NW-Bound
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
- Joined
- Jul 3, 2008
- Messages
- 35,712
Austria just sold 100-year bond, at a price of 154 and a coupon of 2.1% at par. If held to maturity, the yield is 1.171%. What is the chance of inflation being below 1.171% for the next 100 years? And what keeps the Austrian government from recalling the bond, causing the bond holder to immediately lose 1/3 of his principal? Assuming no inflation, it will take 26 years of 2.1% interest to recoup the 54% over par that you pay.
An article below points out that perhaps the above 100-year bond is still better than Austrian 5-year bond, which has a yield of -0.435%. Yes, there's a minus sign. And more, the Austrian bond is still better than German bond yet, which has a yield of -0.643%. Again, note the minus sign.
On another front, Greek 10-year bond now has the same yield as the US bond. An expert points out that “Greece is rated B+ by Fitch, has a debt-to-GDP ratio of 181%, a youth unemployment of 40.4%, and its nominal GDP has shrunk by 23% in the past decade. Greece has defaulted eight times and has been in default for half of its time as an independent country.”
I think we are heading into an exciting time.
See:
Barrons.com - Global Bond Markets Are So Crazy
Marketwatch.com - If the stock market is irrational, what do you call the bond market?
Financial Times - Greek bond yields lower than US Treasuries
An article below points out that perhaps the above 100-year bond is still better than Austrian 5-year bond, which has a yield of -0.435%. Yes, there's a minus sign. And more, the Austrian bond is still better than German bond yet, which has a yield of -0.643%. Again, note the minus sign.
On another front, Greek 10-year bond now has the same yield as the US bond. An expert points out that “Greece is rated B+ by Fitch, has a debt-to-GDP ratio of 181%, a youth unemployment of 40.4%, and its nominal GDP has shrunk by 23% in the past decade. Greece has defaulted eight times and has been in default for half of its time as an independent country.”
I think we are heading into an exciting time.
See:
Barrons.com - Global Bond Markets Are So Crazy
Marketwatch.com - If the stock market is irrational, what do you call the bond market?
Financial Times - Greek bond yields lower than US Treasuries
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