Historical Intermediate Government Bond Return
The government bond market is the largest securities' market in the world. It has a trading volume of more than $100 billion a day. The reason that investors are attracted to this market is because of the security and safety it offers when it comes to interest payments and repayment of the principal amount. These payments are guaranteed by the US government in full faith and credit. If the government does not pay, then one of the government agencies makes the payment. |
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Intermediate government bond is issued by the US government and is highly popular for its rather attractive yield and return rate. Intermediate bond is a note that is issued by the Department of Treasury and guarantees payment by the government in full faith and credit. However, the bonds are issued by different agencies. The difference between intermediate government bonds and other types of bonds is that the government guarantees the revenue source, which can be the Federal Home Loan Bank. Export Import Bank, Fannie Mae and Freddie Mac.
These bonds are issued every quarter and are part of the US Treasury's refunding plan. The maturity period for intermediate government bonds varies, and it can be for 2 year, 5 year, 7 year and 10 year. These bonds are then used by traders to hedge the positions they have in mortgage bonds, corporate bonds and foreign bonds.
Historical intermediate government bond return has always been a matter of interest. As inflation and business rises, the bonds with shorter maturity tend to yield more than bonds with longer maturities. When business slows downs, the opposite happens, and therefore, investors have to rely on longer maturity periods to gain maximum yield. This has been occurring all along with intermediate government bonds.
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