Wednesday, January 7, 2015

10-year bond falls below 2%, appears close to major crash

Unlike the failing economies in Europe who saw their bond offerings skyrocket towards six, ten, twenty percent when they encountered a default event, the U.S. bond market is becoming a safe haven for investors in not just the U.S., but also around the world.  The best way to see how much real volume a bond has is to watch the interest rate rise or fall.  If more people are buying bonds, then the interest received at the end of that term is smaller, while if fewer people are buying bonds (Demand), then the interest received at the end of the term is greater.

Ie… few people were willing to buy bonds from Greece, Italy, Spain, Argentina, or Venezuela despite the potential of higher interest because the risk involved for a country close to default is much greater.

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