Analysis Topic: Interest Rates and the Bond Market
The analysis published under this topic are as follows.
Saturday, November 08, 2014
Debt on Wheels - Subprime Loans and Auto Sales / Interest-Rates / US Debt
By: Mike_Whitney
Soaring auto sales are not so much a sign of a strong economy as they are an indication of financial hanky-panky. We saw this same type of fakery play out in housing between 2004 – 2006, when prices went through the roof due to a mortgage-lending scam (“subprime”) that crashed the stock market and sent the economy reeling. Now the bigtime money guys are at it again, writing up auto loans for anyone who can sit upright in a chair and scribble an “X” on the dotted line. As a result, car sales have surged to over 16 million for the last 6 months. (A full 7 million more than the low point in January, 2009.) And it’s not hard to see why either. The finance gurus are packaging these sketchy subprimes into bonds, offloading them on eager investors, and recycling the profits into more crappy loans. It’s a perfect circle and it won’t end until the loans start blowing up, jittery investors head for the exits, and Uncle Sugar rides to the rescue with more bailouts.Read full article... Read full article...
Thursday, November 06, 2014
The End of QE Is Not the End of Bad Policy / Interest-Rates / Money Supply
By: MISES
John P. Cochran writes:
Recently the financial press and media has been abuzz as the Federal Reserve moved closer to the anticipated end to its massive bond and mortgage backed securities purchases known as quantitative easing. James Bullard, President of the St. Louis Federal Reserve Bank, stirred controversy last week when he suggested the Fed should consider continuing the bond buying program after October. But at the October 29th meeting, the policy makers did as anticipated and “agreed to end its asset purchase program.” However one voting member agreed with Mr. Bullard. Per the official press release, “Voting against the action was Narayana Kocherlakota, who believed that, in light of continued sluggishness in the inflation outlook and the recent slide in market-based measures of longer-term inflation expectations, the Committee should commit to keeping the current target range for the federal funds rate at least until the one-to-two-year ahead inflation outlook has returned to 2 percent and should continue the asset purchase program at its current level” (emphasis added).
Wednesday, November 05, 2014
Japan Rhyme and Reason / Interest-Rates / Central Banks
By: John_Mauldin
“The significant problems that we have created cannot be solved at the level of thinking we were at when we created them.”
– Albert Einstein
“Generals are notorious for their tendency to ‘fight the last war’ – by using the strategies and tactics of the past to achieve victory in the present. Indeed, we all do this to some extent. Life's lessons are hard won, and we like to apply them – even when they don't apply. Sadly enough, fighting the last war is often a losing proposition. Conditions change. Objectives change. Strategies change. And you must change. If you don't, you lose.”
– Dr. G. Terry Madonna and Dr. Michael Young
Tuesday, November 04, 2014
Marc Faber Warns Japan's Bond-Buying Program is a Ponzi Scheme / Interest-Rates / Quantitative Easing
By: Bloomberg
Marc Faber, editor and publisher of "The Gloom, Boom & Doom Report", spoke with Bloomberg TV's Trish Regan today. He commented on Bill Gross' remarks about deflation and explained why he thinks Japan is engaged in a Ponzi Scheme. He also spoke on oil prices and the midterm elections.
Faber said that Japan is "engaged in a Ponzi scheme in the sense that all the government bonds that the Treasury issues are being bought by the Bank of Japan."
Read full article... Read full article...
Sunday, November 02, 2014
For Whom Are Japanese Leaders Kuroda and Abe Making Their Monetary and Fiscal Policy? / Interest-Rates / Japan Economy
By: Jesse
The expansion of the BOJ asset purchase program was timed to start with the end of the Fed's asset purchase program. I mean, come on. Could it have been any more obvious?
Saturday, November 01, 2014
Japan QE As Morphine For A Terminal Patient / Interest-Rates / Quantitative Easing
By: Raul_I_Meijer
You can jot down Halloween 2014 in your calendar, and it’s unfortunately too tragic to make proper use of the irony involved, as the day Japan committed suicide. The sun is no longer rising. Not that the vital signs weren’t bad before, indeed it might not have survived regardless, but this lethal blow announced today is still quite the statement.
Read full article... Read full article...
