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  3. Government bond markets are supposed to be the accountants of the financial world: calm, steady and rational. They are not suppo

Government bond markets are supposed to be the accountants of the financial world: calm, steady and rational. They are not suppo

admin2018-06-06  65
问题     Government bond markets are supposed to be the accountants of the financial world: calm, steady and rational. They are not supposed to frighten the horses. But in the days following June 7th, bond investors had a traumatic experience. The yield on the ten-year Treasury bond rose from 4.96% that day to reach 5.33% during trading on June 13th before closing just below 5.2%. What makes the slump in bond prices all the odder is that Treasury bonds are normally regarded as the risk-free asset, the one that investors buy when they are really worried. What could have prompted the sell-off?
Inflation
   One thing that could cause investors to flee government bonds would be an unexpected rise in inflation. Higher inflation devastates the value of fixed-income assets, as investors found to their cost in the 1970s. But this does not look like an inflation scare. Real yields have caused the vast bulk of the move: inflation expectations have moved up by only around a tenth of a percentage point.
Strong Growth
   Investors may well have decided that American growth will be stronger than they had previously expected. But, in the absence of inflation, faster growth need not be bad for government bonds: higher tax revenues will make it easier for the government to service the debt. Alternatively, unexpectedly strong growth ought to be good news for equities, yet the stock market has also fluctuated wildly.
Rate Cuts
   Another potential explanation is that the markets have given up on rate cuts from the Federal Reserve this year. But the futures market suggests this hope has been dwindling for some time. Global monetary policy is generally being tightened. However, this should not necessarily be bad news for long-dated bonds, if investors believe(as they seem to)that central banks will be successful in containing inflation.
   This suggests that economic fundamentals may not be the primary cause for the sell-off. Big market moves like this tend to occur when investors shift their positions in a hurry. In this case, it looks as if some bond bulls decided to throw in the towel.
Hedging Behavior of the Mortgage Issuer
   The hedging policies of mortgage issuers may also have played a part. Because most Americans have fixed-rate mortgages, issuers find they tend to get repaid early when bond yields fall: they hedge this risk by buying Treasury bonds. When rates rise, borrowers are far less likely to repay: that causes mortgage issuers to sell their bonds. The effect can be to exacerbate short-term moves in bond prices.
Asian Central Banks
   The big question, however, is whether Asian central banks have lost their appetite for American Treasuries. Part of the reason for the rise in yields was a disappointing auction of ten-year bonds, with foreign investors buying just 11% of the issue. Asian central banks had been buying Treasury bonds with their foreign-exchange reserves in an attempt to prevent their currencies from appreciating too rapidly against the dollar. Some analysts have estimated that these purchases had pushed bond yields between a half and a full percentage point below the level they would otherwise have reached.
   The result was that yield curves were "inverted"—long yields were below short-term rates. When he was Fed chairman, Alan Greenspan described this state of affairs as a "conundrum": such curves had traditionally been a harbinger of recession, but perhaps Asian central bank policies meant this signal was no longer valid.
   Whoever has been selling Treasury bonds, the result is that the conundrum has disappeared: yield curves are now sloping upwards.
Which of the following statements is NOT true about Americans’ hedging activities?
选项 A、Borrowers tend to hedge risk by buying Treasury bonds when bond yields fall.
B、Borrowers are far less likely to repay when rates rise.
C、Mortgage issuers hedge risk by selling their bonds when rates rise.
D、Mortgage issuers hedge risk by buying bonds when rates rise.
答案D
解析
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