• Investing in U.S. Cities

    You will find more statistics at Statista Investing in U.S. cities using municipal bonds comes with some risk of default. While cities have been known to default on their debt in the past, this article from MunicipalBond.com makes a case for investing...
  • Investing in Government Bonds

    Investing in bonds or "fixed income securities" currently does not offer very attractive returns because interest rates are so low. This video from the Financial Times explains a few ways that investors find higher yields in bond markets. But...
  • Leverage and Bond Fund Returns

    In this historically low interest rate environment, bond funds are hard pressed to find investments that will earn decent returns. One way to boost profits is to borrow money, and then invest more than 100 percent of the bond fund assets at interest rates...
  • Rising Rates and Expectations

    We all know that when rates rise, bond prices fall, and when rates fall, bond prices rise. That's because the price or "intrinsic value" of a bond is simply the sum of the present values of all expected cash flows. The same is true for...
  • Crowdfunding in a Volatile Market

    According to a recent article in Entrepreneur magazine ( Clifford, 24 Aug 2015 ): Crowdfunding has been celebrated as the grand democratization of finance -- a mechanism for anyone with a business idea to raise money from their peers, outside the bureaucracy...
  • Paying Puerto Rico's Debt

    This week, the sunny island paid it's municipal debt, but the future still looks cloudy. Unlike other U.S. municipalities, Puerto Rico faces some challenges in that it cannot access the bankruptcy laws that protect other U.S. municipalities. Additionally...
  • What Drives the German 10-Year Bond

    Tom Keene asks whether the German 10-year bond yield fell because of the activity of some big investors, or whether it was other forces. He concludes that it was indeed other forces. In this video, Bloomberg's Tom Keene describes that price matters...
  • Crazy Bond Prices

    Bonds are often considered the boring side of investing. After all, how exciting can it be to lend money and then sit back and wait to be repaid principal and interest? Today, however, there's some excitement in bonds due to factors such as the volatility...
  • Negative Corporate Bond Yields

    A crazy phenomenon is underway. Investors are willing to pay borrowers for the privilege of investing. While central banks in Europe have been paying negative interest rates on deposits for months (see BBC, 18 Dec 2014 ), financial markets were surprised...
  • Hostile Takeovers, Poison Puts, and Agency Conflicts

    Calyon Building in Midtown Manhattan, former site of RJR Nabisco headquarters. RJR Nabisco was purchased by KKR in 1988 in what was the largest leveraged buyout in history at that time. In the acquisition, KKR did not refinance all of the existing debt...
  • Unthinkable: Bill Gross Leaves PIMCO

    In the professional investing world, Bill Gross is legendary. The founder of PIMCO and CEO has announced that he is leaving for to join Janus. He leaves a very profitable legacy having started the fund in 1987 when yields were higher and he's "skied...
  • European Central Bank Cuts Rates Unexpectedly

    This week, the European Central Bank (ECB) cut interest rates unexpectedly, and the euro fell in response. From Bloomberg ( Riecher, 4 Sep 2014 ): The rate cuts come three months after an historic package of stimulus measures, and two weeks after...
  • Bond Market Transparency...Or Lack Thereof

    Bond markets are notoriously opaque. Unless you're a dealer active in a particular bond, you can't really identify the fair value of any particular bond. This is a problem for institutional investors as well as retail investors. From this...
  • Bear Flattening of the Yield Curve

    A yield curve graphs the relationship between the term to maturity and the yield to maturity for bonds. The U.S. Treasury yield curve is widely watched, and it is normally upward sloping, which means that long-term rates are normally higher than short...
  • The "Hidden Tax" of Low Interest Rates

    When the increase in the cost of living is greater than interest rates, savers are punished. Borrowers on the other hand can borrow at rates near zero, while savers earn nothing at all. That is the case in our current market. From the NY Times ...
  • Possible Negative Interest Rates in Eurozone

    Photo of euro currency by Images_of_money available by Creative Commons license The euro fell against the U.S. dollar yesterday after Mario Draghi, the president of the European Central Bank, indicated that negative interest rates were being discussed...
  • Jobs For Bond Traders

    A recent Bloomberg article reports that Wall Street hiring of bond traders has increased recently as Nomura and Deutsche Bank add to their bond trading desks. From the article: Debt trading hasn’t been what it was before the 2008 crisis...
  • Bankers Warn of Consequences to Government Default

    “Compared to Washington, Bankers now seem like they have their act together.” ~Rob Blackwell, Washington Bureau Chief in video interview with American Banker A recent American Banker article (Borak, 2 Oct 2013 ) reports that...
  • The "New Neutral" For U.S. Treasury Yields

    The rise in the price and drop in yield of the 10-year US Treasury note is telling us that the market expects central banks to keep rates at their current low levels. In a recent MarketWatch article (Eisen, 16 May 2014 ), Bill Gross of PIMCO is...
  • Spanish Rates Rise: What's the Big Deal?

    Interest rates provide us with information. Even if you aren’t considering investing in the Spanish markets, one look at the 10-year bond yield tells you that there’s trouble. According to CNN Money (July 6, 2012 ): The yield on Spanish...
  • Are Structured Notes OK For You?

    There’s no such thing as bad bonds—only bad prices. ~ Comment from a bond trader, 1995 Bond markets are creative, always coming up with new ways to vary the stream of cash flows to be earned by the investor. Notes are issued...
  • Venture Debt or Venture Capital?

    We’ve heard about venture capital for years. Now companies are turning to venture debt to raise funds for expansion. This is the classic question: which form of capital is more suitable: debt or equity? For a typical publicly traded firm, each form...
  • What About Puerto Rico's Debt?

    What drives the value of financial assets—that is, stocks and bonds? Is it news of profits, market shares, new product lines, CEO missteps? Yes and no. News is only important if it wasn’t already anticipated by investors. In the case...
  • Where Have All the AAA-rated Government Bonds Gone?

    France lost its prized AAA credit rating Monday when Moody’s Rating Agency downgraded French government bonds to AA1. From the Moody’s announcement ( read the full announcement here ): Moody's decision to downgrade France's...
  • Stocks or Bonds?

    Dividend yield and dividend growth are looking better than bond coupon income these days. With interest rates as low as they are, Edward Perks, Senior Vice President of Franklin Templeton Investments is reducing holdings of long-term bonds and increasing...