higher inflation could render your bond interest negative after you factor inflation into the equation. 5. Reinvestment Risk – This risk pertains to the opposite issue of the others in that it occurs in times of a slowing economy, or a declining interest rate environment. When interest rates go down, bond investors are forced to reinvest their bond interest (and any return of principal) into new securities that will have lower rates of return. Of course this will reduce the overall income that is being generated by your bond portfolio. 6. Bond Fund “Backfire” – Bond funds have traditionally been considered very safe as they spread the bond risks out amongst many different bonds (versus an individual bond). And this is usually the case. However, bond funds can “backfire” when a bond manager starts replacing bonds as they mature in a rising interest rate environment. And if the bond portfolio loses enough value that investors start leaving the fund in droves, then the bond manager might have to start unloading high yielding bonds to meet the early redemption's. This doesn’t happen that often, but when it does, it is painful to all involved. 7. Making Bad Bond Assumptions – Finally, don’t ever make the assumption that your bond or bond fund is free of risk and can just cruise on auto-pilot without you ever having to review or check up on. This is where many bond investors get into trouble by thinking they can buy it and forget about it. Stay educated on what is going on with your bond, watch interest rates, and don’t chase bond yields! Finally, always get the advice of a licensed bond specialist to make sure that you never get burned by any of these bond risks. To download your FREE “7 Ways To Lose Money With Bonds” Report, go to http://www.retirementthinktank.com/bondreport Disclaimer: Nothing in this video or free report can be or should be construed as investment advice. This is purely educational and there is not enough information in here or the report to make educated investment decisions. Always consult with a financial advisor before making any investment decisions.
Views: 129618 Retirement Think Tank
🔴 Ep. 411: Rising Prices Reflect Inflation Not Growth
The Peter Schiff Show Podcast - Episode 411 RATE AND REVIEW this podcast on Facebook. https://www.facebook.com/PeterSchiff/reviews/ Dead Cat Bounce Flattens Out - The Dow Jones was down a little over 200 today, closing back below 26,000. NASDAQ composite down 124 - that's a bigger percentage decline, 1.7%, approximately.  The Composite is being led lower by the tech stocks, particularly the FANG stocks once again taking a bite out of the market.  The markets, though, were positive on the week, thanks to that huge relief rally that took place on Wednesday following the results of the midterm elections on Tuesday. But as I said on my Wednesday podcast, I thought that relief rally was  just another dead cat bounce, that the fundamentals and the technicals still looked horrible for the U.S. stock market. I expected that rally to reverse, and of course that process had already begun Thursday and Friday.  I think it will continue next week and I think the rest of those gains will be surrendered. Higher than Expected PPI Sparked Sell-Off - The catalyst for today's selloff was a much hotter than expected Producer Price Index number. The PPI was up .6% in 1 month, which is a big gain.  In fact this is the biggest jump in the PPI in 6 years. On a year-over-year basis, producer prices are up 2.8%.  The market was looking for an increase half that size: .3%, Even year-over-year, when you strip out food and energy we were still up 2.6%, which is considerably above the 2% level that the Fed is looking at. Of course, the Fed is looking at consumer prices, not producer prices, but of course, nobody can consume what is not produced.  These are really wholesale prices and of course they are going to get passed on to the consumer, so consumer prices are headed higher. The Markets Don't Get It - But, again, the markets don't get it.  Gold dropped the minute this number came out, gold dumped about $10. It was already down on the day, and then it sold off and never recovered. On the other hand, bonds were relatively stable when the number came out. Maybe rates ticked up just a smidgen, but actually bonds rallied on the day.  Now maybe the weak stock market had a little bit to do with it, but the irony of it is that you get these numbers that show much more than expected inflation, and what do investors do?  They sell gold and they buy U.S. treasuries. Now, that is the worse thing to do if there's more inflation. Gold is an inflation hedge. So, if inflation is picking up, you would want to own gold to protect yourself from inflation.  On the other hand, the one asset that suffers the most, where the most value is eroded away because of inflation is a bond. A bond is specifically payments of cash in the future, and the more inflation we have, the less that future cash is worth. SIGN UP FOR MY FREE NEWSLETTER http://www.europac.net/subscribe_free_reports Schiff Gold News: http://www.SchiffGold.com/news Open your Goldmoney account today: https://www.Goldmoney.com/ Buy my newest book at http://www.tinyurl.com/RealCrash Like and follow Peter Schiff on Facebook http://www.Facebook.com/PeterSchiff Follow me on Twitter: http://www.Twitter.com/PeterSchiff
Views: 34724 Peter Schiff
FRM: Treasury inflation-protected securities (TIPS)
In a TIPS, the coupon (real yield) is fixed. The inflation-adjusted principal varies. But it redeems at the greater of [inflation-adjusted principal, initial par value]. Also, TIPS are linked to CPI, which is a government statistic and not necessarily your experience of inflation/deflation. For more financial risk videos, visit our website! http://www.bionicturtle.com
Views: 8916 Bionic Turtle
Fixed, floating or inflation linked?
