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Interest Rates and Value Investing

December 13, 2016 : Permanent Link

(Harvest) One way to view value within non-credit fixed income assets is to deconstruct interest rates into their nominal and real components, while also recognizing that investors typically demand a term premium to hold interest rate sensitive bonds. Recent research summarized in this article advances the measurement of both real rate and the term premium. Unfortunately, I’m of the opinion that neither real rates or term premium are paying bond investors enough to make it worth the risk associated with locking away their money and accepting potentially high interest rate volatility.

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