Bonds Overview Charts

This page is just a set of standard bond charts. There is no analysis here. This page will be linked to from other analysis pages.

First up, US Bonds of various durations

US Bonds, various durations 1 Year chart

US Bonds, various durations 1 Year chart

Same tickers with Volume+, Rate of Change, and Williams %R at BigCharts.Com

TLT  -  20+ Year US Treasuries
AGG  -  Aggregate Bond fund (mixed duration Treasury bonds)
MUB  -  US "AMT-Free" Municipal Bonds.
SHY  -  1 to 3 Year US Treasuries
IEI  -  3 to 7 Year US Treasuries
IEF  -  7 to 10 Year US Treasuries
JNK  -  "High Yield" aka Junk Corporate Bonds
TLH  -  10 to 20 Year US Treasuries
LQD  -  "High Quality" aka Liquid Corporate Bonds
TIP  -  Treasury Inflation Protected Securities TIPS

There is also a 60 day and less maturity “Treasury Note” ETF, but what’s the point? It pays nearly nothing and lays there flat as a pancake (or more so). SHV is the ticker. You can graph it yourself, if you like looking at lines with even less slope that SHY has….

TIP has an ‘inflation kicker’ that is supposed to protect against currency inflation, if you believe the government figures on inflation… There is also an STIP of shorter duration 0-5 year maturities. It’s a fairly flat line, about like the other short maturites.

You will note that the longer the maturity, the more slope and volatility the line has. If you want safety, go for short maturity. If you want to trade for bond rises and falls (as The Fed changes interest rates) go for longer maturities. (All of this ignores yields. You will need to look up the yields independently of these charts. At the moment, TLT is about 2.8% yield. Shorter maturities yield less)

JNK, the high yield corporates have a higher risk of default for any given issue. It is presently yielding 7.6%, but you can see that it is much more volatile, and when folks are nervouse (a “risk off” market) it will fall even when most bonds are rising. (It can also rise spectacularly, with yield, when folks expect good times and low risk of default).

LQD, the high quality corporate bonds, has less slope and lower yield (presently 4.08%) than JNK, but higher than TLT.

MUB is a basket of Municipal bonds spread around the nation. It is exempt from the Alternative Minimum Tax. (There are also individual bond funds in individual states that are exempt from that state’s income tax. See links below for those.) I’m only showing this one, since it can serve as proxy for the others, the primary difference being the tax treatment to the buyer.

The various Treasury maturities will layer according to maturity range.

Key Point: Folks will often tell you that bonds are less risky than stocks, as the bond eventually matures and you will be paid the principle. That is true of individual bonds but is is decidedly not true o bond FUNDS. When interest rates start to rise at The Fed, bond prices start to fall. At that time the individual bond holder may choose to just ‘ride it out’ and sit on their bonds, collecting the interest and knowing that at maturity they will get the principle. If you own a bond FUND, however, other people may choose to sell out. That forces the bond FUND to ‘redeem some shares’, and that means selling bonds at a discount. That loss is then locked in. Basically, while a fund may hold an average maturity of 2 years for it’s bonds, the bond FUND has no maturity. It is more nearly a raw bet on future interest rate directions with a dividend payment ‘kicker’. Keep that in mind…

Laddering: A common strategy is to ‘ladder’ maturities. That is, but bonds that mature on a variety of dates. So owning maturities of 1, 2, 3, 4, 5, etc. years. This means that any one time you have one year of bonds maturing, paying you back your principle, and you may then invest it. IF things look bad for interest rates (rising soon, so bond PRICES will fall) you can either choose to simply ‘hold to maturity’ or sell out the longer term bonds. Those strategies do not work for bond FUNDS, since they have no maturity. OTOH, you simply swap between funds to get whatever average maturity you like, depending on the likely Fed actions “soon”.

Hold long maturities when interest rates are high, AND headed down. Hold short maturities when interest rates are low, AND headed up. Those are just broad guidelines and subject to exceptions, such as when the other markets (or general economy) move to a ‘risk off’ posture. Then cash floods into US Treasuries and prices rise, despite a future risk that The Fed will raise rates. Those trading driven cash movements are seen as shorter term ‘ripples’ in the multi-year bond prices. NEVER hold long duration bond funds when The Fed is raising rates. (At the start of an economic recovery is the worst time). In a “risk on” world, dump bonds, longest maturities first.

Global Markets

This chart compares TIP, the US Dollar fund, to a variety of ‘International’ bonds.

International Bond Funds vs TIP U.S. Treasuries, inflation 'protected'

International Bond Funds vs TIP U.S. Treasuries, inflation 'protected'

As the chart is in $US, for some tickers, much of the movement will be the inverse of the $US exchange rate movements. Some of the movement will be the actual basic bond price changes. In any case, it tells you the combined decision of what is winning, US vs International bonds.

IBND -  International Corporate Bond Fund
TIP  -  US Treasury Inflation "Protected" Bonds
GTIP -  Global Inflation Linked Bonds
ITIP -  International Inflation Linked Bonds
LEMB -  Local Currency Emerging Markets
ISHG -  S&P / Citigroup 1-3 year International Treasuries
EMB  -  JPMorgan $US Emerging Market Bonds
IGOV -  iShares S&P / Citigroup International Treasuries
EBND -  Emerging Market Bonds
WIP  -  World Inflation "Protected" Bonds

In general, the word “Global” means the fund manager can mix US and NON-US. The world “International” usually means “Outside the USA”.

