To make money for themselves they reach for yield by lending to more speculative borrowers whom they can charge more interest to, and they too often lend to high interest paying governments whose junkie bonds they buy for a fat yield as well as their implicit security.
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The whole point of the QEs is for the Fed to expand its interest rate policy influence to the whole yield curve.
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In all this, North Fork is not alone: regional banks have been more vulnerable than larger banks to the flattening yield curve because they tend to be more reliant on interest income.
As default risk is the primary driver of high-yield corporate bond prices, as opposed to interest rate direction, when the economy expands, the risk of high-yield corporate bonds defaulting is reduced and this is reflected in lower volatility.
Cigarette stocks have become downright trendy of late as investors have taken to chasing yield in a low-interest-rate world.
The earnings beat was not enough to shore up interest in the stock, as agricultural yield losses abroad in 2010 have pressured many farmers to switch to crops in high demand this year.
He now expects his private-partnership interest in the camp to yield 12 to 15 percent annually over its anticipated five-year life span.
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Current yield can be used to compare the interest income provided by a bond to the dividend income provided by a stock.
Those of you who own maturing bonds will have to make a choice between reinvesting at lower interest rates or taking on more risk to get a higher yield.
And, the press is full of articles on how to replace lost interest income in a zero yield world.
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For more than a year it has been able to ride the yield curve profitably as the Fed kept interest rates down.
There is ample liquidity out there and I think, for bond investors in particular, the low interest rate investor will try to find yield elsewhere.
Take the ten-year Treasury: the ten-year Treasury at a 4% yield is less risky, less sensitive to interest-rate changes than a ten-year Treasury at 2%.
The right to family life is not absolute (unlike the right not to be tortured) but may yield in the public interest, including safety and economic well-being.
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But to get the trade-off between 10-year government bond, not in America, but on a global basis, and the inverse of the PE or the earnings yield back to historical norms, long-term interest rates would have to fully double from here globally.
At equilibrium, all its investments will yield the same expected return, equal to the lending interest rate in non-Islamic banking.
While Nationwide, an investment-grade borrower, found favor with investors, many asset managers are adopting a case-by-case approach to subordinated debt, rather than rushing to buy as they look for yield at a time when interest rates are ultralow.
Certainly the bond markets take him at his word or are hungry enough for yield, in these low-interest days, to take a chance.
With a solid growth trajectory, rising earnings estimates, healthy dividend yield and reasonable valuation, the stock has plenty to interest investors seeking growth and income.
It is unnatural to have interest rates close to zero and to distort the yield curve by pegging longer-run bond prices at artificially high levels and suppressing yields.
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And instead or rising, interest rates and the yield on bonds began to decline, and Treasury bonds launched into an impressive six-month rally in which 30-year treasury bonds gained 20%.
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The nominal yield on a bond is simply the percentage of interest to be paid on the bond periodically.
Hopes of a halt to further interest rate hikes also spurred the bond market, with the yield on the ten-year Treasury falling .071 to 5.059%.
The implicit interest rate on 10-year loans to Italy (the yield on 10-year bonds) rose again above the 7% level which is regarded as punitively unaffordable.
Congress has passed a bill that many believe will harm small investors, many of whom are desperate for yield because of record-low interest rates that appear likely to last.
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The use of the Fed to peg nominal interest rates at artificially low levels, fine tune the yield curve, incentivize risk taking, monetize government debt, and inflate selected asset prices by allocating credit are deviations from sound money and free markets.
Right at the opening, there was a spike in the implicit interest cost to Italy of borrowing for two years (the yield on two-year bonds) to a euro-era record of around 8% - and then it fell back to 7.5% or so, which is where it was on Friday (which is still high).
The point is that Italy's bond yield - the implicit interest rate it pays - is unlikely to fall decisively below the catastrophically unaffordable 7% unless and until the eurozone demonstrates that there is a bailout facility (of some sort) that has sufficient resources to lend to Italy if investors refuse to do so.
However, if interest rates begin to rise toward their historical averages (the average yield on the 10-year note is 7.3%, vs. 3.4% today) investors may balk at rolling over their debt, which would increase our interest rate expenses and could bankrupt the country.
In a world where Federal Reserve zero-interest-rate policy has made it impossible to earn any real yield the 10-year Treasury rate is well below 2% on standard-issue bonds, the income payout on high yield bonds (the polite term for junk) is proving too hard to resist.
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