Article by strathclydeassociate

Market Outlook October 2010: Strathclyde Associates Government Bonds Part3

The strength of the major European bond markets must therefore also be viewed with some concern. The gilt edged market has followed the pattern of other markets and has also improved again over the past month.

The UK economy is currently performing better than expected; but the introduction of austerity measures to reduce the fiscal deficit is expected to limit further gains in the second half of the year. The Bank of England is also continuing to adopt a cautious approach, and is maintaining an easy monetary policy and low short-term rates; and there is no real risk of a default on UK debt. Investors have therefore been encouraged to push the market higher, and are obviously assuming that growth rates will remain low and that inflation will remain under control, even though it is currently well above the bank

Government Bond Markets Global Outlook Fisher Capital Management Seoul – Conditions in the government bond markets have remained very difficult over the past month, and there have been further falls in some of the minor markets, especially in the euro-zone, because of continuing fears about sovereign debt defaults. The agreement reached by the member countries of the euro-zone to combine with the IMF to provide any necessary support to enable Greece to refinance its maturing debts and avoid a default has had a poor response in the markets; but at least Greece has been able to make further bond issues; and the gilt edged market has coped fairly well so far with a disappointing Budget statement that has left any real attempt to resolve the serious UK debt problems until after the general election. But the sudden weakness in the world bond markets after a series of disappointing auctions has once again increased the tensions.

Our position remains unchanged; any existing exposure to bonds should be further reduced in favor of US & Euro equities.

Fisher Capital Management Seoul, South Korea – The global economic recovery is developing slowly, and so short-term interest rates are likely to remain at low levels for a considerable period. It is also possible that the fudged agreement amongst member countries of the euro-zone will provide an opportunity for the introduction of the necessary austerity measures; and that a new government will finally begin to address the debt problems in the UK. But the risks in the situation are still increasing, sovereign debt defaults may still occur, and the single currency system in the euro-zone may not be sustainable in its present form. Higher bond yields therefore appear unavoidable; prospects for all the bond markets are unattractive.

Developments in the bond market over the past month have clearly illustrated the need for caution. The US economy continues to recover. The Fed has left shortterm interest rates unchanged, and has indicated that they will remain at exceptionally low levels for an extended period. This tended to enhance the safe haven status of the US equity market for most of the past month, as conditions continued to deteriorate in other bond markets.

Fisher Capital Management Seoul, South Korea – Most of the available evidence supports the view that the economic recovery is continuing, but only at a slow pace. The unemployment rate remains close to 10%, and the housing sector is still depressed, with both new housing starts and sales of existing homes weakened still further by adverse weather conditions. However
retail sales are holding up fairly well, and manufacturers are beginning to increase capital expenditures and inventories, and so there is a general expectation that growth in the first quarter will be around a 2% annualized rate.

Fisher Capital Management Seoul, South Korea – The Fed has confirmed that its buying programmed for mortgage-backed securities has ended, and that it may be moving slowly towards re-selling some of these securities; but it seems to be in no hurry, and so both the economic background, and the position of the central bank, remain broadly supportive.

The situation facing investors in the mainland European bond markets is more serious. The economic background is improving, with the weaker euro providing considerable support in export markets, and so the area continues to move out of recession. But progress is slow, and so the European Central Bank is maintaining very low short-term interest rates, and providing support. However the massive fiscal deficits are threatening to overwhelm the bond markets and to lead to sovereign debt defaults, and so investors have continued to switch from the bonds of the weaker countries into those of the stronger countries, and have widened the yield
spreads across the markets. The latest Greek bond auctions have received only a very moderate response, and there is considerable uncertainty whether even the markets of the stronger countries are adequately discounting the risks in the situation.

Fisher Capital Management Seoul, South Korea – The available evidence on the performance of the euro-zone economy is mixed, but slightly more encouraging. The weakness in domestic demand is continuing, and retail sales volumes are disappointing in most member countries; but the manufacturing sector, especially in Germany, is much more buoyant, with exports
providing most of the momentum. The latest Ifo index of business sentiment in Germany is sharply higher, and other countries are also sharing in the improvement.

Analysts are therefore forecasting growth around the 0.5% level in the first quarter
of the year.

Article by Julia Lundstrom

The bond market is a mess. Government interest rates are at an all time low and have been low for quite some time.

Right now, you have to invest in a government bond that has a 10 year maturity just to get 1.97% a year. And that’s investing in a US Government Bond.

If you look at the US versus the Eurozone, our debt is only going up, and their debt… well, their debt may wipe out the Euro. If one more country needs to be bailed out of if Greece or Ireland default on their debt payments, the Euro as we know it may not exist.

The Euro carries too much of a risk premium to consider investing in it. There is way too much risk. I had a friend bet me a year ago that the dollar would be gone in a year. Obviously, I won. However, I would take that bet against the Euro failing in the next year if they don’t make significant changes.

And then there is the US… in 2016 the US can’t afford all the debt payments that we have on our current debt. For an individual, that spells bankruptcy. For the Government, well… I don’t know what that means.

