Fixed income means investments that give you a set amount of money at regular intervals until they mature. When they mature, you get back the initial amount you invested. The most common types are government and corporate bonds.
Fixed-income trading strategies are when you invest in something that pays you a set amount of money regularly until it’s time to cash out. When you cash out, you get back what you initially put in. The most common fixed-income investments are government and corporate bonds.
What happens to stocks when bonds go up? Any stock investor or trader should have a basic understanding of the relationship between stocks and interest rates. Why? Because the interest rates influence investors’ risk appetite. When interest rates are high,…
Bond trading strategies are a great inclusion in a portfolio of strategies because they offer diversification and, most likely, uncorrelated returns. Bonds are complementary. First, you might want to have a look at other articles related to bond trading strategies:…
In 2022 the bond market experienced the worst drawdown in its history, and since then volatility has been off the charts. It seems like rates are moving like tech stocks did in 2000. Luckily, this can be seen through the…
Junk bonds are probably an asset class that very few traders are involved in. Junk bonds tend to correlate with the stock market, but junk bonds seem to trend more than stocks, which opens possibilities to make uncorrelated junk bond…
The US government bond market provides the most liquidity, security (in terms of creditworthiness), and diversity in the bond market. The 10-year T-Note futures is not just one of the ways to invest in the Treasury debt market but also…
20+ treasury bonds (TLT) show a significantly different performance depending on the day of the week. Is there any day of the week effect in TLT? Let’s test some day of the week strategies. Assume we start with an account…
Are there any monthly seasonalities in TLT? Yes, just like in stocks there are some strong and weak months. August is, by far, the best month. We are now entering the best month over the last 20 years in long-term…
What happens to stocks when interest rates go up? Our backtest reveals that when rates go up, stocks don’t perform well, just as the financial theory says they would. The cornerstone of the financial theory says that the higher the…
The relationship between stocks and interest rates is at the center of financial theory. Why? Because the interest rates determine the value of stocks. High rates equal less appetite for owning risky assets, and investors will only own risky assets…
The lower the interest rates, the more attractive it is to own risky assets like stocks, gold, and Bitcoin. This relationship is at the cornerstone of the financial theory. In this article, we do a backtest to look at the…
