International Offshore Bonds

With every fall in the bank rate, the attractions of the international bond market get bigger. When the Fed cut the US bank rate by 0.5 per cent in late December, the markets responded with an almost-instant drop of 0.35 per cent in the bond yield - which is another way of saying that bond prices rose sharply around the world.

Indeed, the average ten-year bond investor saw the capital value of his investment rise by around 7 per cent in a single day (because typical yields before the yield cut were around the 5 per cent mark): the only reason that bond yields didn’t drop by the whole 0.5 per cent, as with the bank rate, was that investors were also having to take into account the beneficial effects that the rate cut would have on their equity portfolios, which were also competing with bonds.

International Offshore Bonds - Equities Win Hands Down

International Offshore Bonds - Enough Evidence

They might be right, they might be wrong; maybe it’s better to wait on events for a while. But, if there’s the slightest indication that the US is getting into real trouble this year, getting some of your money into bonds as soon as possible might turn out to be one of your better investment decisions.