News this Week!
July 30, 2024
Happening this week.
——-
Several events this week in the business and investment worlds to be aware of and make note:
1. Rate cuts? The Federal Reserve will consider a rate cut today (Wednesday).
2. Trump and Crypto: Former President Donald Trump was the keynote speaking last weekend in Nashville at a Bitcoin Conference and calls for the US to become a crypto super power.
3. Convertible Bonds: Almost very quietly convertible bonds have made a comeback. So far this year, U.S.-listed companies have issued $48.6 billion worth of bonds that could convert into stock if their shares rise to a certain price. That is the highest issuance of convertible bonds since 2021
—
Fed Rate Defined: The Fed Rate, commonly referred to as the federal funds rate, is the interest rate at which depository institutions (such as banks and credit unions) lend reserve balances to other depository institutions overnight on an uncollateralized basis. It is set by the Federal Open Market Committee (FOMC) of the Federal Reserve, the central bank of the United States. The federal funds rate is a key tool used by the Federal Reserve to influence monetary policy and control inflation, manage employment levels, and stabilize the financial system. Changes in the federal funds rate can impact various economic factors, including interest rates on loans and savings, borrowing costs, and overall economic growth.
Convertible Bonds Defined: A convertible bond is a type of corporate bond that gives the bondholder the option to convert the bond into a predetermined number of shares of the issuing company’s common stock. This conversion can typically occur at certain times during the bond’s life, usually at the discretion of the bondholder. Convertible bonds offer the benefits of regular interest payments and the return of principal at maturity, similar to traditional bonds. However, they also provide the potential for capital appreciation if the company’s stock price rises above the conversion price, making them attractive to investors who seek both income and the possibility of equity-like returns. For the issuing company, convertible bonds can be a way to raise capital with potentially lower interest rates, as the conversion feature adds value to the bond.
Please keep in mind this information should not be considered as financial advice. Investment decisions should be based on individual research and consultation with a qualified financial professional. The value of investments can fluctuate, and past performance is not indicative of future results. Always consider your risk tolerance and financial goals before making investment decisions.
