There is a lot of turmoil in the equity/stock markets these days, but very few people pay attention to the bond market.
A bond is a fixed-income instrument that is a loan made by an investor to a borrower, typically corporate or governmental… It is a legal I.O.U. between the lender and borrower that includes the details of the loan and its payments. Bonds are used by companies, municipalities, states, and sovereign governments to finance projects and operations. Owners of bonds are debtholders, or creditors, of the issuer.
Did you know the bond market is 22% larger than the equity markets globally? With the speed which the FOMC increased rates recently, this put a tremendous amount of pressure on those “fixed rate” debt obligations and caused substantial loss in principal value.
On to the values comparison, thanks to www.visualcapitalist.com for the visuals this week!
Click on the visual to open in another tab so you can expand it…
Now for the bond value…
Click on the visual to open in another tab so you can expand it…