Where to start?

[FTSE in mouth]

Hi folks

I haven't really had any exposure to bonds at all and was wondering where to start. Can someone recommend a good book to read on the subject so I can understand more about them. I guess something that starts with the real basics.

TIA

FIM

 

[andycan]

I trade US Bonds what do you need to know??
i have never read a book on the subject but i know enough to trade it
if you are a fundamental trader then you need to understand the macro economic situation as bonds are very sensitive to it
otherwise if you are technical trader you just have to be aware of a few news event that can make bonds go nuts

 

[FTSE in mouth]

Hi Andy

I am not sure if I want to trade bonds but just to have a good idea of what they do and where they fit into the economy. It's like I know what stocks, futures and FX are and how they are traded/priced and their role in the economy.

I am just really have no knowledge about bonds other than being busy reading Liar's Poker.....

Thanks for the reply,

FIM

 

[andycan]

Well FTSE very simply a bond/notes/bill is a method that the government or a large corporation uses to raise capital so in effect its a bit like an IOU
you lend them X and at maturity they pay you your initial X plus interest
that is pretty much it.
the bond market is like any derivative market gives you the right to buy but not the obligation

 

[Hook Shot]

Ftse - I got my bond education from Liar's Poker too great book

HS

 

[grantx]

Do a Google search for "Fabozzi" (or "Fabbozzi") - written loads of books on bonds.

Also, look at EUREX site - stacks of material on the German Government debt - bunds, bobl, schatz. Similarly, the CBOT, Bank of England, UK's Debt Management Office (part of the UK Treasury). LIFFE is probably a waste of time.

Re Andycan's example, he's referring to a discount bound which repays the principal and interest at maturity. "Standard" (excuse the technical term) bonds, eg government bonds generally pay interest semi-annually. The principal can be recovered at any time by selling it back into the market. Further, the bond market is a cash, not derivative, market although there are options and futures on these.

I would also suggest looking at junk bonds for comparison, especially how they reflect the economy and investors' changing tolerance to risk in a low rate economy. Do a search for "Michael Milken" in this context - a legend for the wrong reasons.

Interesting area bonds.

Grant.

 

[FTSE in mouth]

Thanks for the info Grantx and Andycan.

I now have somewhere to start....

Cheers!

 

[andycan]

Do a Google search for "Fabozzi" (or "Fabbozzi") - written loads of books on bonds.

Also, look at EUREX site - stacks of material on the German Government debt - bunds, bobl, schatz. Similarly, the CBOT, Bank of England, UK's Debt Management Office (part of the UK Treasury). LIFFE is probably a waste of time.

Re Andycan's example, he's referring to a discount bound which repays the principal and interest at maturity. "Standard" (excuse the technical term) bonds, eg government bonds generally pay interest semi-annually. The principal can be recovered at any time by selling it back into the market. Further, the bond market is a cash, not derivative, market although there are options and futures on these.

I would also suggest looking at junk bonds for comparison, especially how they reflect the economy and investors' changing tolerance to risk in a low rate economy. Do a search for "Michael Milken" in this context - a legend for the wrong reasons.

Interesting area bonds.

Grant.

it was aimed at giving a very basic idea with shares you buy an asset with bonds you are in effect lending money