Why do corporate bonds prices change even when Fed interest rates remain unchanged? - corporate bond prices
Supply and demand is good, but there are many factors that affect supply and demand.
If the information changes the perception of risk in a corporate bond is) the price (and performance will change. If you've heard that the proceeds from the sale of a company is currently the cause of cancer from the view that society has changed dramatically and their ability to repay the loan is likely to change. This is reflected in the price of the bond and that bond yields.
If a company is a large amount of new debt, then the debt or obligation is on the increase in supply will reduce prices too. The major credit rating agencies should monitor these things and for their recommendations for the ability of companies to sufficient cash to pay its creditors to generate. Sometimes events occur can react faster than the rating agencies. Events with some of these subprime lenders rank, is a current example.
Corporate Bond Prices Why Do Corporate Bonds Prices Change Even When Fed Interest Rates Remain Unchanged?
1 comments:
Please do not confuse the Fed (Federal Reserve System), which the central government agency to monitor and control the supply of money here in the United States, companies and bond companies. Public service companies, municipalities, counties, and a variety of state and local governments to sell bonds to the public, so expect they think of the market. Companies that are publicly owned, and will not sell shares in the capital often sell bonds as a way to make money. Depending on the credit quality and the nature of the activity of the company however the link to a very high or very low interest rates. For example, you probably want a very high interest rates in a company that is forging anvil to invest. You may also be willing to pay a higher interest rate low for a company that chip is only for I-phone to accept.
In addition, you will see the U.S. Treasury notes are classified as very low risk, trading at rates that are different from those published "Fed" rate of exchange. TreasurerBanknotes and up and down with the market depending on how much money flows into (or from) the market at any given time. As more money flows into the coffers of the United States (and) are generally outside the stock exchange, the rate goes up to Treasury. How to move the money rate, the Finance Ministry over backwards in an attempt to bring the money in.
A brief word about the Federal Reserve. The work of the Fed is telling banks the amount of "cash" should have on hand at all times, and it controls the money supply. If they believe that the economy is moving in a direction that they want to have the banks can lend more money and less cash reserve. If you do not like the direction of the economy, say the banks (their cash to increase reserves and does not immediately). Banks, of course you can not build a reserve of cash immediately, so that the U.S. Federal Reserve (Fed) at which banks can borrow from the Fed before they can build their own reserves set at appropriate levels. So while everyone is focused on the Fed as a reference point, the Fed has little to do wior bond prices.
Hope that helps a little.
Post a Comment