Investing in bonds

Bonds involve investors loaning their money to an organisation (ie a government or a company), and receiving fixed interest payments over a set amount of time. They are traditionally seen as a safe investment, and a key part of a diversified portfolio.

Bonds have always been a popular investment for British investors, for while their value can fluctuate according to factors such as interest rates and inflation, they provide investors with a regular income.

At MoneyWeek, we'll keep you up to date with what's going on in the bond markets – and whether or not it's a good time to buy them.

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A beginner's guide to bonds

It's easy to become confused about bonds – the term covers a wide range of financial products. Here, Ed Bowsher explains the main types of bond.

How gilts work and why they matter

In this video, Ed takes a look at UK government bonds – how they work, why they are important, and whether you should invest in them.

How corporate bonds work

In his third video on bonds, Ed looks at how corporate bonds work, how risky they are, and whether or not they're a good investment for most people.


MoneyWeek bond watch

Government bond yields around the world started climbing again in Autumn 2010. This showed investors getting more jittery about a toxic mix of soaring state borrowings and rising inflation, and so demanding bigger returns as compensation.

Global ten-year sovereign bond yields

America's ten-year bond yield is arguably the world's most important market indicator: it sets the cost of global long-term borrowing. As with other government bond yields, it falls (prices rise) when economic growth and inflation decline, because the fixed income stream paid by sovereign debt becomes more valuable. Quantitative easing (central bank bond-buying) has lowered yields further.

But in mid-2012, yields bottomed, except in Japan where they've since followed suit. Economic growth is now reappearing, while inflation and state debt concerns are still present. A global bear market in bonds now looks a real possibility, led by US Treasuries. That would make borrowing more expensive everywhere.

Eurozone ten-year sovereign bond yields

On the edge of the eurozone, rising default fears have been sending peripheral countries' sovereign debt yields soaring. The rough line in the sand so far is 7% - when yields breach that, it looks like the point of no return.

How will this play out? Watch this page to keep a close eye on those yields - they're a great early warning indicator of trouble ahead.

Spanish and Italian three-year sovereign bond yields

Here's the chart of Spanish and Italian three-year bonds. As investors' fears about these countries' finances grew, yields spiked up sharply.


Bonds: the MoneyWeek view

June 2015: Eurozone complacency "Safe haven" government bonds may look unattractive, but the real madness lies elsewhere. Italian & Spanish ten-year bonds yield less than US Treasuries, and euro-denominated corporate bonds average under 1%. This looks like a big bet that if Greece defaults, the fallout won't spread.

See our view on all the major asset classes here.


Greece might be staggering towards the exit – but who’s next?

It looks like Greece’s time in the eurozone could be coming to an end. Chris Carter looks at who might be next to consider leaving.

The bond market is becoming dangerously volatile

If we are at the early stages of a bond bear market, says Tim Price, the implications for equity investors are worrying.

Lessons from the 'death bonds' debacle

‘Death bonds’ have recently run into trouble. John Stepek explains what they are, and what two lessons investors can learn from them.

A 'Minsky moment' is coming for global markets

In markets like these, investors’ complacency is matched only by their desperation. Anything could trigger a ‘Minsky moment’. John Stepek explains what it is, and how it could send markets crashing.

El Niño may topple bonds

Surprisingly, the El Niño weather phenomenon is often good for global growth, says John Stepek. And that means trouble for bonds.

Another reason to be wary of bonds – US workers’ wages are rising

US wages are on the rise. But what’s good for ‘Main Street’ isn’t always good for Wall Street. John Stepek explains why it could be bad for the bond markets.

Has Mario Draghi called the top of the bond bubble?

The ECB’s Mario Draghi has issued a warning to bond buyers. It’s just one more reason for investors to tread very carefully in the bond markets, says John Stepek.

The assets to buy now – June 2015

Asset allocation is at least as important as individual share selection. So where should you be putting your money? Here’s June’s take on the major asset classes

The one thing stopping the bond bubble from bursting

All the conditions are set for the bond bubble to burst, says Merryn Somerset Webb. All we need now is for central bankers to come to their senses.

Is the bond bull market over?

Government bonds may be overpriced, but there’s life in the bubble yet.

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