Friday, October 31, 2014
QE Is Dead, Now You Tell Me What You Know / Interest-Rates / Quantitative Easing
By: Raul_I_Meijer
It seems like every blue moon or so I need to return to Groucho’s definition of chaos theory, it keeps on popping up. The first time I used it in an article goes back to at least May 2009, incidentally for many people the starting date of the financial crisis in their part of the world. This time around, it’s there because it’s what a lot of people in the financial markets must be feeling. And I mean ‘must’ in the sense of ‘should’ be feeling, though I don’t think they are. Yet.
Thursday, October 30, 2014
Everything The Fed Does Is Scripted / Interest-Rates / US Federal Reserve Bank
By: Raul_I_Meijer
Janet Yellen today solemnly stated that the Fed has killed QE because the jobs outlook has improved. These are the guys and gals who have more and better access to more and better data than any of us have. And we all know that the sole reason the BLS unemployment rate has fallen is that 90-odd million working age Americans are no longer counted as part of the work force, and a huge part of those who are still employed moved to worse-paying jobs and/or had their pay and/or benefits cut.
Tuesday, October 28, 2014
When Will Central Bank Morons Ever Learn? asks Albert Edwards at Societe General / Interest-Rates / Central Banks
By: Mike_Shedlock
Central Banks and the Business Cycle
I like it when someone besides a few financial bloggers takes the gloves off and starts asking some hard-hitting questions.
Read full article... Read full article...
Friday, October 24, 2014
QE Failure & Folly Of Paper Mache, Treasury Bond Integrated Lifeline Patches / Interest-Rates / Quantitative Easing
By: Jim_Willie_CB
The Quantitative Easing initiatives have been declared as stimulus and successful in sustaining the US financial system. While having been able to continue the debt floats, the many market props, providing coverage for USGovt debt securities and mortgage backed securities which nobody wants, the initiative is hardly stimulus. The hyper monetary inflation does what we always learned it did, as in from school for 50 years, dole out its powerful corrosive effect. The inflation lifts the cost structure, leads to elimination of profit margins, and forces businesses to shut down, thus taking equipment out of service. The Jackass prefers to call the QE effect as killing capital, forcing retired capital, putting equipment on mothballs, often liquidated. Neither the USFed nor the Wall Street partners ever refer to the capital destruction effect, because it contradicts their stimulus argument and false message. Theirs is pure propaganda in keeping with the urgent directive to save the banks that are too big to fail. These are the financial crime centers of America.
Thursday, October 23, 2014
What Debt Deleveraging? / Interest-Rates / US Debt
By: Harry_Dent
The best way to delever is to immediately pay off any existing debt, right? So, how can the global economy do that?
There’s a great new study out from Geneva Reports on the World Economy 16 (ICMB — International Center for Monetary and Banking Studies) called Deleveraging? What Deleveraging?
Read full article... Read full article...
Wednesday, October 22, 2014
The Flat Debt Society / Interest-Rates / US Debt
By: John_Mauldin
International Monetary Fund chief Christine Lagarde says the global economy is facing “the risk of a new mediocre, where growth is low and uneven.”… Lagarde said Europe's 18-nation bloc that uses the euro currency – collectively the world's biggest economy – is facing the "not insignificant" risk of falling back into a recession. (VOA News)
Monday, October 20, 2014
Do We Need a Lender of Last Resort? / Interest-Rates / Central Banks
By: MISES
Nicolás Cachanosky writes: Scotland’s vote for independence resulted in a negative. There won’t be, for now, further discussions about what Scotland should do with its monetary institutions. Still, there is one more issue that I would like to discuss, because it transcends the particular case of Scotland, had independence been the result of the vote.
Read full article... Read full article...
Monday, October 20, 2014
A Funny Thing Happened on The Way to Raising Rates / Interest-Rates / US Interest Rates
By: Michael_Pento
It wasn't too long ago that the stock market was busy celebrating a "great" September jobs report. There were 248k net new jobs created and the unemployment rate dropped to 5.9 percent. Janet Yellen, Ben Bernanke and the rest of Washington D.C.'s central planners deemed it a great time to take a Keynesian victory lap, basking in the delusion that they now have proved you actually can print and borrow your way to prosperity.
