Article Summary Investors have in the past bought bonds as Treasury debt is considered to be the safest investments. However Men's Nike Air Max 95 Just Do It White Black Australia , there are concerns about how safe treasuries are. According to an analysis in the article, bonds and stocks are moving in opposite directions. With government bonds provident higher returns, individuals are increasingly holding high-grade debt such as treasuries both in Europe and United States. The strategy is to hedge against further market turbulence. Yields on benchmark Treasury notes have not shown a significant increase. However Men's Nike Air Max 95 Just Do It Orange Australia , they have not also changed as expected over the past month as investors assimilate the new President鈥檚 Donald Trump鈥檚 policies and possibility that the new administration will bolster inflation and economic growth. The author argues that the measure to bring back government bonds into a portfolio may be not investors鈥?expected. This is particularly true if inflation increases in 2017 as expected, bonds may be the biggest losers, specifically if the Federal Reserve reacted by rushing to increase interest rates. Bonds often suffer when inflation and rates increase. Some investors are cautious to add bonds to ensure that their hedge doesn鈥檛 turn out to be a large loss-maker. Experts predict inflation to pick up. Therefore Men's Nike Air Max 90 Premium SE Chenille Australia , holding a small amount of government bonds is safe in case this does not happen as well as concerns over deflation return. With relatively low yields by historical standards, there is a big risk in buying bonds. Investors buying Treasury bonds cannot predict what could happen if rates go up. While bond yields have remained relatively low, investors may be overlooking the unavoidable hike in rates and could pay the price later. There is no completely safe investment; however Men's Nike Air Max 90 Premium Gym Red White Australia , investors are almost better off holding cash as a hedge.
Critique The topic is relevant at a time when many investors have embraced exchange-traded funds. On the other hand, the Federal Reserve expects interest rate normalization in light of an improving U.S. economy while Global central banks are strictly adopting loose monetary policies to stimulate growth. Nevertheless, bonds and fixed-income markets and may have support from safe-haven bets to hedge market risks. Individuals and corporate are looking back to high-grade debt again as an insurance policy against market turbulence. Many investors already recognize that and are causing a crowded trade. Some investors have predicted a bubble in the Treasury bond market. Historically Nike Air Max 90 Mesh Royal Tint White Australia , bond investors have been less prone to panic and make drastic moves. But that could be changing because liquidity has deteriorated. The article is particular importance as the bond market may not be well prepared as it was a few years ago. Additionally, there are other risks in the bond market. For example, the Federal Reserve may raise interest rates soon as it has not increased since 2006. Given that many younger investors do not have an experience in trading bonds. It is important if they have the required knowledge of how bond markets operate. When the reader reads the introduction Men's Nike Air Max 90 EZ White Blue Australia , it is possible to understand the approach that the authors have adopted. The author clearly communicates the content of the article for all audience with or without expertise in the financial markets. The author has adopted a good approach the contents of the study including scope. Arguments from experts have also been presented accurately and clearly to enhance understandability. The authors鈥?discussion flows logically and is discussed in the context of current market trends.
Reference Sindreu Jon & Whittall C. (2017, Jan. 31). As Yields Climb, Bonds Regain Allure as a Hedge. The Wall Street Journal.
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