Category: US Bonds
The analysis published under this category are as follows.Wednesday, December 10, 2008
The State of State Municipal Bond Funds / Interest-Rates / US Bonds
Several of our clients have come to us this past week with questions and concerns about municipal bond funds.
They are concerned about recent performance, about California projected cash shortages, about many states struggling with budget deficits, about the fate of revenue bonds in the face of current economic problems; and whether the US government would bailout states the way they are bailing out banks, insurance companies, industrial “banks”, federal mortgage agencies, and automobile companies.
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Monday, December 08, 2008
The Great U.S. Treasury Bond Market Trap / Interest-Rates / US Bonds
One of the more unusual manifestations of the financial meltdown this year has been the dollar spike, that caught a lot of traders by surprise, and was generated in part by a stampede into the percieved safety of short-expiry US Treasuries, which necessitated the purchase of US dollars. This is now arriving at its ultimate conclusion where Treasury yields have been beaten down to zero, which means that in real terms they are negative, resulting in the bizarre situation where investors are now paying the US government for the privilege of lending them money. This is clearly an untenable circumstance that cannot be expected to continue indefinitely, and it has only been occasioned by desperation, as panicked investors have sought safe haven.Read full article... Read full article...
Monday, December 08, 2008
U.S. Treasury Bonds Reach Extreme Overbought State / Interest-Rates / US Bonds
The bond market not only held the breakout levels from a couple of weeks ago, but continued to power ahead to the lowest yields seen on long term Treasury Bonds in half a century. The US administration, the Treasury and the Federal Reserve along with authorities world wide have been desperately trying all sorts of new programs to foster the flow of credit. Thus far these programs have not seemed to work. It feels like the authorities are just throwing money, programs, bailouts at a wall and hope that something will stick.Read full article... Read full article...
Saturday, December 06, 2008
Low Interest Rates Spell Big Problems / Interest-Rates / US Bonds
Government and mainstream economists have erroneously concluded that the key to reversing the financial free fall can be found in stopping the plunge in home prices. (I would offer the corollary that the key to reducing injuries in auto accidents is to suspend the laws of inertia). But to accomplish the improbable task of re-inflating the housing bubble, the government appears ready to announce a coordinated plan to push down mortgage rates to just 4.5%. Of course, this is precisely the wrong solution to the housing crisis, but when it comes to bad ideas our government has been remarkably consistent.Read full article... Read full article...
Friday, December 05, 2008
U.S. Treasury Bonds the Biggest Bubble of All? / Interest-Rates / US Bonds
Mike Larson writes: We've lived through some truly historic bubbles in recent years:
• The dot-com bubble was a doozy …
• The housing bubble was even bigger, and …
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Tuesday, December 02, 2008
U.S. Treasuries Massive Rally as Helicopter Ben Fires Buyback Bazooka / Interest-Rates / US Bonds
Treasuries staged yet another massive rally today as Helicopter Ben imitates Paulson and pulls out his own bazooka. Inquiring minds are noting that Treasury Yields Drop to Record Lows as Bernanke Cites Buybacks .
Treasuries rose, pushing yields to record lows, as Federal Reserve Chairman Ben S. Bernanke said the central bank may purchase Treasuries and target long-term interest rates to combat the deepening recession.
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Saturday, November 29, 2008
U.S. Treasury Bull Market Living on Borrowed Time / Interest-Rates / US Bonds
I must confess that the pattern in the bond market is a bit surprising. Yield on the 30-year T-bond fell to a low of 3.48% on Friday, which helped to propel the Lehman 20+ Year T-Bond (AMEX: TLT) to a new high of 106.30. Who exactly feels comfortable buying a 30-year piece of paper at less than 3.50% is a mystery in general, but specifically at THIS time, after all of the stimulus and rescue plans, the incredible 24/7 use of the printing presses, and during a period when equities are staging an impressive rally (so far).Read full article... Read full article...
Monday, November 24, 2008
Bond Yields Breakout to New Multi-year Lows / Interest-Rates / US Bonds
The bond market convincingly broke out to new multi decade lows on yields. As the dismal economic data just continues to get worse, Treasury securities ironically remain the safe haven of last resort. Once the Quarterly Treasury auctions were out of the way, traders got the green light to boldly take the US Long Bond Futures to levels where no Long Bond contract has gone before! Risk remains the dirtiest of all dirty four letter words, so government bonds are the best place to hide.Read full article... Read full article...
Sunday, November 23, 2008
U.S. Treasuries, the Final Asset Bubble / Interest-Rates / US Bonds
So far, the credit crisis has produced four asset bubbles as investors shifted from one asset class to the next. Three of these bubble have burst, but the last one, US treasuries, remains.Read full article... Read full article...
Wednesday, November 19, 2008
Misguided Bets On The Yield Curve Steepening / Interest-Rates / US Bonds
Bloomberg is reporting U.S. Long-Term Treasuries Advance as Consumer Prices Plummet .Treasuries maturing in 10 years or more, the most sensitive to inflation expectations, rose after a government report showed consumer prices dropped in October by the most on record.
