Credit Spreads.
Posted: October 18th, 2017, 9:27 pm
Having read some of the posts from earlier in the year I found one relating to AV.A 8.75%. Basically it was about how to estimate the reduction in price caused by a 1/4 point rise in interest rates.
Based on the current price I make the possible reduction as a result of the expected hike in November down to 158.48 from where they are at 166. Possible being the operative word.
Against this with the 2060 Gilts at 1.5%? Credit Spread is 3.77%. Hiriskpaul suggested <2% to be a sell signal for him.
Would any kind soul be willing to check this out? I haven't done this before. My maths is probably up the creek.
Also what is the significance of 2% ? Is it just at this margin the risk is not worth it?
With inflation ticking up my interest is growing.
I've just reread that last sentence and it just proves how poor my maths really is.
SH
Based on the current price I make the possible reduction as a result of the expected hike in November down to 158.48 from where they are at 166. Possible being the operative word.
Against this with the 2060 Gilts at 1.5%? Credit Spread is 3.77%. Hiriskpaul suggested <2% to be a sell signal for him.
Would any kind soul be willing to check this out? I haven't done this before. My maths is probably up the creek.
Also what is the significance of 2% ? Is it just at this margin the risk is not worth it?
With inflation ticking up my interest is growing.
I've just reread that last sentence and it just proves how poor my maths really is.
SH