Bonds in sentence

2285 examples of Bonds in a sentence

An alternative option would be to activate the European Central Bank’s “outright monetary transactions” program, in which the ECB would purchase eurozone member states’ bonds in secondary markets.

Because the ECB, together with national central banks, buys government bonds in proportion to each country’s share of ECB capital, the PSPP cannot privilege the countries that are under stress.

The PSPP, as it is currently constructed, allows repatriation of interest on bonds purchased by the ECB and national central banks.

When Interest Rates RiseCAMBRIDGE – Long-term interest rates are now unsustainably low, implying bubbles in the prices of bonds and other securities.

The very low interest rate on long-term United States Treasury bonds is a clear example of the current mispricing of financial assets.

The Fed is buying Treasury bonds and long-term mortgage-backed securities at a rate of $85 billion a month, equivalent to an annual rate of $1,020 billion.

If inflation turns out to be higher (a very likely outcome of the Fed’s recent policy), the interest rate on long-term bonds could be correspondingly higher.

Investors are buying long-term bonds at the current low interest rates because the interest rate on short-term investments is now close to zero.

In other words, buyers are getting an additional 2% current yield in exchange for assuming the risk of holding long-term bonds.

Here is how the arithmetic works for an investor who rolls over ten-year bonds for the next five years, thus earning 2% more each year than he would by investing in Treasury bills or bank deposits.

Assume that the interest rate on ten-year bonds remains unchanged for the next five years and then rises from 2% to 5%.

The low interest rate on long-term Treasury bonds has also boosted demand for other long-term assets that promise higher yields, including equities, farm land, high-yield corporate bonds, gold, and real estate.

And, in each of these countries, it is likely that interest rates will rise during the next few years, imposing losses on holders of long-term bonds and potentially impairing the stability of financial institutions.

In an era in which stock and housing prices are soaring, the central banks of Japan and China are holding almost two trillion dollars worth of low-interest bonds.

A very large share of these are US treasury bonds and mortgages.

Second, the profits and earnings of corporations and financial institutions will not rebound as fast as the consensus predicts, as weak economic growth, deflationary pressures, and surging defaults on corporate bonds will limit firms’ pricing power and keep profit margins low.

Germany was also forced to compromise in 2012, when Merkel was pushed into agreeing to a banking union and the ECB’s “outright monetary transactions” program, which effectively turned European government bonds into Eurobonds.

The proceeds were then invested in Greek government bonds and loans to Greek companies.

And it is not just short-term policy rates that are now negative in nominal terms: about $3 trillion of assets in Europe and Japan, at maturities as long as ten years (in the case of Swiss government bonds), now have negative interest rates.

And yet negative bonds yields are also occurring in countries and regions where the currency is depreciating and likely to depreciate further, including Germany, other parts of the eurozone core, and Japan.

Many long-term investors, like insurance companies and pension funds, have no alternative, as they are required to hold safer bonds.

But, given such investors' long-term liabilities (claims and benefits), their mandate is to invest mostly in bonds, which are less risky than stocks or other volatile assets.

Moreover, in a “risk-off" environment, when investors are risk-averse or when equities and other risky assets are subject to market and/or credit uncertainty, it may be better to hold negative-yielding bonds than riskier and more volatile assets.

Indeed, if the advanced economies were to suffer from secular stagnation, a world with negative interest rates on both short- and long-term bonds could become the new normal.

But it also requires fiscal stimulus, especially public investment in productive infrastructure projects, which yield higher returns than the bonds used to finance them.

Until now, Americans have been raking in profits by borrowing cheaply from pliant foreigners and investing the money in high-yield foreign equities, land, and bonds.

Controversial “sovereign wealth funds,” which invest funds for governments in the Middle East, Asia, Russia, and elsewhere, are just one manifestation of the search for alternatives to low-yielding, rapidly depreciating, dollar bonds.

If there is a global downturn, any region that is long stocks and short bonds is going to get burned.

Moreover, the Bank of Japan owns government bonds worth 90% of GDP, and ultimately returns to the government as dividends all the money it receives from the government as interest on the bonds it holds.

Far from reacting in horror at this clearly unsustainable behavior, bond buyers around the world still line up to buy government bonds in return for yields that are little more than zero.

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