FIIG's Associate Director of Fixed Income Sales, George Loupos helps you understand which bond is right for your strategy. Learn more from FIIG the fixed interest experts with our 'Corporate Bonds Made Simple' eBook download it at www.bondsmadesimple.com.au or call 1300125 266​
Views: 1191 FIIG Securities
What is INFLATION INDEXED BOND? What does INFLATION INDEXED BOND mean? INFLATION INDEXED BOND meaning - INFLATION INDEXED BOND definition - INFLATION INDEXED BOND explanation. Source: Wikipedia.org article, adapted under https://creativecommons.org/licenses/by-sa/3.0/ license. Daily inflation-indexed bonds (also known as inflation-linked bonds or colloquially as linkers) are bonds where the principal is indexed to inflation or deflation on a daily basis in terms of the official Daily CPI or monetized daily indexed unit of account like the Unidad de Fomento in Chile and the Real Value unit of Colombia. They are thus designed to hedge the inflation risk of a bond. The first known inflation-indexed bond was issued by the Massachusetts Bay Company in 1780. The market has grown dramatically since the British government began issuing inflation-linked Gilts in 1981. As of 2008, government-issued inflation-linked bonds comprise over $1.5 trillion of the international debt market. The inflation-linked market primarily consists of sovereign bonds, with privately issued inflation-linked bonds constituting a small portion of the market. Daily inflation-indexed bonds pay a periodic coupon that is equal to the product of the daily inflation index and the nominal coupon rate. The relationship between coupon payments, breakeven daily inflation and real interest rates is given by the Fisher equation. A rise in coupon payments is a result of an increase in inflation expectations, real rates, or both. For some bonds, such as the Series I Savings Bonds (U.S.), the interest rate is adjusted according to daily inflation. For other bonds, such as in the case of TIPS, the underlying principal of the bond changes, which results in a higher interest payment when multiplied by the same rate. For example, if the annual coupon of the bond were 5% and the underlying principal of the bond were 100 units, the annual payment would be 5 units. If the inflation index increased by 10%, the principal of the bond would increase to 110 units. The coupon rate would remain at 5%, resulting in an interest payment of 110 x 5% = 5.5 units. The real yield of any bond is the annualized growth rate, less the rate of inflation over the same period. This calculation is often difficult in principle in the case of a nominal bond, because the yields of such a bond are specified for future periods in nominal terms, while the inflation over the period is an unknown rate at the time of the calculation. However, in the case of inflation-indexed bonds such as TIPS, the bond yield is specified as a rate in excess of inflation, so the real yield can be easily calculated using a standard bond calculation formula. The most liquid instruments are Treasury Inflation-Protected Securities (TIPS), a type of US Treasury security, with about $500 billion in issuance. The other important inflation-linked markets are the UK Index-linked Gilts with over $300 billion outstanding and the French OATi/OAT€i market with about $200 billion outstanding. Germany, Canada, Greece, Australia, Italy, Japan, Sweden and Iceland also issue inflation-indexed bonds, as well as a number of Emerging Markets, most prominently Brazil.
