Issues in the News
Current Federal Reserve Policy: A Layperson's Explanation
Learn about all aspects of the Federal Reserve's current policy regarding interest rates and quantitative easing. What would lead to a change in Fed's policy?
An Explanation of Fed Tapering and its Impact on the Markets
A definition of "tapering," along with a simple explanation of why the prospect of tapering frightens the markets so much.
What is the Federal Funds Rate?
The federal funds rate – typically referred to in the press as “the fed funds rate” – is the rate at which banks with balances on held at the Federal Reserve borrow from one another an overnight basis. How does the fed funds rate work, and what is its impact on the economy?
What is the Discount Rate?
Find out how the Federal Reserve's discount rate works, the impact of the discount rate on the economy, and how the discount rate differs from the fed funds rate.
What is Quantitative Easing?
A layperson's explanation of the Federal Reserve's quantitative easing policy, the differences between QE1, QE2, and QE3, and how quantitative easing has affected the financial markets.
2013 Bond Market Outlook
A lay person's guide to the 2013 bond market outlook, including predictions, expert opinions, and a rundown on the key factors likely to impact bonds' performance. The most important aspects of the 2013 bond market outlook: low yields, higher volatility, and lower total returns than investors have become used to in recent years.
Is There a Bond Bubble?
Is there a bond bubble? Find out what the bond bubble is and what would a bursting bubble might mean for your portfolio.
What is Operation Twist?
“Operation Twist” is a program conducted by the U.S. Federal Reserve to help stimulate the economy. Learn more about the basics of Operation Twist and its impact on the U.S. bond market, as well as the details behind the Fed's June 20 decision to extend Operation Twist for another six months.
When Will the Fed Raise Rates?
When will the Fed raise rates? That's the question on all investors' minds given the role Fed policy has played in the performance of both stocks and bonds. Get the layperson's explanation of why rates are so low, what it would take for the Fed to raise rates, and what higher rates would mean for your portfolio.
Why Are Yields So Low?
Yields on government bonds and short-term investments have fallen to extremely low levels in recent years, punishing those who are investing for income. Find out why yields are so low, and what you can do about it.
The Difference Between Fiscal Policy and Monetary Policy
How do fiscal policy and monetary policy differ, and what impact can they have on your investments?
The Difference Between Deflation and Disinflation
Deflation vs. disinflation: the difference between the two, and what each means for the economy and financial market performance.
Stocks vs. Bonds: The Long-Term Performance Data
Find out how bond market performance compares to stocks in the past ten years, and learn which segments of the bond market provided the best returns. The historical bond market performance data tells an interesting story about the importance of bonds in portfolio diversification.
The Monthly Jobs Report and its Impact on the Bond Market
On the first Friday of every month, the U.S. Labor Department reports key employment data - including the unemployment rate - in its monthly jobs report. Of all the economic reports released each month, the jobs report has the largest impact on the bond market. Find out why bond yields are so sensitive to the jobs report, and what it means for...
Historical U.S. Treasury Yield Charts
See the long-term, historical yield charts for 2-year, 5-year, and 10-year U.S. Treasuries, together with a brief description of the forces influencing Treasuries' yield movements over time.
What is the Great Rotation?
The term “Great Rotation,” which came to prominence in late 2012, refers to the widespread prediction that record-low bond yields will prompt investors to rotate out of bonds and into stocks in the years ahead. Is the Great Rotation a legitimate concern?
What is the Debt Ceiling? A Simple Explanation of the Debate and Crisis
A simple explanation of the debt ceiling debate and crisis: Find out how the debt ceiling works, and how the debate could impact financial market performance.
What is the Fiscal Cliff?
"Fiscal cliff" is the term used to describe the dilemma U.S. lawmakers will face at the end of 2012: cut the deficit but potentially hurt economic growth, or adopt growth-oriented policies that would add to the United States' current deficit problem. Learn more about what the fiscal cliff is, its potential impact on the U.S. economy, and how it...
What is the European Debt Crisis?
The European debt crisis, which began in late 2009, is the shorthand term for the region’s struggle to pay the debts it has built up in recent decades. This is one of most important issues facing the world economy, but it is also one of the hardest to understand. Here is a Q&A to help familiarize you with the basics of, and outlook for, the...
U.S. Treasuries: No Longer a AAA-Rated Investment
In 2011, the rating agency Standard & Poor's downgraded U.S. debt from AAA to its second-highest rating, AA+ amid the rancor related to the debt-ceiling debate. Find out the details of S&P's downgrade and its surprising impact on U.S. Treasuries.
What is the Debt to GDP Ratio?
Learn what the debt-to-GDP ratio is, why a manageable ratio is essential, and how the debt-to-GDP ratio can affect bond yields.
Who are the Largest Foreign Owners of U.S. Debt?
The largest foreign investor in U.S. Treasuries is currently China, but that may be about to change. Find out how much of the United States' debt is owned by foreign countries, what countries own the most U.S. debt, and how their holdings in U.S. Treasuries have changed in the past year.
How Much U.S. Debt Does China Own?
China owns a large, and growing, percentage of the United States' debt. How large is China's position in U.S. Treasuries, and does it matter?
Why China Will Buy Fewer U.S. Treasuries in the Years Ahead
China is the largest buyer of U.S. Treasuries, but changes in China's economy may change that. What are the implications for the U.S. bond market?
What is the Flight to Quality?
What is the flight to quality, and how can you profit when it takes place?
Elections and Bond Market Returns
Election results can have a meaningful impact on bond market performance. Find out how politics have affected bonds in the past, and what outcome the 2012 elections may have on bond market returns.