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Jui Angel
Aug 01, 2022
In Welcome to the Forum
U.S. Treasury yields inverted on July 13 , which was seen as a precursor to a financial turmoil.Before that, we must first understand the particularity of US treasury bonds. The U.S. dollar is accepted and used by all countries in the world, and central banks of all countries remit the U.S. dollar to facilitate international transactions. But central bank dollars are not necessarily stored in the form of currency. Take Taiwan, Japan, South Korea, and China, which are export-oriented countries, for example. They have accumulated foreign exchange surpluses for many years. Therefore, the foreign exchange earned by enterprises in Taiwan, Japan, South Korea, and China is mainly stored in the hands of central banks of various countries. But the dollar itself will job email list depreciate over time, so the central banks of Taiwan, Japan, South Korea, and China will use part of the dollar to buy U.S. Treasury bonds to earn interest money. Based on the importance of the US dollar in various countries, the financial community believes that US Treasury bonds are the most stable source of income. The common government bond interest rate and bond interest rate algorithm is to divide the coupon rate by the purchase price, bond interest rate = coupon rate / purchase price. Here is an important point, the price at the time of purchase is not necessarily the price at the time of issuance. Banking institutions or investment institutions can buy from the primary or secondary market. Taking U.S. bonds as an example, the primary market is the bonds issued by the United States Department of the Treasury to raise funds, and the purchase price at this time is equal to the issue price of the bonds.
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