The global bond threat

Article Abstract:

There have been rises in 10-year bond yields for Germany, the US and United Kingdom since the end of Jan 1999, and this rise could continue. The Japanese economy may revive, attracting domestic investors, which could lead to problems for the world bond market. Inflation could also lead to rising bond yields, especially if petroleum prices rise. There has tended to be a positive correlation between equities and bonds, but petroleum production and exploration stocks are generally negatively correlated with the price of bonds, so investors can hold these stocks to diversify.

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Who cares about bond yields?

Article Abstract:

Government bond yields have dropped as a sell-off appears to be ending. The likelihood of a peak in bond yields could help stock prices. Debt repayments by governments has helped to improve sentiment. There are a number of uncertainties such as the impact of the millennium on inventories, and difficulties in assessing trends in the US economy. Real yields could rise if Europe experiences non-inflationary growth in the same way as the US. The value of bonds is important as well as their yields.

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Who needs a trillion dollars?

Article Abstract:

Large US budget surpluses have been forecast, yet this appears to have little impact on US bonds, for reasons which are examined in detail.

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