List of Top Books on Bonds Market, Trading and Investing

Here is the list of the top 10 best books on bond investing, bond markets, and trading.

  • The Bond Book (Third Edition) ( Get this book )Bond Markets, Analysis, and Strategies (7th Edition) ( Get this book )The Strategic Bond Investor ( Get this book )Managing a Corporate Bond Portfolio ( Get this book )Bonds: A Step by Step Analysis with Excel ( Get this book )Bonds: The Unbeaten Path to Secure Investment Growth ( Get this book )The Handbook of Municipal Bonds ( Get this book )The Coming Bond Market Collapse ( Get this book )Bloomberg Visual Guide to Municipal Bonds ( Get this book )The Handbook of Convertible Bonds ( Get this book )

Let us discuss each of the bonds market, bond trading, and bond investing books in detail, along with its key takeaways and reviews.

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#1 – The Bond Book (Third Edition)

by Annette Thau

Bond Trading Book Review

The infamous Global Financial Crisis of 2008 had caused widespread disruptions to every sector of the bond market and had left even the most enthusiastic investor in a spot of bother concerning the safety of their investment. To serve investors and anyone looking to explore opportunities in fixed-income investing, the author, with this guide’s help, created this one-stop resource for seasoned bond investors wanting the latest information on the fixed income marketFixed Income MarketFixed Income Market is where fixed income securities like government bonds, corporate bonds and treasury bills are traded. In his market, the investors receive a regular income, whether on a monthly, quarterly, half-yearly or yearly basis, and repayment of principal amount on maturity.read more and equities investors planning to diversify their holdings.

Also, have a look at What are Bonds?

Key Takeaways from this Top Bond Trading Book

This edition is a must-read for financial advisors who want to enhance the allocation of fixed-income components in their portfolios. It offers cutting-edge strategies for making the best bond investing decisions while explaining how to assess risks and opportunities. In addition, the guide offers vital information on critical topics such as:

  • Purchase of individual bonds or bond fundsBond FundsThe bond fund, also known as a debt fund, is a mutual fund that invests in bonds and other debt securities, pays dividends periodically and does not possess any maturity date. It generates a stream of income by investing in fixed income securities like government securities, bonds, debentures.read moreBuying of treasuries without the involvement of any commissionHow to tackle the timing of open-end funds, close-ended funds, and ETFsThe Safest Bond FundsThe modified landscape for Municipal bonds, the changing rating scales, the downfall of bond insurance and Build America Bonds (BABs)

#2 – Bond Markets, Analysis, and Strategies (7th Edition)

by  Frank J. Fabozzi

Bond Market Book Review

This book on the bond market prepares various students to analyze the bond markets and manage bond portfolios without getting impacted by the volatility existing in the bond market. The author has conducted several discussions and conversations with portfolio managers and analysts to ensure the latest information and observations have been covered in this edition.

It includes a detailed analysis of various bonds traded in the market and other essential information on the functioning of such bonds. This guide also exhibits a comprehensive and concise discussion of the instruments involved and their investment characteristics, portfolio strategies for using them, and state-of-art technology for valuation.

Key Takeaways from this Top Bond Market Book

Some of the key topics covered are-

  • Detailed coverage of various markets, including MBS (Mortgage-backed securities) and ABS (Asset-backed securities)ABS (Asset-backed Securities)Asset-backed Securities (ABS) is an umbrella term used to refer to a kind of security that derives its value from a pool of assets, such as bonds, home loans, car loans, or even credit card payments.read moreTechnologies for valuing complex bond structures.Actual bond portfolio management strategiesInterest Rate DerivativesInterest Rate DerivativesInterest rate derivatives are the financial instruments that track the fluctuations of the underlying interest rates. These underlying interest-bearing assets can be a single interest rate or a bunch of different interest rates.read more and their functioning.New coverage on the measurement and evaluation of bond performance and valuation of options and swapsSwapsSwaps in finance involve a contract between two or more parties that involves exchanging cash flows based on a predetermined notional principal amount, including interest rate swaps, the exchange of floating rate interest with a fixed rate of interest.read more.