What I want to know is why would you take the risk in investing in the US Government debt, and especially at a rate that barely keeps up with inflation and you have to wait 10 years to get your principal back. But there is a solution…

Look towards corporate debt. The US Government may not be a rock solid bet, but the companies in the US can still generate a profit and are still run by the entrepreneurs of the world with ideas that lead the rest of the world.

Look at companies or funds with very strong balance sheets, lots of cash on hand and very little debt. On a bond fund with an average yield to maturity, you can get an average yield that is 1.5% more thank you would get on any government bond.

I would recommend corporate bonds over US Government bonds every day of the week. I continue to believe in the American entrepreneur and not the federal government to pull us out of this economic downward spiral. As long as corporations have strong earnings, even if they are only up slightly year after year and they have a very low debt to income ratio, they should be strong candidate. I would even take higher risk bets in companies over Government bonds right now. A few high yield bonds will add great yield to your overall portfolio, with minimal levels of risk.

The bottom line is that you don’t have to stay out of the bond market which has rallied this past summer, just invest in the smart areas of the market. Put your faith in the business owner instead of the politicians.

If you are looking to diversify your portfolio and get relatively higher fixed income from bonds, you could go with emerging market bonds and foreign government bonds. Right now, emerging market bonds are one of the best-performing investments in the international fixed-income industry, yielding around 6.2%/ Experts believe that these types of investments will appreciate if the dollar continues its decline (and currencies from emerging markets appreciate in value. These bonds help you reap the benefits of appreciating currency while giving you bigger yields. Debts from emerging markets are predicted to fare better than other global debts, despite the added risk bondholders take, including currency risk, rate risk, and the risk of government instability.

The risks of investing in this asset class are much more considerable. However, investors with a good tolerance for risk will find that bonds from emerging markets can generate income over the long-term, with volatility that is not as much of a concern due to the solid growth potential and structuring of these bonds.

Average debt from emerging countries is about a third of the GDP or Gross Domestic Product, compared to a hundred percent for developed countries. The GDP is also predicted to increase yearly by more than 5% for developing nations, as opposed to below 2% for developed countries. In addition, the allocation of funds from institutions help the profit potential of these bonds which is the shortage of equity from emerging markets will produce benefits for investors when more funds come in.

Investors are not as attracted to foreign government bonds because of the national debt problems in Greece and other developed nations. These financial crises have definitely put investors on the fence, holding back buying into these securities. However, hiring an experienced financial professional such as a mutual fund expert that focuses on fixed-income securities can give you far better returns compared to similar investments in the US. For instance, Australian government bonds that span one year recently generated profits of nearly 5%, compared to the under performing one-year bills from the US with less than 0.3% yields.

CDs or Certificates of Deposit and Treasuries are no longer the ramparts of retirement income that they used to be. These investments used to be stable, but current global conditions and the need for bigger returns turned these into sub-par sources of income. If you want to increase your earnings in or before retirement with fixed-income investments, try going global and purchasing emerging market bonds and foreign government bonds.

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Question by Matt C: Has there been countries that required its citizens to buy government bonds?
I’m doing a paper on human rights, and seeing how a government can unjustly use its economic controls to affect its people. Have there ever been governments that forced their people to buy government bonds? I’m trying to illustrate how the offering and pricing of bonds can be taken advantage of.

Best answer:

Answer by Rick
To my knowledge – Never has a country forced it’s citizens to buy government bonds.
However the citizens of the USA don’t seem to know about Quantitative Easing.
The Feds. are printing money which devalues our money that effects what citizens have accumulated in savings and will force inflation upward. The money printed is going to purchase government bonds – which means US citizens are indirectly FORCED to buy bonds. – The complete story:
So far they have printed $ 600 Billion to buy bonds, called QE2 (Quantitative Easing 2
They will be printing $ 2 Trillion in a few months called QE3 – Quantitative Easing 3.
Watch the excrement hit the fan! – -
Very Cute Explanation = Easy to understand + very true:
Quantitative Easing Designed to Enrich Goldman Sachs

http://taxdeedtreasures.com/?p=2840

Goldman: QE2 Will Continue Into 2012, Will Be Over $ 2 Trillion,

http://www.zerohedge.com/article/goldman-qe2-will-continue-2012-will-be-over-2-trillion-models-do-not-see-rate-hike-until-201

Goldman: The Fed Needs To Print $ 4 Trillion In New Money

http://www.zerohedge.com/article/goldman-fed-needs-print-4-trillion-new-money

.

Add your own answer in the comments!

Austin, TX (PRWEB) September 29, 2011

Can foreign currency (FOREX) investors profit from the European debt crisis or should they sit on the sidelines and wait for the storm to pass?

The Forex market is one of the few markets in which investors can profit through short selling of the euro against other currencies, in particular the U.S. dollar. And while financial woes in the US accelerate, the US dollar may also be shorted against other currencies.

Short selling is when an investor sells a borrowed security or currency with the expectation that it will fall in value.

