Fixed Income 101: Understanding bond yields and prices
Bond prices and yields move inversely to each other – as a bond’s price falls, its yield rises, and vice versa.
Bond yields and prices shift constantly in response to market forces: interest rate expectations, the credit quality of the issuer, and evolving supply and demand conditions.
Fixed Income 101: Roll-down
Roll-down is the capital gain created by the natural fall in a bond’s yield as it approaches maturity. As a fixed income investor, it is probably the most you will ever get paid for doing nothing.
Fixed Income 101: Trading ABS and CLOs
Bids Wanted in Competition (or BWIC) lists are a unique characteristic of the ABS and CLO markets, where they are widely used in secondary trading when investors are looking to sell bonds.
Fixed Income 101: Hedging currency risk
Hedging currency or foreign exchange (FX) risk is a key decision for any manager running a diversified fixed income portfolio. Currencies are inherently volatile, so whether and how FX risk is managed can have a material impact on a portfolio’s risk and return profile.
Fixed Income 101: Understanding bond duration
Duration is often said to measure a bond’s sensitivity to changes in interest rates, because it describes what is likely to happen to a bond’s price for a given change in the bond’s yield.