Odd Lots Why the True Price of a Bond Can Still Be Hard To Know
Apr 5, 2021
Join fixed income strategist Eric Jacobson and analyst Maciej Kowara from Morningstar as they untangle the complexities of bond pricing. They argue that knowing a bond's true value is often subjective and can vary between firms. The discussion dives into the challenges of infrequently traded bonds, the role of independent pricing agencies, and how recent market conditions have highlighted significant price discrepancies. With the bond market's evolving landscape, they explore the potential for greater transparency and the impact of technology on pricing accuracy.
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Credit Market Attention
- Equity markets get a lot of attention, while credit markets are less noticed.
- Credit markets exhibit interesting dynamics, especially regarding bond pricing.
Bond Pricing Discrepancies
- Bond prices, unlike stock prices, aren't centrally determined.
- Discrepancies arise due to pricing opinions differing among firms.
Bond Portfolio Pricing
- Bond portfolio pricing varies based on factors like time of day and bid/ask/mid choice.
- Discrepancies arise because bond trades might not occur near market close, requiring price adjustments.