The Emerging Markets often issue bonds in both their local currency and in $US denominations (so folks can take Tin Pot Dictator Currency Manipulation risk out of the bond, leaving only the usual Sovereign Risk … ) You can see this by comparing EMB, emerging bonds of $US denomination, to EBND and LEMB, where the $US exchange rate fluctuations also impact the prices seen here. WIP and ITIP have $US exchange rate issues, but TIP does not (being a US Treasury basket), while GTIP ought to ‘split it’. IBND lets you compare international corporates to all the various Treasuries. (Odd that many corporates reflect less risk that national Treasury Bonds these days…) ISHG and IGOV let you compare maturity spreads, in an awkward kind of way.

In general, most of these things will move together when they go. The major variation tends to be between US and non-US, but sometimes the “risk on” vs “risk off” can dominate and move bonds independently depending on risk profile (with emerging home currency being most risk, and US Treasuries the lowest risk… though the recent cavalier attitude toward debt in the USA has me wondering when that will change…)

Currencies

To make decisions about bonds, you need to have some idea how the different currencies are moving. It doesn’t do much good to be in a good bond in a bad currency. These two charts both have the Euro as their main ticker. The first one as a ‘long Euro’ and the other as a ‘short Euro'; vs. the $US. So what’s the “Currency Race” look like:

Currency ETF compared

Currency ETF compared

FXE  - Euro ETF
GLD  - Gold ETF
UUP  - $US "up" bet (short other currencies basket) ETN
FXY  - Japanese Yen ETF
FXF  - Swiss Franc ETF
FXB  - British Pound ETF
FXM  - Mexican Peso ETF
FXC  - Canadian Dollar ETF
FXA  - Australian Dollar ETF
BZF  - Brazilian Real ETF

This is a “Race” of misc other currencies and notes against Gold and Silver. The primary ticker on this chart is the “Euro Short”, a bet against the Euro. The equivalent ticker for shorting the $US is UDN or $US “down”.

Minor Currencies vs Gold and Silver with some futures notes

Minor Currencies vs Gold and Silver with some futures notes

EUO - "Short sale" of the Euro. ETN
GLD - Gold ETF
DBV - G10 "Currency Harvest" fund - short 3, long 3, based on interest rates. ETN
XRU - Russian Ruble
CEW - Wisdom Tree Emerging Currencies
FXS - Swedish Krona, and usually trades about the same as the other European currencies.  
INR - Indian Rupee 
CYN - China.  Basically a flat peg to the $US at about the zero line with minor adjustments upwards.
SLV - Silver ETF
SZR - South African Rand

Generally I ignore most of the things on this chart. Not much need to ‘go there’. The Kroner can be useful sometimes, as the EUO can be. The metals I trade as a commodity rather than a currency. Beyond that, I mostly use these to give me an idea what the relative economies are doing and what the money flows might be if I’m thinking of buying a bond or stock home-based in that currency.

FXS Swedish Krona tends to trade along with the other European currencies and looks be be managed against a basket of the British Pound and the Euro.

CEW is an interesting basket of emerging market currencies, though it is a bit unclear just which ones…

The ‘thin’ and not very liquid currencies are subject to a very ‘spiky’ behaviour. INR, SZR.

The metals can have volatile movements, SLV silver more than GLD gold, but both more than the currencies.

EUO is a ‘short Euro” and is a bet that the Euro will drop relative to the US Dollar.

The Chinese Yuan is in a tight drifting peg to the US Dollar, so is mostly a flat line with minor drift up.

The Ruble XRU tends to be smooth, but with jumps as various political intrigues unfold.

DVB is an interesting ‘natural hedge’ to give a stable place to store value. To quote the Yahoo finance page about it:

The investment seeks to track the performance, before fees and expenses, of the Deutsche Bank G10 Currency Future Harvest Index – Excess Return. The index is comprised of long futures positions on the three G10 currencies associated with the highest interest rates and short futures positions on the three currencies associated with the lowest interest rates. The G10 currency universe from which the index selects currently includes U.S. Dollars, Euros, Japanese Yen, Canadian Dollars, Swiss Francs, British Pounds, Australian Dollars, New Zealand Dollars, Norwegian Krone and Swedish Krona.

I suppose in some market conditions it could actually make money.

Some Links

A long list of currency ETFs including different crosses and leveraged ETFs detailed here:

http://etf.stock-encyclopedia.com/category/currency-etfs.html

A variety of ETFs, including bond ETFs, are at the iShares site. Choose the particular bond fund off of the “fixed income” tab:

http://us.ishares.com/home.htm

There also exists a variety of bond funds at the SPDR site

I may well add some more charts and links to this posting over time. For now, I just wanted to get this “up” so I can make some trade decisions. More later…

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About E.M.Smith

A technical managerial sort interested in things from Stonehenge to computer science. My present "hot buttons' are the mythology of Climate Change and ancient metrology; but things change...
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16 Responses to Bonds Overview Charts

  1. Matthew W says:

    I’ve got 80% in an “Inflation Protected Bond Fund” that is up almost 14% for the year.

    I’ve had that for almost 2 years and I was mocked for not being aggressive with the large and small cap funds that mirror the S&P.

  2. P.G. Sharrow says:

    Matthew; too bad you are not “smart enough” to play with the “big boys” 8-) They have lost money so far this year! good show. pg

  3. Matthew W says:

    Until the T-Bills start going up, I will be in good shape !!

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  5. Tim Clark says:

    I like the new format.

    Best Wishes for the Christmas season, all.
    May next year bring better times.

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