Views: 2502 The Audiopedia
Real and nominal return | Inflation | Finance & Capital Markets | Khan Academy
Inflation and real and nominal return. Created by Sal Khan. Watch the next lesson: https://www.khanacademy.org/economics-finance-domain/core-finance/inflation-tutorial/real-nominal-return-tut/v/calculating-real-return-in-last-year-dollars?utm_source=YT&utm_medium=Desc&utm_campaign=financeandcapitalmarkets Missed the previous lesson? Watch here: https://www.khanacademy.org/economics-finance-domain/core-finance/inflation-tutorial/inflation-scenarios-tutorial/v/hyperinflation?utm_source=YT&utm_medium=Desc&utm_campaign=financeandcapitalmarkets Finance and capital markets on Khan Academy: If the value of money is constantly changing, can we compare investment return in the future or past to that earned in the present? This tutorial focuses on how to do this (another good tutorial to watch is the one on "present value"). About Khan Academy: Khan Academy offers practice exercises, instructional videos, and a personalized learning dashboard that empower learners to study at their own pace in and outside of the classroom. We tackle math, science, computer programming, history, art history, economics, and more. Our math missions guide learners from kindergarten to calculus using state-of-the-art, adaptive technology that identifies strengths and learning gaps. We've also partnered with institutions like NASA, The Museum of Modern Art, The California Academy of Sciences, and MIT to offer specialized content. For free. For everyone. Forever. #YouCanLearnAnything Subscribe to Khan Academy’s Finance and Capital Markets channel: https://www.youtube.com/channel/UCQ1Rt02HirUvBK2D2-ZO_2g?sub_confirmation=1 Subscribe to Khan Academy: https://www.youtube.com/subscription_center?add_user=khanacademy
Views: 168159 Khan Academy
Bonds & Yields - 7, why central banks love inflation & raise interest rates
This video explains why major central banks across the world try to target an increased inflation. This video explains how inflation benefits the debt issued by major central banks across the world. This video explains the concept of rising interest rates along with inflation and its effect on bond prices.
Views: 3228 Rajiv Dharmadhikari
Bond Price | Bond Yield | Interest Rate | Inflation | Oil Prices | FDI/FPI | Banks SLR | M K Yadav
To download the Handouts, Please Join https://t.me/currentaffairsmkyadav The video Explains the relationship between Bond Price, Bond Yield, Interest Rate, SLR, Inflation, Oil Prices, FDI/FPI
Views: 2418 MK Yadav - theIAShub
TIPS: Expensive Inflation Insurance
Inflation-protected Treasury bonds offer less protection than investors think. Buy corporate debt instead.
Views: 845 Forbes
Bond Pricing on the Term Structure of Interest Rates with Expected Inflation Rate Changes
Consider the following spot interest rates for maturities of one, two, three, and four years. Year | Rate 1 | 4% 2 | 5% 3 | 6% 4 | 7% What is the price of a four year, 4 percent coupon bond with a face value of $100? Assume the bond pays an annual coupon. What are our expectations of the yield for a one year bond that starts in one, two, and three years, i.e., what are the forward rates? Suppose the inflation expectations are a constant 2 percent, what are the expected real interest rates for each one year period in the future? Suppose that immediately after purchasing the bond that market expectations of the inflation rate decrease to a constant one percent. What are our new nominal forward rates? Assume expectations of real interest rates have not changed. In one year, what do we expect the new term structure of interest rates to be? In one year, what do we expect the price of the bond to be based on the new term structure of interest rates? What do we expect the holding period return to be if you sell it immediately after receiving the first year’s coupon? Note: There is a typo in calculating the holding period return. The correct formula is (92.22 - 90.17 + 4)/90.17 = 6.7% Note: A pdf of the solution is available from here: https://goo.gl/MeMDkv
Rising inflation hits both equities and bonds
Rising rates in key global markets have boosted asset prices, magnifying the importance of good investment portfolio construction, says Janus Henderson’s Jay Sivapalan.