Short selling is best explained by way of example. You need a bottle of wine for a dinner party you are having that evening, but all the stores are closed. Your neighbor just bought a bottle of wine for $ 10. You ask your neighbor for the wine and offer to pay for it. Your neighbor refuses the money and tells you to just buy a bottle as a replacement. The next day, you go out to buy the wine for your neighbor and find the same kind selling for $ 8 a bottle. You buy the wine for your neighbor and you make a profit of $ 2 since you borrowed something worth $ 10 but were able to buy it for $ 8. That is short selling.

How does this relate to the euro? Greece is still in trouble. The European Central Bank has spent $ 22 billion dollars buy sovereign debt and keep spreads low. The five year Italian bonds are trading at 5.5% but the Italian government can’t afford to pay that kind of rate. So, the euro, which interestingly enough is worth $ 1.36, is due for a fall. It is not a matter of if, but when.

When the euro falls, investors can sell the euro against the dollar. One expert, Andrew Busch, a global currency strategist for BMO Capital Markets, recommends that FOREX traders take profits after a 4-cent slide and setting a stop-loss to exit the trade after about a 1-cent rise in the euro.

Similar to the Boy Scouts, FOREX traders must be prepared by setting plans and security measures in place to protect their position while short selling. By being prepared and taking action, FOREX traders can profit from the European debt situation.

To learn more about the foreign currency exchange (FOREX) market go to: http://www.foreximpact.com/

http://www.youtube.com/foreximpact

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Find More Government Bonds Press Releases

(PRWEB) April 30, 2004

Israel Bonds Canada, which sells Israel Savings Bonds and other investment securities, has redesigned their Canadian website to ensure http://www.israelbonds.ca is completely current to the minute and as easy manage as using MS Word. In order to achieve this, MOSHEN MEDIA’s WriteNow Content Management Solution was deployed.

Israel Bonds and MOSHEN MEDIA focused on several target audiences for the website redesign: those looking to purchase bonds, those looking for bond information, and those looking to see how bonds help Israel. Israel Bonds and MOSHEN MEDIA developed a bold new look and organized the content to be incredibly simple to access and use.

“Too many websites have good information that is hard to find and even harder to use,” says Larry Waller, Executive Vice-President of Israel Bonds. “Our new website gives all visitors clear, quick and easy access to all the information Israel Bonds has to offer, and it’s completely managed by our people, internally. Israel Bonds are important to further the growth of Israel; our website is a vital part of that growth and MOSHEN MEDIA’s content management tools have truly empowered us in our work”.

“For Jewish organizations, the ability to formulate a message and communicate quickly is vital,” says Terry Moshenberg, Lead Strategist of MOSHEN MEDIA.

“If an organization is encouraging donor participation, or advocating for Israel, or responding to anti-Semitic hate crimes, information must be current to the minute. The last thing an organization needs is technology that doesn’t work.”

“Three years ago, we were obsessed with numbers and with how many people visited our site,” notes Elan Levitan, marketing director for Israel Bonds Canada. “Now,” he says, “we are far more concerned with who comes to our site and if we’re serving them well.”

Levitan explains that Israel Bonds had been trying for years to create a 24/7 storefront. “We needed a site that brought real value and efficient services to our current clients and also showed our product line to real prospects. The solution eluded us until we connected with MOSHEN MEDIA. Most website content management systems promise a lot and don’t truly deliver. MOSHEN MEDIA’s WriteNowtm Content Management Solution was the total solution we were looking for. We actually manage 100% of the content like using MS Word.”

“Our site users are happy, satisfied visitors. The download time is fast, it’s easy to use, and from Israel Bonds’ perspective, it is incredibly easy to manage.”

About Israel Bonds

State of Israel Bonds is an organization whose sole purpose is to sell bonds and notes for the Israeli Ministry of Finance. Israel Bonds are securities issued by the State of Israel to help build and strengthen the nation’s economy. Israel Bonds are backed by the full faith and credit of the Government of Israel, which has maintained a perfect record of repayment of interest and principal since the first bond was issued more than 50 years ago.

About MOSHEN MEDIA

MOSHEN MEDIA is an innovative multi-service organization specialized in strategic marketing, graphic design and web site development. The Company’s flagship product is WriteNowtm, a Content Management Solution that lets’ users manage their websites like using MS Word. MOSHEN MEDIA provides strategic, web-based solutions to successful companies in the Entertainment, Technology, Consumer Health, Human Resources, and Not-For-Profit industries. The Company creates, develops, and delivers website and print based solutions that enable companies to achieve higher profitability and more efficient workflows.

Find More Government Bonds Press Releases

Los Angeles, CA (PRWEB) December 17, 2007

The Full Disclosure Network

Question by Muda Luda: Can a country create money, and buy foreign government bonds?
Country X creates X amount of money and buys government bonds in Country Y.

Also, What if we default in paying back China? Realistically that is. Does the USA buy any foreign government bonds?

Best answer:

Answer by ada
i dont think they can do that

Add your own answer in the comments!

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Sep 19 2011 Bloomberg — David Roche, president of Independent Strategy and a former Morgan Stanley global strategist, talks about the outlook for US and Greece debt problems and his investment strategy. Roche speaks with Rishaad Salamat on Bloomberg Television’s “Asia Edge
Video Rating: 5 / 5

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• david rosenberg cnbc