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The bond market has largely been dominated by the United States, which accounts for about 39% of the market. As of 2021, the size of the bond market (total debt outstanding) is estimated to be at $119 trillion worldwide and $46 trillion for the US market, according to the Securities Industry and Financial Markets Association (SIFMA). [1]
The 1994 bond market crisis, or Great Bond Massacre, was a sudden drop in bond market prices across the developed world. [ 1 ] [ 2 ] It began in Japan and the United States (US), and spread through the rest of the world. [ 3 ]
There is a time dimension to the analysis of bond values. A 10-year bond at purchase becomes a 9-year bond a year later, and the year after it becomes an 8-year bond, etc. Each year the bond moves incrementally closer to maturity, resulting in lower volatility and shorter duration and demanding a lower interest rate when the yield curve is rising.
The Frankfurt Bond Market, 1988. A bond index or bond market index is a method of measuring the investment performance and characteristics of the bond market.There are numerous indices of differing construction that are designed to measure the aggregate bond market and its various sectors (government, municipal, corporate, etc.)
Trading on the United States bond market also ceased; the leading government bond trader, Cantor Fitzgerald, was based in the World Trade Center. [4] The New York Mercantile Exchange was also closed for a week after the attacks. [5] The Federal Reserve issued a statement, saying it was "open and operating.
A bond vigilante is a bond market investor who protests against monetary or fiscal policies considered inflationary by selling bonds, thus increasing yields. [ 1 ] In the bond market , prices move inversely to yields.
The money market is a component of the economy that provides short-term funds. The money market deals in short-term loans, generally for a period of a year or less. As short-term securities became a commodity, the money market became a component of the financial market for assets involved in short-term borrowing, lending, buying and selling with original maturities of one year or less.
Market value CDOs are longer-established, but less common than cash flow CDOs. Motivation—arbitrage vs. balance sheet. Arbitrage transactions (cash flow and market value) attempt to capture for equity investors the spread between the relatively high yielding assets and the lower yielding liabilities represented by the rated bonds. The ...