Category: US Bonds
The analysis published under this category are as follows.Tuesday, May 19, 2009
Barrons on U.S. Treasury Bond Bubble Bursting / Interest-Rates / US Bonds
This is the second cover story in 5 months for Barron's on the bursting of the bubble in Treasury yields. I have been closely following the yield on the 10 year Treasury since December, 2008, and I would agree that Treasury yields are ripe for a secular trend change. However, this won't be confirmed until there is a monthly close over 3.43% in yield.
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Tuesday, May 19, 2009
U.S. Treasury Bonds Recovery from Deeply Oversold Levels / Interest-Rates / US Bonds
The bond market recovered from deeply oversold levels last week. Former support at 3% on the 10 Year Treasury Note will be the first major resistance level to watch. The yield curve on the other hand maintained its steepness as yields declined across the maturity spectrum. The economic data might look good from far but it is far from good so the main concern for the bond market is not an imminent recovery but a continued deterioration of the credit quality of government bonds as more and more of the excesses of this enormous credit bubble continue to migrate from the private to the public sector. Look for real yields to expand.
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Friday, May 15, 2009
Dangerous Treasury Bond Bubble / InvestorEducation / US Bonds
As reported two weeks ago: spreads had been sending a caution sign for the risk of yields rising. That has been happening, and the 30 year yields are rising ...
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Friday, May 15, 2009
Non-Existant U.S. Economic Recovery Bullish for Treasury Bonds / Interest-Rates / US Bonds
Given that Bernanke's green shoots are withering on the vine it was a sure bet that someone else would find another feel good term to describe what is essentially not happening. That term is "pre-recovery".
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Monday, May 11, 2009
U.S. Treasury Bonds Break Below Short-term Support / Interest-Rates / US Bonds
The bond market gave up a major support level 2 weeks ago as the 10 Year Treasury Note moved decisively through 3%. Last week the bond market followed through with yields rising and prices falling further. The stocks for bonds switch also continued unabated. The yield curve also broke out of its trading range around 200 basis points to steepen toward the 230 level. Long term rates rose from 2.5% just before year end to 4.27% as of last weekend. That is a 71% rise in a little over 4 months. That is about double the measly 35% rise in the stock market. The record debt to GDP level maybe changing in its composition but it is not going away. Any “green-shoot” that might be fixing to sprout will be nipped in the bud by rising yields.
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Friday, May 08, 2009
The Clock is Ticking on the U.S. Dollar and Bond Markets! / Interest-Rates / US Bonds
This is the beginning of the third edition of the “Fingers of Instability” series. The first edition was in the winter/spring of 2007, the second in the winter/spring of 2008, and now the third in the spring of 2009. The Fingers of Instability are ANALOGOUS to nature as seen in a sand pile. In August 2006, John Mauldin (John@frontlinethoughts.com) commented on a study of sand piles by three physicists who created a sand pile with a computer program that dropped one grain of sand on top of another to study critical states: NON-EQUILIBRIUM systems and uncertainty. When I read this, I immediately realized the debt bubbles throughout the world were an analogy to these studies and explained a great deal about the last three decades of debt creation. It reinforced my observations about Ponzi finance and asset-backed economies. It explained quite nicely what was transpiring and what to expect at some point in relation to PILES of DEBT and the FAKE prosperity and growth caused by EASY MONEY and runaway credit expansion.
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Friday, May 08, 2009
Bursting Of The U.S. Treasury Bond Bubble: Not So Fast! / Interest-Rates / US Bonds
The yield on the 10 year Treasury bond has spiked 10% in the past two weeks, and many are now jumping on the "bonds are the next bubble to burst" bandwagon. I was one of the first to be bearish on Treasury bonds calling for the likelihood of a secular trend change back in December, 2008 and a top in back in February, 2009. Higher Treasury yields are in our future, and it isn't a matter of if but when.
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Wednesday, May 06, 2009
Inflation or Deflation: Who is the Winner? / Interest-Rates / US Bonds
In this environment, we anticipate that inflation will remain low. Indeed, given the sizable margin of slack in resource utilization and diminished cost pressures from oil and other commodities, inflation is likely to move down some...
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Wednesday, May 06, 2009
U.S. Treasury Bonds Break Below Support / Interest-Rates / US Bonds
The bond market gave up a major support level last week as the 10 Year Treasury Note moved decisively through 3%. The stocks for bonds switch continued unabated, where it stops, nobody knows. As the short end remains anchored, any back-up in long term rates causes the yield curve to steepen. This is a good news – bad news story in the present environment. It is excellent news for financials that can still afford to borrow short and lend long as they can earn a significant carry on that trade.
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Friday, May 01, 2009
U.S. Treasury Bond Debt Bubble Bursting! / Interest-Rates / US Bonds
Mike Larson writes: You’d think that after the dot-com bubble … the housing bubble … and the bubbles in commercial real estate and private equity, investors would have learned their lesson.