And, because of their success, the Fed would be able to raise interest rates without any damage to the economy.
Read full article... Read full article...
Thursday, October 16, 2014
Why the Fed Should Consider Delaying the End of QE / Interest-Rates / Quantitative Easing
By: Bloomberg
James Bullard, President of the St. Louis Federal Reserve Bank, told Bloomberg Television's economics editor Michael McKee today that the Fed should consider delaying the end of QE.
Bullard said, "I also think that inflation expectations are dropping in the U.S. And that is something that a central bank cannot abide. We have to make sure that inflation and inflation expectations remain near our target. And for that reason I think a reasonable response of the Fed in this situation would be to invoke the clause on the taper that said that the taper was data dependent. And we could go on pause on the taper at this juncture and wait until we see how the data shakes out into December. So...continue with QE at a very low level as we have it right now. And then assess our options going forward."
Read full article... Read full article...
Wednesday, October 15, 2014
Comparing One Dimension of the Policy Responses of the ECB and the Federal Reserve / Interest-Rates / Central Banks
By: Jesse
Here is a chart comparing the Balance Sheet Assets of the Fed and the European Central Bank.
It is important to recall that the Fed has been providing extensive funding to non-US, largely European, multinational Banks through their US subsidiaries.
Read full article... Read full article...
Tuesday, October 14, 2014
Inflation, Deflation, and Our Very Confident Bet in T-Bonds / Interest-Rates / US Interest Rates
By: Rick_Ackerman
I’ve been touting the ongoing bull market in T-Bonds as one of the best investment opportunities of our lifetime – a no-brainer, as far, as I can recommend. About the only way this bet can lose is if inflation returns with a vengeance. This has never been much of a worry for me, since, on the inspiration of C.V. Myers’ prescient 1976 book, I’ve been writing about the threat of deflation for more than 20 years. As Myers noted, every penny of very debt must eventually be paid – if not by the borrower, then by the lender. So far, lenders have hung tough on their terms, and although a recklessly expansive monetary policy has cut mortgage debtors in particular some slack, there is no reason to think private lenders will let homeowners skip free when the second stage of the housing collapse that began in 2007 begins anew. Deflation-wise, this is where the rubber will meet the road, drawing irresistible power from the inevitable implosion of the quadrillion dollar Ponzi scheme popularly known as “derivatives.”
Read full article... Read full article...
Sunday, October 12, 2014
New Zero Bound Only Game In Town / Interest-Rates / Financial Markets 2014
By: Richard_Mills
The Federal Reserve tried to fix the U.S. economy by Quantifornication - stimulus measures.
Investors reacted to the Fed's unconventional efforts. Since the U.S. dollar is the world's reserve currency and precious metals are priced in dollars they bought gold and silver to protect their wealth against currency devaluation and inflation.
Gold catapulted to a record in 2011 as investors wagered on higher inflation and a weakening dollar.
Read full article... Read full article...
Sunday, October 12, 2014
The 5–Year U.S. Treasury Bond is Emblematic of Careless Risk Taking in Bond Markets / Interest-Rates / US Bonds
By: EconMatters
Dovishness Begets Excessive Risk Taking by Speculators
The Fed minutes came out this past week and they mentioned the strong dollar and less than stellar growth out of Europe, basically more over the top dovishness which just encouraged more unwise risk taking in the bond markets. This week Dallas Fed's Fisher said that they have identified areas of risk in markets, and James Bullard has said on several occasions that the markets are even behind the most dovish participants at the Federal Reserve regarding the forecasts for rate hikes, and the actual market actions of participants.
Read full article... Read full article...
Friday, October 10, 2014
The Fed Risk - Upside Down and Backwards: Here We Go Again / Interest-Rates / US Federal Reserve Bank
By: MISES
"There are some ideas so wrong that only a very intelligent person could believe in them." -George Orwell
In a recent widely distributed associated press article, Bond Market Bubble is Looking
Fragile, Bernard Cohen correctly (remarkably) identifies the financial bottleneck threatening to once again freeze credit markets a la The Lehman Crisis.
Cohen paints the portrait of a bond market panic; the very sort that could easily trigger the type of crash that could "get away" from policy makers and morph into a full blown currency crisis.
Read full article... Read full article...