Bond Market Indicators

Just as stock market indexes provide guidance concerning the performance of the overall stock market, several bond market indicators measure the performance of various categories

54 PART I Introduction

Table 2.5 Sample of MSCI Stock Indexes

Regional Indexes Countries

Table 2.5 Sample of MSCI Stock Indexes

Regional Indexes Countries

Developed Markets

Emerging Markets

Developed Markets

Emerging Markets

EAFE (Europe, Australia, Far East)

Emerging Markets (EM)

Australia

Argentina

EASEA (EAFE ex Japan)

EM Asia

Austria

Brazil

Europe

EM Far East

Belgium

Chile

European Monetary Union (EMU)

EM Latin America

Canada

China

Far East

Emerging Markets Free (EMF)

Denmark

Colombia

Kokusai (World ex Japan)

EMF Asia

Finland

Czech Republic

Nordic Countries

EMF Eastern Europe

France

Egypt

North America

EMF Europe

Germany

Greece

Pacific

EMF Europe & Middle East

Hong Kong

Hungary

The World Index

EMF Far East

Ireland

India

EMF Latin America

Italy

Indonesia

Japan

Israel

Netherlands

Jordan

New Zealand

Korea

Norway

Malaysia

Portugal

Mexico

Singapore

Morocco

Spain

Pakistan

Sweden

Peru

Switzerland

Philippines

UK

Poland

US

Sri Lanka

Taiwan

Thailand

Turkey

Venezuela

Source: www.msci.com

of bonds. The three most well-known groups of indexes are those of Merrill Lynch, Lehman Brothers, and Salomon Smith Barney. Table 2.6, Panel A lists the components of the fixed-income market at the beginning of 2000. Panel B presents a profile of the characteristics of the three major bond indexes.

The major problem with these indexes is that true rates of return on many bonds are difficult to compute because the infrequency with which the bonds trade make reliable up-to-date prices difficult to obtain. In practice, some prices must be estimated from bond valuation models. These "matrix" prices may differ from true market values.

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