Issues in the News
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.
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.
What is Quantitative Easing?
The Federal Reserve's quantitative easing policy has been one of the most important factors driving financial market performance in recent years. Find out what quantitative easing is, and the differences between QE1, QE2, and QE3.
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.
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.
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 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?
Long-Term Bond Market 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.
Current Federal Reserve Policy: A Layperson’s Explanation
Learn about all aspects of the Federal Reserve's current policy regarding interest rates and the stimulus policy known as "quantitative easing," and find out what would lead to a change in Fed's policy.
Stocks and Bonds, Year by Year Performance
Find out the annual total return for both bonds and stocks in each calendar year from 1980 through 2011, together with their total returns for the full period. Which asset class delivered the better performance, stocks or bonds?
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 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...
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...
What is the Debt Ceiling? A Simple Explanation of the Debate and Crisis
Find out how the debt ceiling works, and how the debt ceiling debate could impact financial market performance in the months ahead. The debt ceiling, or debt limit, is the maximum amount that the U.S. Treasury can borrow to fund government spending.
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 Flight to Quality?
Investors often hear the terms "flight to quality" or "flight to safety." What is the flight to quality, and how does it affect the bond market?
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...
What is the Debt to GDP Ratio?
A country's debt-to-GDP ratio measures the size of a country's debt load relative to its gross domestic product. Learn more about what the debt-to-GDP ratio is, why a manageable ratio is essential, and how the debt-to-GDP ratio can affect bond yields.
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?