It explains the latest analytical techniques for the valuation of complex bond structures, bridging theoretical and practical aspects at the trading desksTrading DesksA trading desk is a section within a bank or company that buys and sells securities such as bonds, shares, currencies, and commodities to facilitate their own or clients’ trades in the financial markets, ensuring market liquidity.read more.  The objective is to allow the readers and the investors to feel how professional money managers employ strategies with the use of bonds.

#3 – The Strategic Bond Investor

by Anthony Crescenzi

Bond Trading Investing Review

This guide explains how one can maximize their returns with bonds, considered one of the few stable and reliable investments after the Financial crisis. It provides a complete round of education on bond investing, providing the readers with the know-how for safe and dependable investments.

Key Takeaways from this Top Bond Investing Book

Some of the important highlighted contents of this bond investing book are:

  • A detailed description of various types of bonds.Factual data on how each bond category performs under various environments and circumstances.Key economic reports highlighting how market factors can have an impact on the prices of bondsTechniques on forecasting the possible moves the Central Bank could take and the impact it could have on bonds, especially government bonds.Different ways of using the yield curveYield CurveA yield curve is a plot of bond yields of a particular issuer on the vertical axis (Y-axis) against various tenors/maturities on the horizontal axis (X-axis). The slope of the yield curve provides an estimate of expected interest rate fluctuations in the future and the level of economic activity.
  • read more and other indicators to predict the market and economy direction.

This book on bond investing describes every tool an investor must know to participate in present bond market extremes, analyze volumes and liquidity, and utilize other techniques restricted to equity and institutional investors.

#4 – Managing a Corporate Bond Portfolio

by Leland E. Crabbe & Frank J. Fabozzi

Corporate bond portfolio management is a very dynamic and continuous process. It requires the investors to monitor various market sectors continuously, offering an attractive balance between risk and expected return. Since it’s a complex process, the authors have attempted to simplify the same by giving a basic overview of Corporate bond features, including provisions contained in bond indenturesBond IndenturesIndenture is a legal agreement between two or more parties to meet their respective obligations. It is a common term used in the bond market to provide the lender and borrower with the necessary comfort in the transaction in the event of one defaulting party.read more, secured and unsecured bonds, and associated interest payments. They also offer a strong foundation for various corporate debt structures of corporate bonds.

Some of the benefits offered through an in-depth discussion of corporate bond valuation are:

  • A valuation framework and various measures of corporate bondCorporate BondCorporate Bonds are fixed-income securities issued by companies that promise periodic fixed payments. These fixed payments are broken down into two parts: the coupon and the notional or face value.read more yields and spreads.The most current measures of interest rate riskInterest Rate RiskThe risk of an asset’s value changing due to interest rate volatility is known as interest rate risk. It either makes the security non-competitive or makes it more valuable. read moreHandy formulas display the relationship between spreads and excess returns.Strategies that can improve performance by the anticipation of the change in yield spreads and curves.A complete, robust understanding of the fundamental factors that drive corporate spreads.

The guide continues its comprehensive treatment of corporate bond portfolio management. In addition, it discusses corporate credit risk issues such as micro fundamentals of credit risk and credit analysis, measuring expected excess returns based on credit rating transition probabilities, and valuing subordinated securities.

#5 – Bonds: A Step by Step Analysis with Excel

by Guillermo L. Dumrauf

Bond Investing Book Review

This book on bond investing is classified into two chapters. The first section describes how to price a bond and calculate various return measures, working with real bond examples and Excel spreadsheets. It describes a step-by-step procedure for designing a cash flow in a spreadsheet to calculate the Yield to Maturity (YTM) and other measures of return as per the bond indentureBond IndentureBond indenture or bond resolution is a core legal document that serves as a contract binding upon the bond issuer and the bondholder. It comprises all the bond-related information, like details of the issue, its purpose, bond issuer’s obligations and rights of the bondholders.read more. One will be able to understand the following aspects:

  • Designing the cash flow for a specific investment amount.Pricing a real bond to calculate its YTM with the help of Excel.Calculate the total return of an investment horizon.Perform a sensitivity analysis of Price, Yield, and Total ReturnTotal ReturnThe term “Total Return” refers to the sum of the difference between the opening and closing value of all the assets over a particular period of time and the returns thereon. To put it simply, the changes in opening and closing values of assets plus the number of returns earned thereof is the Total Return of the entity over a period of time.read more

The second section describes two measurements for estimating the volatility of a bond price: duration and convexity.

