The picture of financial market at the end of this year. Representatives of another country, who signed a contract on the central bank - buying bonds on the market (2009) - took part. The main argument for the launch of "printing machines" was published at the beginning with attention to increasing confidence and increasing the value of assets, which was achieved by increasing the amount of money spent in real terms.
The low interest rates in the new large bond buyer then enable even a quiet sleep for the state treasurers, despite the increase in the borrowing of countries. Backwards expectations can be on average averages. Some have missed the equation (lower in the lower middle layer, which does not have assets), while the other is with this political interest that needs to be done (European periphery in some developing countries). Fears that spillovers from financial to real economy will not be in a hyperinflation, they did not materialize.
It is true, however, that in the first two incentives these courses grew mainly due to monetary expansion. in 2017 the US Federal Reserve started lowering its bonds. The ECB has also confirmed that more plasma of fresh money has entered the market since January 2019.
All eyes where looking in the FedLast week (dec. 2018) . The President of the United States "chimed" that they should not raise interest rates. The market began to be included in the required yields of US bonds, which are less expected hoists. The shares followed, the rates fell by more than 10%.
What is a Bond
A bond is a fixed income instrument that represents a loan made by an investor to a borrower (typically corporate or governmental). A bond has an end date when the principal of the loan is due to be paid to the bond owner and usually includes the terms for variable or fixed interest payments that will be made by the borrower. 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.
Governor Feda Powel, despite the wind in the chest, raised the short-term interest rate to 2.5 percent. He also confirmed that he had lowered the bonds purchase on autopilot, and only on economic policy. However, it indicated a deterioration in economic indicators for the coming year in a message that the Fed is already on the lower range of neutral interest, which means that further increases are no longer as automatic.
Normalization in the market of interest rates is also a stock market, it has to find some new balance that can no longer be treated as painkillers. In this spirit, the current correction is not excluded, which should be used for everything that can save healthy savings in shares in equity funds.