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Sunday, November 09, 2008
U.S. Treasury Bonds Set to Crash, Heres How to Make a Killing / Interest-Rates / US Bonds
A new president … new ideas … and an old problem: How to pay for it all!
Mike Larson writes: It's been one heck of a week in American politics. We have a new president-elect in Barack Obama … a new approach to governing this country … and lots of new ideas about how to get the economy off its back.
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Friday, November 07, 2008
US Treasury Bonds to be Hit by $500 Billion Quarterly Flood / Interest-Rates / US Bonds
Martin Hutchinson writes: The U.S. Treasury Department announced Nov. 3 that it intended to borrow a record $550 billion in the fourth quarter. That represents a staggering $408 billion increase over Treasury's borrowing estimate from early August and includes $260 billion for the recapitalization of U.S. banks.
Make no mistake about it: There will be enough U.S. Treasury bonds to choke on, as the government tries to finance this debt.
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Monday, November 03, 2008
U.S. Bonds Weaker in advance of Massive Issuance of Bailout Treasury Bills / Interest-Rates / US Bonds
The bond market lost 4 points last week as the yield on the 10 year note gravitated back to the 4% level that seems to be acting as a magnet of equilibrium these days. While the bounce in the stock market has put some pressure on US Treasury and other government bonds, the real driver for interest rates at the present time is supply. There are certainly a number of other problems that are supportive for the bond market, but all the bailouts, guarantees and government as well as Federal Reserve programs will have to be paid for. It will be done with a massive increase in the issuance of Treasury Bills, Notes and Bonds.Read full article... Read full article...
Tuesday, October 28, 2008
Pullback in U.S. Treasury Bonds Appears Complete / Interest-Rates / US Bonds
The large 6-week coil pattern in the Lehman 20-Year T-Bond ETF (AMEX: TLT) hit its 3rd coordinate on the high side last Friday at 100.00 (off of the 10/17 low at 93.02), and since has pulled back to this morning's low at 96.02, which represents a 60% correction of the 10/17-10/24 upleg. The strength off of 96.02 suggests strongly that the pullback is complete and is turning to the upside to enter a new upleg that will retest and likely hurdle resistance between 100.00 and 100.86 -- on the way to 102.00.Read full article... Read full article...
Wednesday, October 22, 2008
Investment Opportunities in Municipal Bonds? / Interest-Rates / US Bonds
The $2.66 trillion municipal bond market is embroiled in the overall credit market mess, creating an unusual complex of risks and opportunities.
The supply-demand forces in the municipal bond market have been unfavorable in the past year, causing prices to decline.
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Monday, October 20, 2008
Bonds Crash as Stock Markets Bounce / InvestorEducation / US Bonds
The bond market traded sharply lower again last week as tiny glimmers of hope appeared on the horizon indicating that the worst of the financial upheaval for this month might be behind us. After a record breaking crash in equities during the first third of October, stocks actually managed to show some gains last week as some metrics of financial distress such as elevated LIBOR levels, 0% Treasury Bill yields and record premiums for Credit Default Swaps managed to subside a tad. We are far from normal on most fronts but at least for the moment it appears that the sky has stopped falling!Read full article... Read full article...
Tuesday, October 14, 2008
US Treasury Bond Market Crash / Interest-Rates / US Bonds
Martin here with an urgent update on these wild, wild markets.
The key factor many investors seem to be forgetting: While stock markets have enjoyed a historic rally, bond markets are suffering a dramatic decline.
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Tuesday, October 14, 2008
Treasury Bonds ETF Inverse Trend to Stock Market Indices / Interest-Rates / US Bonds
To some degree, the TLTs (Lehman 20 Yr T-bond, ETF) trades inversely to the equity indices like the SPYs (for instance); however, my sense is the recent upside explosion in the stock averages and the recent plunge in TLT prices have "corrected" and defused the bulk of that relationship, which if accurate, means that a new relationship is forming based less on flight-to-safety and more on the still-challenging (to put it mildly) economic fundamentals that will not be corrected any time soon.Read full article... Read full article...
Monday, October 13, 2008
$62 Trillion Credit Default Swaps Threaten U.S. Government Bonds / Interest-Rates / US Bonds
Gold experienced sharp falls on Friday but was still up by more than 3% on the week. This was a very impressive performance considering that major equity indices crashed some 20% to 25% for the week (see Performance table).Read full article... Read full article...
Monday, October 06, 2008
Government Bonds Strong Rally on Grim Economic Outlook / Interest-Rates / US Bonds
The bond market traded up last week as panic in financial markets intensified. The latest and greatest $700 Billion bailout package was finally passed by the US authorities last Friday, but it did not seem to make much difference as stocks dropped another 3-4% once the deal was officially passed. As previously mentioned in this here column, it is just another band-aid that hopes to provide quick relief for the symptoms of this gigantic financial crisis without addressing the real problem of dealing with the excess credit that has been built up on all fronts. European governments have also been busy with various rescue plans. Ireland and Germany are leading the charge by declaring that those governments now will guarantee all deposits in their respective banking systems. Surely other countries, including the US , will not be far behind adopting this drastic measure.Read full article... Read full article...