1. ANDREW CARUSO, NICOLE LANGE. TOM TRESHOCK, RYAN TOM QF 102 SECTION B
10 YR GOV. BOND YIELDS 2016
ANDREW CARUSO, NICOLE LANGE. TOM TRESHOCK, RYAN TOM
QF 102 SECTION B

2. 10 YEAR GOV BOND YIELDS YIELD BONDS = SAFE INVESTMENTS
YIELDS AND PRICES ARE INVERSELY RELATED
Buying
Current Price
Selling
Andrew
A COUPLE THINGS TO REMEMBER WHEN WORKING WITH BONDS ARE THAT, FIRST
BONDS ARE STABLE INVESTMENTS

3. Andrew
HERE ARE THE 4 YIELD CURVES WE RESEARCHED AND HOW THEY WERE AFFECTED BY 3 MAJOR EVENTS iN 2016

4. BREXIT
POST-LEAVE RUSH
BORING BONDS > RISKY STOCKS
Tom

5. BOJ AIMS FOR 0% YIELD JAPAN HOLDS 0% YIELD FOR THE REST OF 2016
THE BANK OF JAPAN OWNS 35% OF JAPANESE GOVERNMENT BONDS
SEPT 21: JANET YELLEN ANNOUNCES THE FED WILL WAIT UNTIL AFTER THE ELECTION TO RAISE RATES
Nicole
Japan: wanted to keep yields close to zero, would adjust or buy bonds to keep it at this level, after struggling with negative rates as a result of deflation
After this, 10yr rates jumped and then fell Same day fed announced
Fed won’t change rates on September 21, according to WSJ this cause yields to drop

6. US ELECTION PEOPLE RUSH TO STOCKS BOND PRICES GO DOWN. YIELD UP
LARGEST GAP BETWEEN US AND GERMAN BONDS SINCE THE REAGAN ADMINISTRATION
ROASTY
YIELDS UP, PROMISE OF 4% GDP GROWTH, fiscal stimulus, tax cuts and infrastructure spending->boost american economy (INVEST IN AMERICA), Fed return monetary policy to more “normal” levels by RAISING rates from the 0.5% TO ABOUT 3%
Germany = NOT AFFECTED BY US ELECTION LEADING TO THE LARGEST YIELD BETWEEN THE US AND GERMAN BONDS SINCE THE 1980s
TARGET 4% GDP GROWTH

7. WHY THIS IS IMPORTANT
BONDS MAKE UP THE LARGEST FINANCIAL MARKET US BOND MARKET = $30 T SOVEREIGN BOND MARKET = $80 T
YIELDS AFFECT THE PRICING OF OTHER ASSET CLASSES
YIELD CURVES PROVIDES INSIGHT INTO FUTURE ECONOMIC ACTIVITY AND INTEREST RATES. AC
OVER 30 TRILLION DOLLARS
2. YIELDS AND INFLATION AFFECT THE PRICING OF OTHER ASSET CLASSES
(ie. STOCKS, REAL ESTATE etc.)
3. UNDERSTANDING THE YIELD CURVE CAN HELP MAKE YOU MAKE EDUCATED FINANCIAL DECISIONS IN YOUR OWN PORTFOLIO

8. SOURCES