Tag: Business and Economy Magazine

Top Business News Today

Inform your business decision making. Read and watch risk intelligence and analysis. Discover the best and worst of the global economy. Get the latest global economy news headlines opinions and reviews. Save money and time with BusinessRiskTV.

Find new solutions to common business problems

Find Now

The Threat of Rising Bond Yields in European and American Bond Markets

By Keith Lewis 20th October 2023

Bond yields are the interest rates that investors receive when they lend money to governments or corporations. Bond yields have been rising steadily in recent months, both in Europe and the United States. This is due to a number of factors, including the Federal Reserve’s plans to raise interest rates and concerns about inflation.

Rising bond yields can have a number of negative consequences for investors and businesses. For investors, rising bond yields can lead to losses on existing bond holdings. For businesses, rising bond yields can make it more expensive to borrow money.

This article will explore the threat of rising bond yields in European and American bond markets in more detail. It will also discuss some of the risk management actions that investors and businesses can take to protect themselves from this threat.

Why are bond yields rising?

There are a number of reasons why bond yields are rising in European and American bond markets. One reason is the Federal Reserve’s plans to raise interest rates. The Federal Reserve raises interest rates in an effort to combat inflation. When interest rates rise, the cost of borrowing money increases. This can lead to a decrease in demand for bonds, which can cause bond yields to rise.

Another reason for rising bond yields is concerns about inflation. Inflation is the rate at which prices for goods and services are rising. When inflation is high, investors demand higher returns on their investments to compensate for the loss of purchasing power. This can lead to an increase in bond yields.

What are the risks of rising bond yields?

Rising bond yields can have a number of negative consequences for investors and businesses.

For investors, rising bond yields can lead to losses on existing bond holdings. When bond yields rise, the prices of existing bonds fall. This is because investors can buy new bonds with higher yields, which makes older bonds with lower yields less attractive.

For businesses, rising bond yields can make it more expensive to borrow money. Businesses often borrow money to finance growth and investment. When bond yields rise, the cost of borrowing money increases. This can make it more difficult for businesses to finance their growth and investment plans.

What can investors and businesses do to protect themselves from the threat of rising bond yields?

There are a number of risk management actions that investors and businesses can take to protect themselves from the threat of rising bond yields.

Investors

Investors can protect themselves from the threat of rising bond yields by diversifying their portfolios and investing in shorter-term bonds.

Diversification means investing in a variety of different asset classes, such as stocks, bonds, Bitcoin and property. By diversifying their portfolios, investors can reduce their overall risk.

Investing in shorter-term bonds can also help investors to protect themselves from rising bond yields. Shorter-term bonds have less interest rate risk than longer-term bonds. This is because shorter-term bonds are more likely to mature before interest rates rise significantly.

Businesses

Businesses can protect themselves from the threat of rising bond yields by hedging their interest rate risk and borrowing money at fixed interest rates.

Hedging interest rate risk involves using financial instruments to offset the risk of changes in interest rates. There are a number of different hedging instruments available, such as interest rate swaps and options.

Borrowing money at fixed interest rates can also help businesses to protect themselves from rising bond yields. When businesses borrow money at fixed interest rates, they lock in the interest rate for the life of the loan. This protects them from the risk of rising interest rates during the term of the loan.

Conclusion

Rising bond yields can have a number of negative consequences for investors and businesses. However, there are a number of risk management actions that investors and businesses can take to protect themselves from this threat.

Investors can protect themselves from the threat of rising bond yields by diversifying their portfolios and investing in shorter-term bonds. Businesses can protect themselves from the threat of rising bond yields by hedging their interest rate risk and borrowing money at fixed interest rates.

I urge investors and business leaders to take risk management action to protect themselves from the threat of rising bond yields. By taking action now, you can minimise the potential impact of rising bond yields on your investments and your business.

Join the global risk experts forum online

Click here or email editor@businessrisktv.com to subscribe to BusinessRiskTV.com for free enter code #GlobalEconomy

Subscribe to BusinessRiskTV for free global economy alerts bulletins and reviews to your inbox

Enter code #GlobalRiskAnalysis

World Economic News Headlines

Read global economy articles and watch video updates on global economic news headlines business risk analysis business leader debate and discussion. Entrepreneurs executives and business leaders take part in our strategic growth business forum online events from you phone pc or mobile device.

Inform your business decision making from expert panel and member discussions and sign up for innovative business development online workshops from anywhere in the world where business innovators operate.

Global Economy News Analysis Review Live Online

Current global economy news articles and video content. Stress test the global economy with latest forecasts reports and global economic analysis.

Promote and market your business on BusinessRiskTV Global Economy Review for 12 months

Find out how to promote your business locally and globally. CLICK HERE or email editor@businessrisktv.com entering code #GlobalEconomyReviewMarketing

Put your products or services in front of new people already interested in your type of business offering.

Link into your existing online sales process direct from BusinessRiskTV or use our eCommerce solutions to increase your sales cash flow and profit

Increase the sources of your revenue streams more sustainably. Grow your business faster with with BusinessRiskTV.

BusinessRiskTV World Economy Journal

Taking a look at global economy data. Undertaking business risk analysis. World economy and business research and development reports and analysis.  

Subscribe to BusinessRiskTV for free to receive email alerts to live events on demand video reports and global business analysis reports

Academy	Marketplaces
Exhibitions	Risk Magazine

Discover better ways to protect and grow your business with BusinessRiskTV

#BusinessRiskTV #GlobalGrowthForum #GlobalEconomy #GlobalNews #GlobalMarketplace #GlobalMagazine #GlobalReview #GlobalReports #GlobalBusiness #GlobalEconomy #GlobalToday #InternationalTrade #Entrepreneurship #BusinessCoaching #RiskManagement #EnterpriseRiskManagement #GlobalEconomyReviewMarketing

Global Economy Risk Analysis and Review