Nope! They did the same stupid things this fall …
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Tuesday, April 28, 2009
Bond Vigilantes are Fighting the Fed By Pushing Up Yields / Interest-Rates / US Bonds
Cant' fight the Fed? Bond vigilantes are fighting the Fed and winning at bidding up bond yields. Short of another shock-&-awe policy announcement this Wednesday, the FOMC decision is likely to generate fresh dollar strength against risk currencies (non-JPY).
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Monday, April 27, 2009
Obama Says Short US Treasuries, an Update / Interest-Rates / US Bonds
Back in March, I penned this essay, Obama Says Short US Treasuries, making the bear case for the US government’s fiscal position and the Treasury long bond: http://mises.org/story/3364
Then I wrote this follow-up, Inflection Point in US Treasury Bond Interest Rates Near: http://www.marketoracle.co.uk/Article9294.html
Monday, April 27, 2009
U.S. Treasury Bonds Fall Despite Supportive Fundamentals / Interest-Rates / US Bonds
The bond market is testing the line in the sand drawn by the Bernanke Fed at 3% on the 10 Year Treasury note yield. While stocks held their own with the Nasdaq closing positive for the 7th week in a row, bonds continued to trade in a leaky fashion. There was all sorts of chatter about the government stress tests being flunked by most financial institutions, but until we see an official announcement, rumours of across the board insolvencies remain just that: rumours!
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Sunday, April 19, 2009
U.S. Treasury Bonds Now 2 Standard Deviations Cheaper than Stocks / Interest-Rates / US Bonds
The bond market continues to chop around aimlessly. The market was stronger most of the week, but a 2 point sell-off on Friday destroyed all the gains and then some. The fundamental news turned considerably weaker – even in relation to expectations - but the stock market managed to show further gains for the 6th week in a row now. That generated further outflow from bonds to stocks. Based on the Fed model which compares the 10 year Treasury note to the dividend yield in the stock market, stocks made a close to 4 standard deviation move relative to bonds in a little over one month.
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Tuesday, April 14, 2009
What to Do When the U.S. Treasury Bond Market Falls / Interest-Rates / US Bonds
Tom Dyson Writes: Jesse Livermore called it "the path of least resistance." Livermore is probably the greatest trader that ever lived. He made his first fortune in the stock market as a teenager... in the late 1890s. The book of his trading techniques – Reminiscences of a Stock Operator – is the best book on stock market trading ever written. You shouldn't buy another stock until you've read it. (Just don't copy his money-management techniques. By overtrading, Livermore made and lost several multimillion-dollar fortunes in his lifetime.)Read full article... Read full article...
Monday, April 13, 2009
Economic Weakness Supportive of Bond Prices / Interest-Rates / US Bonds
Before the start of this week’s column, I would like to make a quick announcement. I am not affiliated with MF Global any longer, so please note the new contact email below if you wish to reach me. The old email address and phone number that was published in previous editions is no longer functional.Read full article... Read full article...
Monday, April 06, 2009
Fed's Flawed Strategy of Buying Long Dated Treasuries to Force Rates Lower / Interest-Rates / US Bonds
Bernanke thinks he can manipulate treasury yields by purchasing long dated treasuries. He can't. The market is simply too big. Please consider Treasurys slide after Fed purchases .Read full article... Read full article...
Saturday, March 28, 2009
Do Bonds Beat Stocks Over the Long Run? / Interest-Rates / US Bonds
Why Bother With Bonds?
So Then, Bonds for the Long Run?
P/E Ratios at 200? Really?
Mark-to-Market Slip Slides Away
Housing Sales Improve? Not Hardly
Investors, we are told, demand a risk premium for investing in stocks rather than bonds. Without that extra return, why invest in risky stocks if you can get guaranteed returns in bonds? This week we look at a brilliantly done paper examining whether or not investors have gotten better returns from stocks over the really long run and not just the last ten years, when stocks have wandered in the wilderness. This will not sit well with the buy and hope crowd, but the data is what the data is. Then we look at how bulls are spinning bad news into good and, if we have time, look at how you should analyze GDP numbers. Are we really down 6%? (Short answer: no.) It should make for a very interesting letter.
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Friday, March 27, 2009
U.S. Treasury Bonds Heading for Day of Reckoning / Interest-Rates / US Bonds
Mike Larson writes: The U.K. Treasury held a bond auction on Wednesday morning. On the offer were 1.75 billion pounds ($2.55 billion ) worth of 40-year “Gilts” — the U.K. equivalent of U.S. Treasuries. There was just one problem …
Buyers went on strike! They offered to purchase just 1.63 billion pounds ($2.37 billion) of debt.
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Wednesday, March 25, 2009
U.S. Treasury Bond Yields: Government Intervention Breeds Uncertainty / Interest-Rates / US Bonds
For many months, I have been tracking US Government 10 year Treasury bonds essentially stating that they have topped out. In my most recent article on Treasury bonds, I stated: "the upside for Treasury bonds is limited, and there is a high degree of certainty that a new secular trend is developing that favors higher yield pressures. "Read full article... Read full article...