Ep 184: Market History in the 60's, Inflation, Bonds, & Stock Charts
In today's episode of let’s talk stocks we're going to cover a handful of economic news, we'll talk about inflation and I'll also share with you some insights on the history of the stock market, and what could happen in the market place today, based on its history. And finally, we'll review some popular companies and their behavior in the charts, such as Amazon, Google, CMG, Facebook, Paypal, Shopify, and more... Posted at: https://tradersfly.com/2018/05/ep-184-market-history-inflation/ ★ REGISTER FOR A FREE LIVE CLASS ★ http://bit.ly/marketevents ★ GETTING STARTED RESOURCE FOR TRADERS ★ http://bit.ly/startstocksnow * Please note: some of the items listed below could and may be affiliate links ** * Trading Software / Tools * Scottrade: http://bit.ly/getscott SureTrader http://bit.ly/getsuretrader TC2000: http://bit.ly/gettc2000 TradeKing: http://bit.ly/gettradeking TradeStation: http://bit.ly/getstation ★ SHARE THIS VIDEO ★ https://youtu.be/6XP9N_M7Vq0 ★ SUBSCRIBE TO MY YOUTUBE: ★ http://bit.ly/addtradersfly ★ ABOUT TRADERSFLY ★ TradersFly is a place where I enjoy sharing my knowledge and experience about the stock market, trading, and investing. Stock trading can be a brutal industry especially if you are new. Watch my free educational training videos to avoid making large mistakes and to just continue to get better. Stock trading and investing is a long journey - it doesn't happen overnight. If you are interested to share some insight or contribute to the community we'd love to have you subscribe and join us! FREE 15 DAY TRIAL TO THE CRITICAL CHARTS - http://bit.ly/charts15 GET THE NEWSLETTER - http://bit.ly/stocknewsletter STOCK TRADING COURSES: - http://tradersfly.com/courses/ STOCK TRADING BOOKS: - http://tradersfly.com/books/ WEBSITES: - http://rise2learn.com - http://criticalcharts.com - http://tradersfly.com - http://backstageincome.com - http://sashaevdakov.com SOCIAL MEDIA: - http://twitter.com/criticalcharts/ - http://facebook.com/criticalcharts/ MY YOUTUBE CHANNELS: - TradersFly: http://bit.ly/tradersfly - BackstageIncome: http://bit.ly/backstageincome
Inflation protection with bonds
Part 5 of the fixed interest video series featuring Joe Brennan.
Views: 42 Vanguard Australia
Inflation-Protected Bond Study (TIPs) 2/12/17
I analyze the chart of the TIP ETF (inflation-protected bonds) and explain why it's not too late to jump on board the new uptrend. -- Watch live at https://www.twitch.tv/torpedotrading
Views: 239 Torpedo Trading
Gold price, bonds, equity, inflation, and rates in 2017.
This video discusses possible longer term trends in gold price, stock markets, bond prices, inflation, and interest rates. My Finance Teacher January 2017
Views: 607 MyFinanceTeacher
Inflation-indexed bonds
Inflation-indexed bonds Although bond investing has changed from a world characterized by stability to one where price swings of 1 percent a day are common, there may be a chance for some stability to return to bond investors. The US Treasury recently announced that it will issue inflation-indexed bonds. These types of bonds already have been issued in countries like Canada and England, but only recently in the United States. At least initially, these bonds will be marketed mainly to individuals. It also is estimated that the total amount of inflation-indexed bonds issued by the US government will be less than 10 percent of the government's outstanding debt, so most bond investors will still face the threat of inflation. Investors in inflation-indexed bonds will have to pay taxes on the increase in value of the bond due to inflation. Because of this, unless the bonds are placed in tax-deferred retirement accounts, an inflation-indexed bondholder may have to dip into his principal to pay the taxes due. In spite of this, inflation-indexed bonds might be a good addition to traditional US Treasury bonds. Traditional bonds provide protection against deflation, while inflation-indexed bonds provide protection against inflation. Having both bonds in your fixed income portfolio should give you good diversification. Copyright 1997 by David Luhman
Views: 2379 MoneyHop.com
Inflation Linked Bonds – the not-so-boring alternative | 7 July 2016
Uncertainty or surprises are the things that frighten investors most and so unexpected spikes in inflation cause havoc. One way around this is to invest in inflation linked bonds (ILBs) which compensate you for inflation no matter what it does. Portfolio Manager, Daphne Botha, explains how the Futuregrowth Yield ILB Fund has managed to give investors superior fixed interest.
