Bond Market Forecast Overview
Bond market forecast is primarily an approximation of interest rates of bonds in the succeeding year. Bond market forecast tries to predict the interest rates of bonds for short and long term. The bond market forecasts are based on the techniques of the stock market.
A significant number of the bond market forecasts are alterations of those made in the previous years. For example a bond market forecast of the year 2010 could be an adjustment of the bond market forecast of the year 2009. The bond market forecasts try to predict the upper and lower limits, between which the interest rate of bonds is supposed to move in a particular year.
The analysts use specific dates at times in order to substantiate their predictions. For example they might use a certain month from a year to demonstrate that the interest rate of the bond would not fall below the one that was in operation at that time.
The analysts are also able to predict the bond that might produce the maximum returns in the coming year. The analysts can also employ the trading tendencies of the investors to predict the interest rates of the bonds.
Bond market forecast are based on the techniques of the stock market & is done using 3 methods. They are fundamental analysis, technical analysis (charting) and technological methods.
Bond market yield curve
Bond market yield curve is one of the leading indicators of economic growth. The current steep bond market yield curve is a bullish economic sign. In particular, when bond investors anticipate economic growth and rising inflation, they bid up yields on the long bond and long bond prices fall. To short the long bond, exchange traded fund TBT can be bought.
Bond Market Observations
The financial analysts watch the trends of the bond markets. These observations form the basis of the bond market forecasts. Thus the bond market forecasts could be said to be more like deductions. The bond market forecasts are made in compliance with historical experiences.
10 Year Patterns
The 10 year patterns are important in the context of bond market forecasts. The financial analysts attach a lot of importance to the 10 year patterns, as they are important with regard to assessing the movements of the interest rates of bonds.
The long-term bond market is already showing serious signs of deterioration. If bond prices collapse we will see a spike in interest rates, which will give a MAJOR reality check to whatever imaginary economic recovery the pundits believe is currently underway.
Keep your eyes on the US debt markets. There is smoke there. And bonds, NOT stocks, may prove to be the big story of 2010.
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Last Updated on : 10th July 2013