Got a tricky question? Receive an answer from students like you! Try us!

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

Free
College
Research Paper
Finance & Accounting
Pages 3 (753 words)
Download 0

Summary

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)…

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. ...
Download paper
Not exactly what you need?

Related Essays

Stock Market Efficiency
The intention of this study is the capital market that provides a conducive and convenient venue for the investors that can be either organizations or individual entities to buy and sell shares and bonds in the form of stock exchange on a local and worldwide basis. Due to the advancement in technologies, the world has become a place where human being can travel and reach any destination within no time. Therefore, this has also provided an opportunity for the overseas institutions to participate in the trading activities of the stock exchange based in the vicinity. However, with reference to…
33 pages (8283 words)
The Financial and Economic Environment of a US website business targeting South African students
The paper tells that South Africa has a well-developed financial and legal environment with its stock exchange the world’s 18th largest exchange, ranked 17th with market value $1.013 trillion in 2010. It is one the most advanced developing countries on African continent. It is a middle-income economy with abundant natural resources. The country’s former fiscal policy was conservative mainly focused on controlling inflation and reducing budget deficit. The policies still exist but the recent global recession has put pressure to provide with the basic services to poorer sections and provide…
16 pages (4016 words)
The Causality Relation between the Kazakhstan Stock Market and the US Dollar, the Euro and the Russian Ruble.
The relation between the Kazakhstan tenge and other currencies is examined by statistical time series analysis. The relationship of exchange rates over a specific period of time is studied based upon bivariate and multivariate variables. Currency has continuously evolved as the domestic and international vehicle for trade. This paper will define and discuss the history of the causality relation between the Kazakhstan Stock Market and the tenge, and the US Dollar, the Euro, and the Russian Ruble. The research includes a quantitative analysis by using several statistical methods to support the…
80 pages (20080 words)
Role of "securitization" and "structured finance products" in the recent banking and financial crisis
The paper describes the role of securitization and structured finance products in the recent banking and financial crisis. Financial institutions cater to the needs of different types of customers by providing relevant financial services. Financial institutions worldwide have been affected by the adverse market environment created by the US sub prime fiasco. Trouble began when the financial companies started relying too much on the innovation in the blind faith that it will yield returns. As it is common knowledge that banking industry has suffered the most due to the current meltdown, the…
7 pages (1757 words)
The European sovereign debt crisis during 2010-2011
Historically, when a sovereign nation’s governmental debt exceeds the annual GDP of the country, the risk increases proportionately that the country will default on all or a portion of the debt requirements, particularly in the circumstances where the debt instruments are held by foreigners or in another currency than the national coin. The ability of sovereign nations to generally print money without formal external control is well established and the example of Zimbabwe is an extreme example of this, but the United States has also reached a debt level that is over $15.5 trillion USD or…
8 pages (2008 words)
The European sovereign debt crisis during 2010-2011
Matters involving liability crisis have in the recent years being reported globally, as the level of the sovereign arrears of some of the financial scheme of the world have risen, giving them a threat of failure to pay. A Financial network is thought to be in an obligation crisis once its government has failed to pay its debt. However, not any of the nations that are at present in debt disaster has defaulted, but they involve extremely high government debt balances, and their bond output spreads in the securities of the government have gone up, as a result, there is relegation of their…
8 pages (2008 words)
How government policy affect US banking system?
The demand-deposit control has turned banks into the middle agents and the principal agents in the US payment system and the financial transactions taking place. The costs and the benefits of banking regulation include the major industry changes witnessed that include internet and electronic banking; data processing models improved communication; and the development of more complex risk management and financial instruments (Graig, 1983). Government policy on the banking sector determines the outlook of the banking system, influencing the entry of players in the system and determining who is…
4 pages (1004 words)