Andrew Stolz
AUGUST 4, 2020
Definition of Risk-Free Rate. The risk-free rate is the minimum rate of return on an investment with theoretically no risk. Government bonds are considered risk-free because technically, a government can always print money to pay its bondholders. Treasury Bill. 10-Year U.S.
Musings on Markets
JANUARY 27, 2022
Put simply, no central bank, no matter how powerful, can force market interest rates down, if inflation expectations stay low, or up, if investor are anticipating high inflation. Note that the decrease in default spreads, at least for the lower ratings, mirrors the drop in the implied equity risk premium during the course of 2021.
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Musings on Markets
JANUARY 24, 2024
In my last post, I looked at equities in 2023, and argued that while they did well during 2023, the bounce back were uneven, with a few big winning companies and sectors, and a significant number of companies not partaking in the recovery. The Fed Effect: Where's the beef?
Musings on Markets
MARCH 25, 2021
The first quarter of 2021 has been, for the most part, a good time for equity markets, but there have been surprises. The first has been the steep rise in treasury rates in the last twelve weeks, as investors reassess expected economic growth over the rest of the year and worry about inflation. for 2021 and inflation of 2.2%
Musings on Markets
JANUARY 30, 2023
If 2022 was an unsettling year for equities, as I noted in my second data post, it was an even more tumultuous year for the bond market. As a result, treasury bond investors faced one of their worst years in history, losing close to a fifth of their principal, as bonds were repriced.
Musings on Markets
JANUARY 19, 2022
In a post at the start of 2021 , I argued that while stocks entered the year at elevated levels, especially on historic metrics (such as PE ratios), they were priced to deliver reasonable returns, relative to very low risk free rates (with the treasury bond rate at 0.93% at the start of 2021). The year that was.
Musings on Markets
OCTOBER 4, 2023
The Markets in the Third Quarter Coming off a year of rising rates in 2022, interest rates have continued to command center stage in 2023. At the start of October, the ten-year and thirty-year rates were both approaching 15-year highs, with the 10-year treasury at 4.59% and the 30-year treasury rate at 4.73%.
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