This one’s a collectable

The Sage thinks past coupons explain current yields.

2 thoughts on “This one’s a collectable”

  1. In fairness, I don’t think the Spud is trying to say that, although it is hard to know what he is trying to say, or why he thinks it worth saying. Not unusually for him, he uses big words that sometimes don’t mean what he thinks they mean, or what he wants them to mean. His “Effective Interest Rate” is just weighted-average coupon – and it is a trivial observation that coupon rates have declined over the past few years, as he shows in his chart. But calling it “Effective Interest Rate” to him sounds impressive – like this is something that only a true finance guru would know; but to a real finance guy that suggests that he means yield which is where he loses the plot. Of course, adjusted for risk the yields will be ± right on the yield curve (there’s a reason they call it that…). I don’t know what “with or without BoE stock” or “index-linked” mean in this case, but I suppose it affects the risk / reward profile.

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