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

April 2015: An asset to avoid Government debt is so overvalued that negative yields have become common all over Europe. In the corporate-debt market, yields are still positive, but even these rates have fallen fast. Stay away.

See our view on all the major asset classes here.


Chart of the week: The only way is up for junk defaults

When interest rates finally start to rise, defaults are likely to pick up, with serious consequences for many investors in junk bonds.

When will the bond market bubble finally burst?

In their desperate efforts to find yields, investors have been gripped by bond mania. The big question, asks John Stepek, is when does it all end?

Could liquidity dry up in US Treasuries?

Declining liquidity in US Treasuries – the global ‘safe-haven’ asset – could have unpredictable consequences.

Switzerland gets paid to borrow

Switzerland has become the first country to sell ten-year government bonds with a negative interest rate.

Don’t sit on the sidelines – the stockmarket could double from here

There’s talk that central banks will loosen up what banks need to hold as reserves, says Bengt Saelensminde. That could send stockmarkets soaring.

The bond market keeps getting crazier – don’t get caught in the rout

Investors are clamouring to pay for the privilege of lending to the Swiss government. But as John Stepek explains, things could be about to get a whole lot crazier.

The assets to buy now – April 2015

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

The Bank of England is arguing about interest rates again

Two big hitters at the Bank of England disagree on where interest rates will head next. Who should you believe? Bengt Saelensminde explains.

Could Greece be the pin that pops the global bond bubble?

Risk in the eurozone will be cast in a whole new light if Greece is allowed to ditch the euro. John Stepek explains why that could be disastrous.

The big threat to bonds

Tighter rules governing banks’ bond holdings and debt-market activities could cause the next credit crunch.

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