The readers will be able to understand the following:

  • A clear understanding of the price-yield relationship of an option-free bond.Calculation of Duration, Modified DurationModified DurationModified Duration tells the investor how much the price of the bond will change given the change in its yield. To calculate it, the investor needs to calculate Macauley duration which is based on the timing of the cash flow.read more, and convexity of real bonds.Comprehend why the duration measures the bond’s sensitivity to yield changes.Understanding the limitations of using duration as a measure of price volatility and how one can adjust its estimation for the convexity of the bondConvexity Of The BondConvexity of a bond is a measure that shows the relationship between bond price and yield, and it helps risk management tools to measure and manage a portfolio’s exposure to interest rate risk and loss of expectation.read more.

#6 – Bonds: The Unbeaten Path to Secure Investment Growth

by Hildy Richelson and Stan Richelson

This guide is a must-have for anyone seeking to understand the investment opportunities available to them. The author, a couple in real life, has demystified the stocks’ superior investment returns and proposes an all-bond portfolio as a solid strategy ensuring positive returns. Of course, it will only sometimes offer supernormal returns if circumstances offer but will focus on the consistency of returns.

Practical and detailed case studies, in-depth strategies for bond management, and a financial planning overview are exhibited, which can design the timely achievement of financial goals.

The tactics presented here help the reader determine how bonds can take control of their own financial destiny.

  • This edition includes information on corporate bonds, emerging market bonds, municipal bonds, the impact of global ratings, and how to protect against the default of municipal bonds.The survival of bonds posts the global financial crisis and how they can protect themselves from such potential threats in the future.The suggestions and strategies by established and successful investors to maximize the return on their portfolios while offering the security of the principal.

Thus, it offers a wide spectrum of investment opportunities of bond-investment options and how to get the best of bonds at the most attractive rates, thereby enhancing the performance of a portfolio.

#7 – The Handbook of Municipal Bonds

by Sylvan G. Feldstein and Frank J. Fabozzi

The Editors, through this version, provide bankers, traders and advisors, and other industry participants with a well-rounded look at the industry of tax-exempt municipal bonds. These bonds offer attractive opportunities for both institutional and retail investorsRetail InvestorsA retail investor is a non-professional individual investor who tends to invest a small sum in the equities, bonds, mutual funds, exchange-traded funds, and other baskets of securities. They often take the services of online or traditional brokerage firms or advisors for investment decision-making.read more. First, however, one needs a firm understanding of multiple elements that make up this market to make the most of them.

With seven comprehensive parts, this book on bond trading provides detailed explanations and a variety of relevant examples which illuminate crucial components and areas such as:

  • The sell-side involves deals, distribution, and market-making rolesThe Buy-Side specific to institutional investorsInstitutional InvestorsInstitutional investors are entities that pool money from a variety of investors and individuals to create a large sum that is then handed to investment managers who invest it in a variety of assets, shares, and securities. Banks, NBFCs, mutual funds, pension funds, and hedge funds are all examples.read moreCredit AnalysisCredit AnalysisCredit analysis is the process of drawing conclusions about an entity’s creditworthiness based on available data (both quantitative and qualitative) and making recommendations about perceived needs and risks. Credit analysis also involves identifying, assessing, and mitigating risks associated with an entity’s failure to meet financial commitments.read moreCompliance issuesFixed income analysis of municipal productsSpecial security structures and their analysisBond insurers

In addition to a comprehensive glossary of Municipal bond terminologiesMunicipal Bond TerminologiesA municipal bond is a debt security issued by a national, state, or local authority to finance capital expenditures on public projects related to the development and maintenance of infrastructures such as roads, railways, schools, hospitals, and airports.read more, this book on bond trading also includes an extensive array of case studies that offer information on some of these bonds’ most essential and innovative aspects. The cases include topics on the 9/11 catastrophe, subprime loansSubprime LoansSubprime loans are given to entities and individuals by the bank, usually on a rate of interest much higher than the market, which has a significant amount of risk involved regarding its repayment in the specified amount of time.read more, bankruptcy of a major airline, etc. It also covers other products like CDS, derivatives, tender option bonds, CDO, etc.

