Bond Rates - Treasury vs Corp - Don't make sense

[MrMuppet]

I have more than an iota, but am still learning.

I was refering to mervyn rather than to you
What I was trying to say is that it's most often better to just to the trade with very small amount of money and document everything that comes along with it. The learning experience is much better and faster than pure study.

Honestly speaking I like that trade so much, I'm going to set it up, too

 

[mervyn]

I was refering to mervyn rather than to you
What I was trying to say is that it's most often better to just to the trade with very small amount of money and document everything that comes along with it. The learning experience is much better and faster than pure study.

Honestly speaking I like that trade so much, I'm going to set it up, too

Why wouldn't i refer to TR when you get your money back, coupon yield is coupon yield.

Anyway, the point is no corp yield would price below the Ts, even for AAPL. If you see the yield number is at odd, then check the bond price and do the math.

 

[albion]

%%
SAy SCHW gets the research right; even though i have found some serious errors in thier ETFs data[not daily errors but YTD, 3 ty, 10 yr+ IBKR volume ]. Fine with me if the bank regulators want to talk thier book+ sort of promote gov bonds as ''risk free''

Murray, is there any chance you could write using normal punctuation and grammar? Much of the time your writing is somewhat incoherent and difficult to decipher.

 

[murray t turtle]

Murray, is there any chance you could write using normal punctuation and grammar? Much of the time your writing is somewhat incoherent and difficult to decipher.

%%
YTD= year to date, 3 years + 10 years.
OK sorry\ you did not understand the point of bank regulators sort of talking their book + promote gov bonds??
If i could not figure that one sentence ''sort of sort of talking thier book'' ;I could google that sentence + find out .
3 years does make more sense than ''3ty'' or '' risk free'' Thanks

 

[SunTrader]

Downgrade US Treasuries??? You must be smokin' some good stuff!

The US Dollar, Currency, and Treasuries are as good as it gets for a store of value in this world.

Yup never ever happen!!!!!!!!!!!!!!!!!!!!!!

"The 2011 S&P downgrade was the first time the US federal government was given a rating below AAA."

https://en.wikipedia.org/wiki/Unite...11 S&P downgrade was,given a rating below AAA.

 

[leonel]

1. 037833DP2?
2. Also, I'm talking about the posted short-term (3, 6, 9mo) rates from Schwab in the screenie above.
3. How did you arrive at 11%?

He must be talking about the discount ($100-88.50=11.5). That works out to 1,91% each year if you divide it by six years. So overall, the yield to maturity on those Apple Bonds is around 4.11% - 4,5% with coupon included. I admit that perhaps my interpretation of his post is incorrect.

 

[mervyn]

He must be talking about the discount ($100-88.50=11.5). That works out to 1,91% each year if you divide it by six years. So overall, the yield to maturity on those Apple Bonds is around 4.11% - 4,5% with coupon included. I admit that perhaps my interpretation of his post is incorrect.

You don’t divide bond price by year, if the fed cuts rate next year, same bond price will go up to possibly 90ish. The point is T is the benchmark to price risk, normally no corp paper can be issued at lower yield that comparable Ts. If SVB can lose 9% on selling Ts, the investors can lose 11% liquidate on selling apple bonds.

 

[leonel]

You don’t divide bond price by year, if the fed cuts rate next year, same bond price will go up to possibly 90ish. The point is T is the benchmark to price risk, normally no corp paper can be issued at lower yield that comparable Ts. If SVB can lose 9% on selling Ts, the investors can lose 11% liquidate on selling apple bonds.

You don’t divide bond price by year, if the fed cuts rate next year, same bond price will go up to possibly 90ish. The point is T is the benchmark to price risk, normally no corp paper can be issued at lower yield that comparable Ts. If SVB can lose 9% on selling Ts, the investors can lose 11% liquidate on selling apple bonds.

Thanks mate!

 

[emporata]

Perhaps he doesn't have one iota of an idea about bond math and confuses total return with anual yield?


look @kmiklas, why don't you put on a relative value trade here? Whenever two instruments with different risk profiles have the same cashflow something is not right. Instead of trying to find out why that is the case, throw some money at it.

Find a way to structure a good risk/reward and go for it.
I mean, the 7-eleven 2year corborate bond yields 5%. I would easily spread that against 2y treasuries, the risk is basically zero.

Thanks for the idea. But basically what is the purpose of the spread if you can just buy bond and get 5% yields ? And what about spread risk which I suppose is not zero if for example 7-eleven file for bankruptcy then default could occur and the value of the bond might decline significantly.

 

[MrMuppet]

Thanks for the idea. But basically what is the purpose of the spread if you can just buy bond and get 5% yields ? And what about spread risk which I suppose is not zero if for example 7-eleven file for bankruptcy then default could occur and the value of the bond might decline significantly.

Leverage + convexity.

You could turn that safe 5% into an easy 30% on your account if you structure the trade correctly. And of course you'd buy government bonds and short 7-11. Corp. bond blow up would be your lotto