Treasury Bonds Rise on Lower Inflation Expectations - Essay Example

Summary

The paper "Treasury Bonds Rise on Lower Inflation Expectations" highlights that Ming Zeng writes about money and investing issues that include interest rates, global asset allocation and bonds in various locations in the US, though most of his work deals with fiscal matters in the US…

Download full paper File format: .doc, available for editing

GRAB THE BEST PAPER98.2% of users find it useful

Treasury Bonds Rise on Lower Inflation Expectations

Read Text Preview

Subject: Macro & Microeconomics
Type: Essay
Level: Masters
Pages: 2 (500 words)
Downloads: 3
Author: claudia33

Extract of sample "Treasury Bonds Rise on Lower Inflation Expectations"

“Treasury Bonds Rise on Lower Inflation Expectations” is copyrighted to Dow & Johns Company, and is available online on The Wall Street Journal website.

The article explores the current state of Treasury bond yields and prices in the US financial market. According to Zeng, the strengthening of the bonds is a sign that inflation has been tamed in the US market. As result, the Federal Reserve is not in a hurry to increase the interest rates, a factor that has highly boosted investor confidence (Zeng, 2014). The trading in the Treasury bonds has recorded little change in terms of yields. This is in addition to the fact that the prices of imported goods have also fallen. The article states that in the current US financial market, the prices of treasury bonds face no threats, a reason why investors are confident when investing in the bonds.

The goal of the author in this article is to explore the state of treasury bonds in the US market. The author wants to show the increased confidence of the investors, a depiction that it is the right time to invest in treasury bonds as inflation appears to have been tamed in the US financial market. To do this and to achieve the objective of showing that the current state of the US Treasury bonds has strengthened, the author analyzes the trading and yields from the treasury bond over the last couple of weeks to prove to the reader that the bonds have indeed strengthened.

Ming Zeng has been able to achieve his goal of showing that the prices of treasury bonds have strengthened. His success in attaining this goal is evident in the way he can clearly show the prices and the yields of the treasury bonds over the last couple of weeks to depict the trend and prove that they had strengthened. His conclusion that it is a good time for investors to put their money on the bonds is valid as he can use factual data from Tradeweb/WSJ Market Data Group to prove his point and the current state of the treasury bonds (Zeng, 2014).

In my opinion, the author uses an appropriate writing style as the article is straightforward to read. In addition to this, the author uses figures and data tables to help in passing the intended points. He also shows the prices and yields of the bonds, as well as all the other influencing factors in a clear way to help in the understanding of the article. Read More

Cite this document

APA
MLA
CHICAGO

(“Article Review Essay Example | Topics and Well Written Essays - 500 words - 26”, n.d.)
Retrieved from https://studentshare.org/macro-microeconomics/1667398-article-review

(Article Review Essay Example | Topics and Well Written Essays - 500 Words - 26)
https://studentshare.org/macro-microeconomics/1667398-article-review.

“Article Review Essay Example | Topics and Well Written Essays - 500 Words - 26”, n.d. https://studentshare.org/macro-microeconomics/1667398-article-review.

Cited: 0 times

CHECK THESE SAMPLES OF Treasury Bonds Rise on Lower Inflation Expectations

Analyzing the Yield Curve

om) Table 1: Yield on US treasury bonds with different maturities The reason why it's upward sloping is because the curve shows the expectations of the investors about future interest rates.... f the market considers that the government will be facing huge budget deficits, the investors will demand increasing compensation or required rate of return, as the supply of treasury bonds will grow to finance the budget which will push up the market interest rates for the long term as investors contemplate that the risk lies in the future....

2 Pages (500 words) Essay

Factors That Determine the Demand for Bonds

iv) Expected inflation: Expected inflation has an adverse impact on bond demand.... If there is an increase in expected inflation, bond demand will fall and vice versa.... Should policymakers again avert that fate, bond yiels may be primed for an explosive rise as fiscal spending plans and the expansion in money supply suggest inflation is the likely outcome”.... However, during booms since the threat of inflation looms large, it is a natural counteracting force to the possibility of overinvestment....

3 Pages (750 words) Essay

Finance and Accounting Risk Management

The yield curve graph gives a rapid way to evaluate and compare the yields that are offered by the different types of fixed income securities and also to find out the expectations of the investor for market conditions in the future.... The goals and the associated expectations depend on the arrangement of the monetary policy (Haubrich, 2004, p.... expect growth in the economy in the future and for this growth to lead to higher interest rates and higher inflation....

9 Pages (2250 words) Essay

Financial Markets and Forecasting Interest Rates

The Fed is making interest rates low, which means inflation and decreased bond yield, seeming like a bubble.... The worst thing, he says is that he cannot benefit from them to lower his monthly payments.... Interest rates, according to the Financial Times, have fallen back to historic lows, permitting companies, individuals, and some countries to borrow loans at a price lower than before.... n the same way that falling interest rates raise the bond prices by paying flat rates of interest, increasing rates eat into their value and push costs lower....

6 Pages (1500 words) Essay

Analysis of Unemployment and Inflation

Money supply in the economy can be expanded by lowering the interest or discounted rate, purchasing treasury bonds or other government loan securities earlier floated by the government into the economy or reducing reserve requirements of banks and other financial institutions.... Demand for loans comes from all types of borrowers, namely consumer borrowers, commercial or business borrowers and even from governments (say when governments float treasury bonds)....

15 Pages (3750 words) Essay

Bond Pricing and Fund Management

From the above curve, different treasury bonds with varying coupon rates have been accounted for.... They are broadly classified as the market segmentation theory and expectations theories, which are the preferred habitat theory, the liquidity premium, and the pure expectation theory.... Note that the bonds' yield curve is influenced by several factors among them the fiscal policies, inflation, economic conditions, tax policies, foreign exchange rates, expected forward rates, bonds' credit rating, and foreign capital inflows as well as outflows....

6 Pages (1500 words) Essay

Financial Markets and Institutions

treasury bonds have no default risk because they are government securities.... Lenders, therefore, attach an inflation premium, which is a payment for anticipated future inflation.... This paper outlines the ease or difficulty of forecasting Interest rates, why was the federal reserve created, strategy for the use of bonds- from the eyes of a financial manager.... Primary markets are those capital markets where stocks and bonds are issued to the public for the first time....

8 Pages (2000 words) Essay

Capital Market Assessment

A lower inflation rate makes the currencies rise in their value.... he yields and prices in the foreign exchange markets are affected by inflation differentials.... Depreciation of currency is observed where there is a high inflation rate.... The inflation rate, exchange rates, and interest rates are highly correlated, they affect each other, Humpage (2003, page 27).... he manipulation of the interest rates exerts influence on the exchange rates and inflation....

15 Pages (3750 words)