#8 – The Coming Bond Market Collapse

by Michael Pento

The controversial bond market book of 2013 describes how the United States is rapidly approaching the end stage of the biggest asset bubble in history, how it can cause a massive interest rate shock that will send the US consumer economy and the US government (riding on a massive treasury debt) towards bankruptcy sending shockwaves throughout the global economy. This bond market book examines how policies followed by the Federal Reserve and private industries have contributed to the existing interest rate disasters and similarities between the US and European debt crises. The author also provides well-reasoned solutions that the government, industry, and individuals can take to prevent themselves from the impending crisis.

Key Takeaways from this Top Bond Market Book

It explains why retirees, in particular, will be at risk with the decline of real estate prices, weakening of pensions, and burst of the bond bubble. This book offers smooth, necessary information with tested strategies for insulating oneself and tools for thriving financially against a disaster worse than the Great Depression.

#9 – Bloomberg Visual Guide to Municipal Bonds

by Robert Duty

This book offers a step-by-step guide to the nature and diversity of municipal securities credit structures. It is a very engaging and informative resource on the “how-to” guide toward municipal securities that will help create more effective investment strategies. There is also a demonstration of the overwhelming dependence on municipal securities pointing to a particular market sector, which can yield fruitful rewards with the proportionate existence of risks. Valuable insights offer to pertain to the differences between corporate and municipal debt. The author has clarified all the miscommunication about muni bond risk while walking through the features of a tax-exempt market.

It is a valuable addition to the new Bloomberg visual series directing the readers and offering up-to-date information and new market tools, a by-product of recent market enhancements.

Widely appreciated by the readers, this flow of information is very smooth, permitting the investors to have complete knowledge before progressing to the next topic. In addition, the author has also included many colorful illustrations, including screenshots from a professional Bloomberg financial information system, which all the readers may need access to.

#10 – The Handbook of Convertible Bonds

by Wim Schoutens & Jan De Spiegeleer

The authors of one of the most appreciated reading materials in the financial fraternity have magnificently described the pricing techniques and risk management process attached to convertible bonds and portfolios involving them through this book. Of course, these bonds can be complex since they include debt and equity features. However, the book is practical with real-life examples, and the numbers used are not restricted to hypothetical situations. This book is classified into 4 parts.

Key Takeaways from this Top Bond Investing Book

  • The primary part covers the impact of the 2007-2008 credit and financial crunch on the markets. It further enhances how to build a convertible bond and introduces readers to various terminologies relating to options and Option GreeksOption GreeksOption Greeks are variables used to measure changes in factors, such as price movement, time-value loss, and volatility of the underlying asset that affect the value of an options contract.read more. The market for stock borrowing and lending is also expressed in detail. Further, there is a complete explanation of the different features one can embed in convertible bonds.The second section focuses on aspects to consider for the pricing of convertible bonds and the parameters used in valuation models: interest rate, credit spreadsCredit SpreadsCredit Spread is the yield gap between similar bonds but with different credit quality. If a 5-year Treasury bond yields 5% and a 5-year Corporate Bond yields 6.5 percent, the gap over Treasury is 150 basis points (1.5 percent ).read more, volatility, and maturity.The third part highlights the investment strategies for equity, fixed-income, and hedge fund investors, including dynamic hedging and convertible arbitrageConvertible ArbitrageConvertible Arbitrage refers to the trading strategy used in order to capitalize on the pricing inefficiencies present between the stock and the convertible. The person using the strategy takes the long position in the convertible security and the short position in underlying common stock.read more.The fourth part details all aspects of the risk management process, which is also very critical.

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