The bond market is much larger than the equity stock market and has its own set of standards by which its fundamentals are analyzed. It deals in debt securities with a fixed income potential but exposes the investment to much lower risk as compared to equity stock investment. Today a large number of retail investors avoid the bond market for a number of reasons ranging from the low returns that bonds offer to a general misunderstanding of the bond market.
Over much of the first half of the 20th century the bond markets worldwide, spanning most of the advanced economies of the time did not do well at all. This was a time of great turmoil in the world which was ravished by two world wars within the span of 20 years. In Germany, the bond market was literally wiped out during the hyper inflation post World War I and World War II. In fact in 1922-23 the inflation rate went haywire to an absurd 209,000,000,000 %! In the United States too, the Great Depression did impact the bond market with disastrous consequences but it is also true that this was mainly confined to the government bonds. The corporate bonds on the other hand managed to perform better due to their flexible approach toward risk and returns.
It is estimated that the international market for bonds is worth over USD 45,000 billion with the US bond market accounting for over four-fifths of it. The bond markets are not as well organized as the equity stock markets are and they are mainly traded over the counter. Certain corporate bonds though, are traded in securities exchanges where they are listed. The unorganized nature of the bond market is mainly because of the level of difference between the bond issues which is not helpful in the establishment of a common market for bonds.
The Bond Markets
The bonds market can be classified into the following segments.
The Indian debt security market comprises government bonds and corporate bonds and is dominated by government bonds. The maximum liquidity in Indian bonds could be found in bonds issued by the central government. The NSE (National Stock Exchange) GOI (Government of India) Bond Index presents the performance of all outstanding GOI bonds.
Over much of the first half of the 20th century the bond markets worldwide, spanning most of the advanced economies of the time did not do well at all. This was a time of great turmoil in the world which was ravished by two world wars within the span of 20 years. In Germany, the bond market was literally wiped out during the hyper inflation post World War I and World War II. In fact in 1922-23 the inflation rate went haywire to an absurd 209,000,000,000 %! In the United States too, the Great Depression did impact the bond market with disastrous consequences but it is also true that this was mainly confined to the government bonds. The corporate bonds on the other hand managed to perform better due to their flexible approach toward risk and returns.
It is estimated that the international market for bonds is worth over USD 45,000 billion with the US bond market accounting for over four-fifths of it. The bond markets are not as well organized as the equity stock markets are and they are mainly traded over the counter. Certain corporate bonds though, are traded in securities exchanges where they are listed. The unorganized nature of the bond market is mainly because of the level of difference between the bond issues which is not helpful in the establishment of a common market for bonds.
The Bond Markets
The bonds market can be classified into the following segments.
- Government bond market
- Asset-backed bond market
- Corporate bond market
- Municipal bond market
- Financing bond market
The Indian debt security market comprises government bonds and corporate bonds and is dominated by government bonds. The maximum liquidity in Indian bonds could be found in bonds issued by the central government. The NSE (National Stock Exchange) GOI (Government of India) Bond Index presents the performance of all outstanding GOI bonds.
