StudentShare solutions
Triangle menu

The US government role in the bond market in 2011 - Research Paper Example


Extract of sample
The US government role in the bond market in 2011

This fueled bond investors’ purchase of US government debt.  During the week of 8/23/2010 investors continued to buy large amounts of US government bonds (treasuries), while selling off stocks.  Investors can usually buy treasuries directly or more commonly through bond funds.  Bond funds had attracted US$559 billion industry-wide in the past 30 months through June 2010. Bonds returned 16% within that 30 month period, while stocks returned -26%.  Investors had removed US$209.4 billion from domestic (US) equity funds, as well US$24.4 billion from funds that purchase non-US stocks.  With the increase in price, the yield on the 10 year US Treasury note had declined to 2.41% in October of 2010, the lowest level since Dec 2008 (when it was less than 2.20% during the height of the financial crisis).  This meant that equities had become cheap (i.e. stocks were selling for much less than they should have been) as investors retreated from the volatile stock markets in search of stability in US bonds. On 10/5/2010 Warren Buffett, who was a guest speaker at Fortune’s Most Powerful Women Summit in Washington, had said that it is “quite clear stocks are cheaper than bonds”.  He also stated that he “can’t imagine” the rationale for adding bonds to your portfolio at the then current prices. “We are following policies that unless changed will eventually lead to lots of inflation down the road”. “We have started down a path you don’t want to go down.” Despite the Oracle of Omaha’s direct warning, US bond

Check these samples - they also fit your topic

Should the government intervene in the OTC markets, pros and cons and US versus Canada
An over the counter market (OTC) is a decentralized market for securities where market players trade over the telephone and other electronic systems instead of the physical trading on the floor (Poitras 50). Trading occurs through middlemen commonly referred as the dealers who buy and sell securities on behalf of their clients (Williams 29).
9 pages (2250 words) Research Paper
LED lighting fixtures market of US
To take the benefits of this globalized world, ABC Company has planned to enter the LED lighting fixtures market of US. Business plans to meet the growing LED lighting fixtures demand with low cost option. To achieve this low cost, LED light fixtures will be imported from China.
5 pages (1250 words) Research Paper
Global Environment of Business. The Saudi Stock Market (2009-2011)
Therefore, for developing comprehensive study on Saudi Stock Market various aspects have been explored with evaluation of events in the market relative to events in world. Upon analysis, it was explored that world oil prices have direct impact on the TASI while internal country strength resists the impact of Asian crises on market.
12 pages (3000 words) Research Paper
The Bond Market
These funds are required to fund state projects, business expansions and ongoing operations (Brett, 17). Government issues securities refer to the loan term loans offered to the public though issuance of bonds. They enable the government to raises capital from the public.
5 pages (1250 words) Research Paper
South Korean Government vs. US Government
While America had hundreds killed during the American War of Independence, 154 people died and around 3,000 were wounded in the Gwangju massacre in South Korea under the military leadership of Chun Doo-Hwan (Savada & Shaw, 1990). The transition from a state of war to a state of democracy for both countries was heralded by the institution of democratic governments that always maintained the peace and freedom in these two nations.
15 pages (3750 words) Research Paper
US stock market Indexes
The S&P 500 is another US index with the stocks of 500 Large-Cap corporations, mostly American. It is a part of the wider S&P 1500 and S&P Global 1200 stock market indices. Thus, S&P 500 is one of the many indices possessed and
4 pages (1000 words) Research Paper
Effect of Debt Limit/Debate on Credit Rating of US
This paper will seek to provide an account of the potential effects of debt limit/debate on credit rating of United States. It will identify the key agencies and explain the process of credit rating. The research paper will attempt to analyze the impact of recent debates on the United States debt and current legislations.
8 pages (2000 words) Research Paper
US. Government / Federal Bureaucracy
That would increase the amount of cash to federal coffers. The House bill called the American Clean Energy and Security Act, intents to control greenhouse gases emission, which trap heat in the atmosphere. The
1 pages (250 words) Research Paper
US Government / Public Policy / Corporate Welfare
These special favors are bestowed over the selected corporations by the government rather the ones in deficit or poor (Cozic, Charles &Winters 1997). It is considered that these corporate welfares are the reason for the fiscal crisis; all these millions of dollars
1 pages (250 words) Research Paper
Role government of each artical
ding a stable environment for the growth of the economy during the time that it can be relied upon to maintain the currency stability, defend and enforce property rights, and avail oversight that gives the private citizens an assurance that their partners in transactions are
8 pages (2000 words) Research Paper
purchasing continued, causing yields on 10 year US treasuries to reach near record lows at 2.17% in November 2010 (US treasuries reached near record high prices). In November the US Federal Reserve announced it is committing $600 billion to buy more government bonds/treasuries in order to stimulate the weak US economy. This was the second massively large and unconventional program of quantitative easing (money printing).  US treasury prices began to fall as investor confidence began to wane.  In December, US Federal Reserve chair Ben Bernanke defended the $600-billion US Treasury bond purchase plan on national television.  He said the economy was still struggling to become “self-sustaining” without government help and also indicated further stimulus may be required in 2011.  In the days following Bernanke’s comments, yields on 10 year US treasuries rose sharply to a six month high of 3.27%, after prices dropped in the largest two day sell off since September 2008 (when Lehman Brothers collapsed).  US treasuries continued to fall through the month of December as investors reduced their bond holdings after government data (prices and trade) suggested stronger than expected economic growth in the fourth quarter and easing deflation risk.  Investors had started to put money back into US equities.  The yield on 10 year US treasuries rose to six month highs (prices dropped to six month lows).  Retail investors withdrew a record net $US8.6 billion from bond funds during the week ended December 15.


Your name Subject: Finance and Accounting   Date submitted The US government role in the bond market in 2011 a. Article “2011 US Treasuries / United States Bonds Outlook & 2010 Year-End Review” Measures of underlying inflation have trended lower during the first few months of 2010, which raised fears of Japan style deflation (economically worse than high inflation).  However, European debt downgrades have caused investors to move back into “safe” US treasuries particularly starting in the second of 2010, which pushed the yield closer to two year lows (prices closer to two year highs)…
Author : gerholdcrystal
The US government role in the bond market in 2011 essay example
Read Text Preview
Comments (0)
Click to create a comment
Let us find you another Research Paper on topic The US government role in the bond market in 2011 for FREE!
Contact us:
Contact Us Now
  • About StudentShare

  • Testimonials

  • FAQ

  • Blog

  • Free Essays
  • New Essays
  • Essays

  • The Newest Essay Topics
Join us:
Contact Us