BVTV: Bond yields and inflation and credit markets
Bond Vigilantes TV - The weekly review of global bond markets by the M&G Fixed Income team. In this week's edition: - Bond yields and inflation surprises: waking up to reflation? - A good start to the year in credit markets - Record supply in US Investment grade credit Visit Bond Vigilantes: https://www.bondvigilantes.com/?utm_source=youtube&utm_medium=video&utm_campaign=inflation
Views: 3753 Bond Vigilantes
Understanding Inflation and Inflation-Linked Products by Brice Benaben
Full Workshop available at quantshub.com
Views: 479 Quants Hub
Opportunities in Inflation-Linked Bonds
Terms and conditions: pimco.com/socialmedia
Views: 587 PIMCO
What are TIPS - Treasury Inflation Protected Securities
What are treasury inflation protected securities? TIPS are government bond investments that are adjusted by inflation. SO if you believe inflation is going to be high, TIPS could be a solid investment. ★☆★ Subscribe: ★☆★ https://goo.gl/qkRHDf Investing Basics Playlist https://goo.gl/ky7CJq Investing Books I like: The Intelligent Investor - https://amzn.to/2PVhfEL Common Stocks and Uncommon Profits - https://amzn.to/2DAV8h9 Understanding Options - https://amzn.to/2T9gFSp Little Book of Common Sense Investing - https://amzn.to/2DfFGG2 How to Value Exchange-Traded Funds - https://amzn.to/2PWSkRg A Great Book on Building Wealth - https://amzn.to/2T8AKZ1 Dale Carnegie - https://amzn.to/2DDAk8w Effective Speaking - https://amzn.to/2DBncAT Equipment I Use: Microphone - https://amzn.to/2T7JxL6 Video Editing Software - https://amzn.to/2RQM1vE Thumbnail Editing Software - https://amzn.to/2qIUAgP Laptop - https://amzn.to/2T4xA8Z DISCLAIMER: I am not a financial advisor. These videos are for educational purposes only. Investing of any kind involves risk. Your investments are solely your responsibility. It is crucial that you conduct your own research. I am merely sharing my opinion with no guarantee of gains or losses on investments. Please consult your financial or tax professional prior to making an investment. #LearnToInvest #StocksToWatch #StockMarket
Views: 155 Learn to Invest
Inflation and bond yields in spotlight | Market Minute
► Subscribe to FT.com here: http://on.ft.com/2eZZoLI US equities stall after the post-election rally, while Federal Reserve chair Janet Yellen's hints at rate increases to keep inflation in check push up the dollar and steer bond markets. ► Subscribe to the Financial Times on YouTube: http://bit.ly/FTimeSubs For more video content from the Financial Times, visit http://www.FT.com/video Twitter https://twitter.com/ftvideo Facebook https://www.facebook.com/financialtimes
Views: 750 Financial Times
Mike Maloney-Fed Endgame Is Inflation
Gold and silver expert Mike Maloney says we have seeing bubbles in stocks, real estate and now in bonds. Maloney contends, “The bond market is in a 35 year bull market, and I don’t know how this can continue on forever. . . . I am expecting when this next recession starts, it’s going to be a deflationary event. In deflation and a crisis, you are going to see investors run towards safety . . . and bonds get one last pop. They are going to run to U.S. Treasuries and gold and silver. Those are the safe havens. Then people are going to realize, in this rarified territory, that bonds are not a good deal. You are going to see one last pop in the bond market before all hell breaks loose.” Maloney warns that we may see deflation, but the end game for the Fed is inflation, and that is theft. Maloney says, “When they inflate the currency supply . . . this is the most immoral act because they are stealing portions of our lifetimes. Slavery is no longer legal. That was when they were stealing present life moments. Now, they steal past life moments. The whips and the chains still exist, you just can’t see them.” Join Greg Hunter as he goes One-on-One with Mike Maloney, founder of GoldSilver.com. All links can be found on USAWatchdog.com: http://usawatchdog.com/trump-honeymoon-in-markets-will-end-in-2017-mike-maloney/ http://usawatchdog.com/donations/
Views: 111155 Greg Hunter
Inflation Hits Govt. Bonds
Government's 10-year bond yield at the highest since 2016, on the back of CPI inflation and lack of liquidity
Views: 34 Go News 24x7 India
Index Linked Bonds and Inflation Derivatives - Dr. David Cox
Index Linked Bonds and Inflation Derivatives: http://www.londonfs.com/programmes/Index-Linked-Bonds-and-Inflation-Derivatives/Outline/ Dr. David Cox explains the growing popularity of inflation derivatives and index-linked bonds in current markets. He discusses some of the mechanics of these instruments, valuation challenges and how they can be used by banks, fund managers, pension funds and other financial institution to take or hedge inflation exposure alone or embedded in other structures. This video was produced by London Financial Studies.
