Bonds are not a real alternative in 2018. As rising interest rates depress prices, a sizaeble interest rate level should be awaited.
At some point it had to come. The recent collapse of stock markets just after the fifth week of the year raises the question of whether bonds in 2018 will rise again from the ashes.
When the rally of stocks comes to an end, actually offers a switch to interest rate securities. But first, a few cloudy days are a long overdue correction if necessary. And secondly, even 2018 bonds are not yet a real alternative.
Bonds remain 2018 not a real alternative
As an investor, you should wait until a decent interest level is reached again. After all, bonds are subject to their own dynamics: an increase in interest rates depresses the price of the outstanding securities. This can be more frustrating than offsetting stocks.
In any case, given the recent slump, the outlook for an unscheduled rate hike by the US Federal Reserve played a role. The reason for this was the unexpectedly pronounced wage growth in the USA. In order to counteract escalating inflation, interest rates are usually raised. But if money and credit become more expensive, this slows down economic growth. Higher interest expenses and wages are also denting corporate earnings. ...CONTINUE READING