Bond Market Peer Response

Bond Market Peer Response

Initial Response

The inflation or the general prices level of goods and services in the economy has increased in long-term objectives to about 2%. According to the Press Conference that took place on December 14, 2016, this can be attributed to the increase in monetary policy by 0.25 percent resulting in 0.5 % to 0.75 % increase in interest rates (FOMC, 2017). The video points out that as a result the economy is expected to grow since interest rates form a major component of the monetary policy of a country. If the federal funds rate increases it will help to stabilize the economy over a few years. The press conference points out that as the monetary policies increase the government is compelled to invest the profits from the increasing volume of treasury securities and principal payments from bonds. However the statement is contradictory to the principles guiding the monetary policy and the bond market since the yields of bonds are affected by the monetary policies (Kimberly, 2021). This is because an increase in the monetary policy increases bond yields as the prices of bonds decline. Any increase in the interest rates and inflation will result in a decline in the bond prices leading to higher bond yields.

Peer Response

I agree with your observation from the video clip that the monetary policy has increased by 0.25 % resulting in to increase of 0.5 % to 0.75 % in the interest rates that have made the general price levels in the economy raise to 2% in the long-term objectives (FOMC, 2017). Moreover, I agree with the observation that the increase in money supply in the economy will affect inflation with interest rates being a key component of the country’s monetary policy. Moreover, I agree with your sentiments that federal funds rates can be used to stabilize the economy over a few years. I agree with your comments that the relationship between bonds, interest rates, and inflation is inverse. The bonds and interests rates and inflation have an inverse relationship. An increase in interest rates and inflation leads to a fall in the bond price (Kimberly, 2021). In addition, inflation and interest rates have similar behavior to bond yields. They tend to move in the opposite direction.

References

FOMC (2017). Press Conference on Dec 14, 2016. https://www.federalreserve.gov/monetarypolicy/fomcpresconf20161214.htm

Kimberly, A (2021). How does the Feds Fund Rate work and what is its impact. https://www.thebalance.com/fed-funds-rate-definition-impact-and-how-it-works-3306122

Why You Should Choose Us

Affordable Prices

Since we know that we are dealing with students, either part time or full time, many might be having financial constraints, but still want to pursue academic life. This has made us ensure we have very affordable prices, and wonderful discounts, yet give high quality products.

Professional Writers

Our reputation has been built because of the dedicated and highly qualified writers in our team. The writers give clients high quality products which guarantees return clients and referrals.

Quality

Our team is dedicated to giving clients the best quality products. However, if a paper does not meet the requirements stated by the client, our team will provide free revisions to the satisfaction of the client.

Moneyback guarantee policy

We believe that clients should get value for their money. If the client finds that the product has not met the requirements stated, we will refund the amount paid.

Original papers

We understand how plagiarism can ruin clients’ careers and reputation. We thus strive to provide original papers to our clients. We use several tools to check plagiarism. This ensures that clients get products that meet their institutions’ standards.

24/7 Customer Support

You can reach our support team via, live chat, email or phone. All your issues will be dealt with asap as the team works round the clock.

Try it now!

Calculate the price of your order

Type of paper needed:

Pages:

Academic level:

Total price:

$0.00

How it works?

Follow these simple steps to get your paper done

Place your order

Fill in the order form and provide all details of your assignment.

Proceed with the payment

Choose the payment system that suits you most.

Receive the final file

Once your paper is ready, we will email it to you.

Our Services

You have other errands to run? No need to worry. Place your order with us, carry out your errands while we do your paper and deliver on time.

Blog Writing

Give us a topic you want your blog based on, and let our team handle the rest. You will get the best article to be published in any forum you want. We have able team to do all the work for you.

Assignments

Many students are given assignments by their tutors. However, students find it challenging to just even come up with a topic. This should no longer be a problem to you. Just visit our site, contact the support team that will help you place your order, and find the best writer to handle the assignment.

Dissertation Services

Dissertation has proven to be challenging to most students. For this reason, we have specialized writers who handles only these kind of papers. You will be in constant touch with the writer and the support team once you place a dissertation order to make sure nothing goes wrong.

Editing and Proofreading

Some students have good points and writing prowess. However, they make minor mistakes that deny them good grades. To avoid such cases, you can give us your already written paper so that our team can edit it to the correct formatting style, language, proper flow and the correct academic language. This gives you an upper hand to get the best grade than a person whose job has not been edited.