Article

2018-08-09 Economy

US bond yield rise to 5% could wreck Asia’s economic year

Archived material is restricted to Rantburg regulars and members. If you need access email fred.pruitt=at=gmail.com with your nick to be added to the members list. There is no charge to join Rantburg as a member.

Posted by 3dc 2018-08-09 00:00|| || Front Page|| [10 views ] Top

#1 What happens to the US if bond yields rise to 5%?

Posted by Anguper Hupomosing9418 2018-08-09 11:52|| 2018-08-09 11:52|| Front Page Top

#2 Nothing if you don't sell, certainly a loss if you do sell.

Bonds are sold on a present value discounted basis: the future value of a $10K treasury bond is exactly $10K at maturity, but if you need to sell it a year before maturity, you can't get 10K for it if the rate is currently 5% because someone would buy a 1 year bond for 10000/1.05=9523 (less money) and if they had the time, would get that 10K next year.

If someone bought the bonds at 1% but sold it prematurely at 5%, they'd suffer a real dollar loss because the present value of the bonds dropped. Ditto for those who are invested in 1% bonds in their ESP and had to liquidate.

Posted by Ptah 2018-08-09 18:25|| 2018-08-09 18:25|| Front Page Top

22:59 trailing wife
22:54 trailing wife
22:14 JohnQC
21:13 swksvolFF
21:07 SteveS
21:01 Deacon Blues
20:36 SteveS
20:34 SteveS
20:18 irishrageboy
19:38 mossomo
19:36 Frank G
19:34 Frank G
19:19 rammer
19:11 Mullah Richard
19:02 Anguper Hupomosing9418
19:01 g(r)omgoru
18:59 Anguper Hupomosing9418
18:55 charger
18:51 NoMoreBS
18:48 charger
18:47 magpie
18:37 Jack Chaiter7913
18:25 Thing From Snowy Mountain
18:25 Ptah