McCullough: Get Inflation Right, You Get The Bond Market Right
Get Hedgeye’s FREE "Market Brief" investing newsletter: https://bit.ly/2GKb9yg Have exposure to the $40 trillion swirling around in the U.S. bond market? We thought so. Here’s a simple investing relationship to help you risk manage your bond exposure: Accurately forecast the rate-of-change in U.S. inflation, and you’ll be able to more easily predict the future direction of bond yields. It’s a simple relationship to understand, but harder to forecast, according to Hedgeye CEO Keith McCullough. “The number one predictor of getting the bond market right is getting inflation right on a longer-term inflation expectations basis,” McCullough explains in the clip above. “If you have the proper forecast, you would make a lot of money and certainly save a lot of money in getting away from certain things like being short bonds. Watch the full clip above to watch McCullough explain how to risk manage this correlation – and “take advantage of the herd.”
Views: 2086 Hedgeye
Inflation Linked Funds
An alternative to buying single inflation-linked bonds is to buy a fund of inflation-linked bonds. Why would you do this and what are the risks and benefits?
Views: 391 PensionCraft
Tinkerbell, Lochness & Inflation linked Bonds
In this video we look at the Myths surrounding Inflation-linked bonds and ask the question: Are they expensive or cheap?
Bonds & Yields - part 4 (Hindi), Bond prices vs inflation, बॉन्ड्स & यील्ड - 4
This video describes how the investment in a country is guided by its bond's interest rate and the inflation. This video also explains the relationship between interest rates and inflation. यह विडियो किसी बॉन्ड् में निवेश करते समय उस बॉन्ड् की ब्याज दर और महंगाई दर के अन्तर का महत्व समझाता है. बांड्स में निवेश करते समय क्या चीज़े ध्यान में रखी जाती है, यह इस विडियो में समझाया गया है.
Views: 6111 Rajiv Dharmadhikari
10 Inflation Indexed bonds
Knowledge Varsity (www.KnowledgeVarsity.com) is sharing this video with the audience.
Views: 213 KnowledgeVarsity
What impact will rising Treasury yields and inflation have on bonds?
Senior Portfolio Manager R.J. Gallo offers his perspective on potential impact on fixed income from increasing interest rates, inflation and 10-year Treasury yields. Views as of 06-21-2018. For disclosure, visit http://bit:ly/FederatedYouTube. For more information, visit http://www.federatedinvestors.com.
