ANDREW CARUSO, NICOLE LANGE. TOM TRESHOCK, RYAN TOM QF 102 SECTION B 10 YR GOV. BOND YIELDS 2016 ANDREW CARUSO, NICOLE LANGE. TOM TRESHOCK, RYAN TOM QF 102 SECTION B

10 YEAR GOV BOND YIELDS YIELD BONDS = SAFE INVESTMENTS YIELDS AND PRICES ARE INVERSELY RELATED Buying Current Price Selling Andrew A COUPLE THINGS TO REMEMBER WHEN WORKING WITH BONDS ARE THAT, FIRST BONDS ARE STABLE INVESTMENTS

Andrew HERE ARE THE 4 YIELD CURVES WE RESEARCHED AND HOW THEY WERE AFFECTED BY 3 MAJOR EVENTS iN 2016

BREXIT POST-LEAVE RUSH BORING BONDS > RISKY STOCKS Tom

BOJ AIMS FOR 0% YIELD JAPAN HOLDS 0% YIELD FOR THE REST OF 2016 THE BANK OF JAPAN OWNS 35% OF JAPANESE GOVERNMENT BONDS SEPT 21: JANET YELLEN ANNOUNCES THE FED WILL WAIT UNTIL AFTER THE ELECTION TO RAISE RATES Nicole Japan: wanted to keep yields close to zero, would adjust or buy bonds to keep it at this level, after struggling with negative rates as a result of deflation After this, 10yr rates jumped and then fell Same day fed announced Fed won’t change rates on September 21, according to WSJ this cause yields to drop

US ELECTION PEOPLE RUSH TO STOCKS BOND PRICES GO DOWN. YIELD UP LARGEST GAP BETWEEN US AND GERMAN BONDS SINCE THE REAGAN ADMINISTRATION ROASTY YIELDS UP, PROMISE OF 4% GDP GROWTH, fiscal stimulus, tax cuts and infrastructure spending->boost american economy (INVEST IN AMERICA), Fed return monetary policy to more “normal” levels by RAISING rates from the 0.5% TO ABOUT 3% Germany = NOT AFFECTED BY US ELECTION LEADING TO THE LARGEST YIELD BETWEEN THE US AND GERMAN BONDS SINCE THE 1980s TARGET 4% GDP GROWTH

WHY THIS IS IMPORTANT BONDS MAKE UP THE LARGEST FINANCIAL MARKET US BOND MARKET = $30 T SOVEREIGN BOND MARKET = $80 T YIELDS AFFECT THE PRICING OF OTHER ASSET CLASSES YIELD CURVES PROVIDES INSIGHT INTO FUTURE ECONOMIC ACTIVITY AND INTEREST RATES. AC OVER 30 TRILLION DOLLARS 2. YIELDS AND INFLATION AFFECT THE PRICING OF OTHER ASSET CLASSES (ie. STOCKS, REAL ESTATE etc.) 3. UNDERSTANDING THE YIELD CURVE CAN HELP MAKE YOU MAKE EDUCATED FINANCIAL DECISIONS IN YOUR OWN PORTFOLIO

SOURCES http://www.economist.com/news/finance-and-economics/21711036-recent-falls-bond-prices-and-rises-yields-may-not-signal-end-low http://www.investopedia.com/articles/economics/08/yield-curve.asp http://www.cnbc.com/2016/09/05/this-is-why-japans-bond-yields-are-on-the-rise.html