It's the time to put up for sale..

Discussion in 'Financial Futures' started by bapunagar, Sep 27, 2006.

  1. Economists and Investors are anticipating that Fed Reserve will reduce the interest rates in next meeting. It will affect the bond market drastically.

    Now Investors are selling off Floating rate notes, whose Interest payments depend on the central bank policy and they are fascinating towards the fixed interest rate bonds.

    Floating rate notes will give better average returns than fixed rate bonds. But lower interest rates in the market are pushing the investors towards the fixed rate bonds. They are all buying fixed rate bonds, something they can get capital when the yields go down.
    If Fed Reserve reduces the interest rates, Floaters must be ready to bear the losses. Floaters who are enjoying the high average yields from long back need to sell their bonds before it leaves you with losses.