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Play in the bond market | type of risk of bonds

When most people come into contact with bonds, they have the idea of "I have debit, can't money get away with it". But the practice shows that there are a lot of investors who have overturned their cars in the bond market.

"all neglect of risk only depends on the return of the operation is to play hooligans" is the truth of countless creditors and investors after a long period of great joy and sorrow. Bond investment is no exception, since there is a proud return on bank deposits, it is bound to be accompanied by ups and downs.

Why did bond prices fall? This article will answer your doubts about risk. Follow the cow Ollie!

In general, the risk of bonds comes from interest rate changes, reinvestment, macro-level and corporate credit default.

1. Interest rate risk: the ancestor of ten thousand "evil"

In the past, FUTU BULL repeatedly nagged that the root cause of the impact on bond prices was the change in market interest rates. If you still have "bond interest rates can still float?" "this little white doubt, FUTU BULL suggested looking back at the" bond price "to consolidate.

There is a negative correlation between market interest rates and bond prices. In short, bond prices fall when interest rates rise. If you happen to experience a rise in market interest rates while you are holding a bond, the bond in your hand has already lost its par value. Under the restlessness of market interest rates, the promise of making money is gradually moving away, and the hustle and bustle are all of the savings users, and the hearts of the people in debt are broken all over the place..

Of course, if market interest rates fall, investors can wait for attractive spread returns. That is why bond markets have strengthened in the last two years-the global cycle of interest rate cuts, with governments adopting loose monetary and fiscal policies that have led to lower interest rates, thus driving the bond market down.

Interest rate risk is the root of ten thousand "evil" because it always comes out with a group of younger brothers-reinvestment risk, macro risk, and so on, trying to deceive you of your returns.

2. Reinvestment risk: the cost of changing your mind

The so-called reinvestment risk is in the context of lower market interest rates, the return on reinvestment is lower than the income of the original product, so the loss.

It's like you hoarded a bunch of cosmetics during the discount and sold it at a high price after the discount. At this point you suddenly want to buy another for your own use, but by this time there are no low-cost products on the market to start with.

Now FUTU BULL has two products: A: Yesone hundred and eighty. The annualized rate of return is7%;B: Yesninety. The annualized rate of return is also7%. Which one would you choose?

B seems more attractive. Because under ideal circumstances, B withdraw the principal and interest when it expires and buy another one. B Products, funds are more flexible. That's quite witty..But if you take out the principal and interest, you find that there is no such thing in the market. 7% The above products can be invested, is it to take the wrong way and sad?

3. Macro risk: an inescapable behemoth

Since there are ambitions for Nuggets around the world, they must bear the blow from all over the world. In complex capital markets, a bat can trigger a global collapse, and some macro risks affect all asset allocation.

Examples one: FUTU BULL wants to sell the bonds at high prices now, but in the short term there is no buyer willing to offer a reasonable price.

Only if you sell it at a low price or miss this point in time can someone be willing to pick up the offer?

Examples two: Cattle and cattle are getting the aging rate for buying 5%. The company is complacent about its corporate debt, but finds that this year's inflation rate is 5%. Is it not that interest payments have been eroded by inflation.

Examples three: Cattle and cattle use RMB to buy dollar bonds, and when they sell them, they get stuck in trouble-the exchange rate is constantly changing, and when will they recover and make more money?

This cow is miserable and has been destroyed by "liquidity risk", "inflation risk" and "currency risk" respectively. As ordinary creditors who can not control the overall situation, they should pay more attention to market hotspots to speculate on the future trend, close their eyes to invest for a while, and lose money to come to the crematorium.

4. Company default: scum male haunt warning

Among the many risks, "credit risk" is the most speechless, originally easy to borrow to repay both sides, but there are always issuers taking the risk of being punished to play scoundrel, not paying interest or repayment on time, resulting in losses to investors.

Of course, corporate credit risk can be avoided, credit rating agencies through the rating of bonds, to prompt its default risk. FUTU BULL will introduce this "thunder" artifact in detail in subsequent articles.


People who are really not afraid of risk are those who have spectrum in their hearts, grasp hot spots in real time and have psychological expectations before they invest. To be vigilant, to think is to be prepared, to be prepared.

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