The uncertain scenario
Up and down. Those who feel the soul of a trader must come forward. This could be the phase in which the fluctuations in the market prices of government bonds will accelerate in both directions, upwards and downwards. It is the very physiognomy of uncertainty. And to provide it is the expectation of the future of market yields, in the first place, and of the level of official rates, then. The two main central banks, the US and the Eurozone, have clearly indicated this: we are looking ahead, far, but not too much. In securities portfolios, the presence of fixed coupon issues is still significant, albeit less than in past months. If you look at the price chart of BTPs and similar US government bonds, you won’t find many differences. Because, in both cases, uncertainty dominates. Between the belief that yields will not rise quickly and the opposite sign. That their ascent will be gradual, but constant.
The difference is substantial, because it will directly affect not so much the crediting of the coupon flow, but rather the market value of the securities in the portfolio. Situation that has a significant weight on those who are accustomed to frequently assessing the value of their assets. But that relatively affects those who invested for the sole purpose of collecting coupons every six months and collecting the nominal value of the securities purchased at the time of maturity. Attention, at the time of redemption: if the price of the placement of the security was at a value lower than 100, at maturity the substitute tax of 12.50% will be applied on the difference between the same value 100 and the placement price.
© All rights reserved