Yes, but they were guaranteed by the government in 2008, after that the government's hands were effectively tied. If they had of burned the bond holders subsequently then the credibility of Irish government to pay its debts would be gone and they wouldn't have been able to get the 20 billion from the bond markets at such low interest rates in 2020 for covid lockdowns
Government Bonds
- Thread starter BIG-notorious
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Thanks for the great recommendation. I listened to that one and a couple of subsequent ones and it's an indication of how topsy turvey and out of control the world economy has become under Trump's disasterous and illiterate (anti)economics and McWilliams was insightfully calling all this back in January well before "Liberation Tuesday"
I see this iran war while causing a sell off in stock markets is also causing a sell off in the bond markets, $2.5 trillion has already been wiped off the value of global bonds.
BEcause the oil shock is inflationary just like covid and the ukraine invasion bonds are not the safe havens they were believed to be.
Irish government bonds maturing in 2031 are back at 86% of their par value so if you sold them now you would only get €86 for every 100 invested. Its been a bad decade so far for bond investors
BEcause the oil shock is inflationary just like covid and the ukraine invasion bonds are not the safe havens they were believed to be.
Irish government bonds maturing in 2031 are back at 86% of their par value so if you sold them now you would only get €86 for every 100 invested. Its been a bad decade so far for bond investors
COVID in 2020 was deflationary. There was a recession and mild deflation in 2020.
Yes, after COVID, the UKR invasion was inflationary.
Bonds are not risk-free, unless held until maturity.
Yeah, even the 30 year (3.15% Treasury Bond 2055) bonds issued last year are trading at 88% of par.
Things in the UK are much worse too - but good times for someone that's considering guaranteeing some of their retirement income via an annuity. As of last week, a single life, 3% escalation, 5 year guarantee annuity in the UK was providing a 65 year old with £5,781 annual income - and this rate will have rose further this week. A person purchasing an annuity 5 years ago would have needed more than 50% extra funds to purchase the same level of income.
Things in the UK are much worse too - but good times for someone that's considering guaranteeing some of their retirement income via an annuity. As of last week, a single life, 3% escalation, 5 year guarantee annuity in the UK was providing a 65 year old with £5,781 annual income - and this rate will have rose further this week. A person purchasing an annuity 5 years ago would have needed more than 50% extra funds to purchase the same level of income.
Well, a different type of risk, but there's still a risk
That was the theory that it would be delationary but it was anything but deflationary, there was a brief period where the expectation was that property prices would fall. But because the housing market was effectively closed and building stopped due to lockdowns it caused a huge pent up demand, so the brief deflationary pressure never actually materialised
That same bond now down to 85% of their par value, there is another 2031 bond maturing bond that is trading at 92% of its par value but that has a higher coupon rate. All those government bonds issued at very low or 0% interest rates during covid have turned out to be terrible investments. Yes as has been pointed out you get your money back at maturity but 100 euros in 2021 is only worth maybe 50 or 60 euros by 2031 with the large inflation we have been having this decade.
Yes but it has returned 50% since 2021, you get back 150 euros for every 100euros invested in 2021, with that 2031 government bond you only getting 85euros at market now, that is not good.
I really don’t know what you are talking about.
Irish 10-year government bonds are currently yielding around 3.4%. If you bought and held that bond to maturity, that’s what you would earn (assuming no default).
Will a fund that tracks the MSCI World index beat that return over the next 10 years?
Quite possibly but nobody knows for sure.
Irish 10-year government bonds are currently yielding around 3.4%. If you bought and held that bond to maturity, that’s what you would earn (assuming no default).
Will a fund that tracks the MSCI World index beat that return over the next 10 years?
Quite possibly but nobody knows for sure.
They were yielding nothing in 2021 thats why they are now trading at 85% of par value, they were a terrible investment and i do know what i am talking about.
The bonds are now yielding 3.4% yes because the market now demands that interest rate and the interest rate will rise again probably due to rising inflation, that is why those 2021 bonds are now trading at 85% of par because their coupon interest rates were so bad, they have deflation baked in until 2031.
I mean, how could anyone expect a bond issued at 0% interest to be a good investment?
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So, you are telling us that, with the benefit of hindsight, bonds turned out to be a poor investment in 2021.
You could just as easily say that, with the benefit of hindsight, equities turned out to be a poor investment at the end of 1999.
It’s equally meaningless and tells us nothing about future returns.
You could just as easily say that, with the benefit of hindsight, equities turned out to be a poor investment at the end of 1999.
It’s equally meaningless and tells us nothing about future returns.
I believe joe sod is talking about holding the bond from issuance to maturity. Paying €100 to receive €100 in ten years is never going to be a "good" investment, at best it will be as good as cash. And holding €100 of cash doesn't have the risk of falling in value/price like a bond can.
JoeRoberts
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He is saying his fund may already have the bond bought at issuance date. Today the value is 15% down. There was never an upside opportunity