bond market dry up?

[dantonsen]

I just went into retirement savings to re-jig stuff today and noticed pretty much every provincial bond and federal bond has been bought up same with pretty much every canadian dollar denominated corporate bond.

The only things on the market are us dollar denominated bonds.

who here follows this stuff? I cant find anything in articles or the news besides bonds being used as collateral in repo loans with out having to actaully come up with the bond right awaybut deliver it later... Some sort of three way collateral lending scheme... the people who borrowed cant get the bonds to put up for collateral on money owed.

Where did the bonds go is what I want to know? Seems real weird, they just dried up.

[World Watcher]

They are preparing...

[jungleboy]

Originally Posted by World Watcher

They are preparing...

preparing for what? when the "SHTF" the bonds will be worthless as will money . We will be trading skins for barley . Or is that barley for skins?

[Sushi]

Are institutional investors and bond funds buying them up?

[Dik]

Haven't touched government issue since ..... ever. Well, 1982 anyway.

Buy five-star north-American corporate bonds. Typically these are companies that pay dividends.

PS. I think the bond ride is (almost) over but I have been saying that for about three years now.



Dick

[dantonsen]

Originally Posted by Dik

Haven't touched government issue since ..... ever. Well, 1982 anyway.

Buy five-star north-American corporate bonds. Typically these are companies that pay dividends.

PS. I think the bond ride is (almost) over but I have been saying that for about three years now.



Dick

I find it odd that everything is cleaned out besides us dollar bonds. When the us ten year was at 1.4% and canada at 1.7% a year or two ago there was plenty of fed and provincial stuff around.

It is very weird that people would buy all this stuff up and not sell it. Usually stuff is always for sale for a price.

Its like collateral or some one is getting called on to repay.

[raab]

I find it weird that people are buying bonds when interest rates are at 1.7%. If interest rates go up to even 5% those bonds are worthless to resell.

[avb3]

Originally Posted by raab

I find it weird that people are buying bonds when interest rates are at 1.7%. If interest rates go up to even 5% those bonds are worthless to resell.

Not worthless, but they would have an appropriate discount applied to them, and the owner would lose money.

Corporate bonds can get you 4-5%, just make sure they are rated high enough. Also look at preferred dividend paying stocks. They can get you a decent return, and with the tax advantage, it is worth considering.

As example, Scotiabank has not missed a dividend in some 80 years.

[Sneeze]

Originally Posted by avb3

Not worthless, but they would have an appropriate discount applied to them, and the owner would lose money.

Corporate bonds can get you 4-5%, just make sure they are rated high enough. Also look at preferred dividend paying stocks. They can get you a decent return, and with the tax advantage, it is worth considering.

There are not many if any Corporate Bonds that I would consider investment quality (A- or better) paying that rate of interest over a reasonable term.

Lots of junk stuff out there paying it - or companies very dependant on favorable government decisions in the near term.

Careful with Preferreds, the market saw the bond market drying up a while ago and a great deal of the preferreds have already priced in current interest rates.

So not so bad deals can be found with perpetual preferreds but they can act crazy.

The point of my post is there are very little quality investments available today at a fair price.

I believe the low inventory of quality bond products - Canadian specific - is because of a variation of the carry trade. Lower US interest rates means an institution can borrow money at a lower rate then the coupon on our bonds (Corporate or Government).

Add in the security of deep pockets that comes with Fed backing, a 0.5% spread on a few billion dollars - you get pretty decent rewards for not spending any of your own money.