Views: 28816 FederatedInvestors
What is bond, Inflation, deflation, Assets in hindi
Important economics terms with best explanation in Hindi -~-~~-~~~-~~-~- Please watch: "All the schemes launched by Modi's government datewise II Reviews and discussion😘😍😊 " https://www.youtube.com/watch?v=jrEeVHthgEU -~-~~-~~~-~~-~-
Views: 2874 guru yogi classes
Bond Issuance Does Not Reduce Inflation
Professor Bill Mitchell, debunking a commonly held misunderstanding of government "borrowing." Most people believe that a government has 3 choices to "raise funds": it can tax, borrow, or "print money." Further, they believe that "printing money" is more inflationary than borrowing. This could not be more wrong. In fact, a government deficit (spending more than taxing) will be exactly as inflationary regardless of whether it's matched by bond sales (aka. "borrowing") or not (aka. "printing money"). First, the conventional narrative gets the order that things happen in wrong. When the government "borrows," it sells Treasury Bonds. But the private sector can only purchase Treasury Bonds using the government's own currency (paper notes or bank reserves). Where did the private sector get the currency that it uses to purchase the bonds? It can only come from previous government spending: the currency is created by the government only, and the way they get it out there is by spending it (or lending it). So any funds that the government "borrows" are necessarily funds that it has previously spent (or lent). So it is incorrect to say that government is borrowing and then spending. Logically, this is wrong. First it is creating funds by spending, and then borrowing back funds it has previously spent, effectively destroying them. That is the way the cycle works, every time. The case that people call "borrowing" is in fact the government spending and then selling bonds, and the case that people call "printing money" is in fact the government spending and then not selling bonds. Nothing more. Next, a lot of people think that choosing "borrowing" over "printing money" is more inflationary because it increases the money supply. This is false. It might (only might) be true that "the money supply" increases, but in fact they are equally inflationary. Remember, the government is only borrowing back funds it has previously spent. After the government spent them initially, they circulated and eventually wound up in somebody's savings, when that person decided not to spend them. Then that person can use their savings to buy a Treasury bond. Thus we see that a Treasury bond is nothing more than an alternate way to hold savings: an interest-bearing asset, rather than a non-interest bearing asset. And when the government "borrows" all it is doing is changing the form of the private sector's savings, from currency to bonds. Note that the key word here is "savings." The fact that somebody purchased a Treasury bond indicates that they weren't spending their money. If Timmy needed his $100 for groceries, then he wouldn't have been participating in a Treasury Security auction! The total amount of spending in the economy would be the same regardless of whether the government changed the form of Timmy's savings from currency to bonds, because Timmy wasn't spending in either case. And if there's no change in the amount of spending on goods and services, then how can prices change? They can't. The two scenarios ("borrowing" vs "printing money") have exactly the same impact on on prices, output, and employment. Now, clever readers might say, "aha, but wait! Timmy might not need his $100 at the moment he buys the bond, but what if he needs it later? What if he buys a 30-year bond, but next week he realizes he needs to spend the $100? In the scenario where the government sells him a bond ('borrowing') he can't spend the $100, whereas in the scenario where the government doesn't sell him a bond ('printing money') he still has the $100, and can spend it next week. So 'printing money' is still more inflationary." This is clever, but incorrect. The reason is because there is an extremely robust secondary market for Treasury bonds. In fact, in the US in particular, the Treasury bond market is the deepest and most liquid market on Earth. This means there is *always* somebody standing ready to buy your Treasury bond from you, in exchange for currency/deposits (often a dealer bank), to give you the funds you need if you decide to spend, nearly instantaneously. This means there is no such thing as being in a situation where you are prevented from spending because you're holding a Treasury bond instead of cash. And that means that the same amount of total spending would occur regardless of whether the government sold Treasury bonds or not. And that means that "borrowing" is exactly as inflationary as "printing money." Watch the whole video here: https://www.youtube.com/watch?time_continue=2&v=MLKrBsTQntA Follow Deficit Owls on Facebook and Twitter: https://www.facebook.com/DeficitOwls/ https://twitter.com/DeficitOwls And follow our sister page, Modern Money Memes: https://www.facebook.com/ModernMoneyMeme/ https://twitter.com/ModernMoneyMeme
Views: 737 Deficit Owls
Understanding TIPS (Treasury Inflation Protected Securities)
http://www.thewaytobuildwealth.org Today Ethan Bloch talks in detail about TIPS, Treasury Inflation Protected Securities. How they work, why you should own them and the best ways to buy them. Links and more - http://www.thewaytobuildwealth.org/2009/01/treasury-inflation-protected-securities-tips-what-are-they-episode-39/
Views: 9758 thewaytobuildwealth

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