Analysis Topic: Interest Rates and the Bond Market
The analysis published under this topic are as follows.
Monday, June 23, 2014
The Fed’s Stealth Tightening / Interest-Rates / US Interest Rates
By: Casey_Research
By Bud Conrad, Chief Economist
As expected, the Fed tapered its purchases of mortgage-backed securities on Wednesday to $15 billion per month and its purchases of longer-term Treasury securities to $20 billion per month.
That means total monthly purchases, which were $85 billion last year, are now down to $35 billion. That’s a significant cut.
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Monday, June 23, 2014
The Bond Market Trap / Interest-Rates / US Bonds
By: Peter_Schiff
The American financial establishment has an incredible ability to celebrate the inconsequential while ignoring the vital. Last week, while the Wall Street Journal pondered how the Fed may set interest rates three to four years in the future (an exercise that David Stockman rightly compared to debating how many angels could dance on the head of a pin), the media almost completely ignored one of the most chilling pieces of financial news that I have ever seen. According to a small story in the Financial Times, some Fed officials would like to require retail owners of bond mutual funds to pay an "exit fee" to liquidate their positions. Come again? That such a policy would even be considered tells us much about the current fragility of our bond market and the collective insanity of layers of unnecessary regulation.
Friday, June 20, 2014
U.S. Fed Musical Chairs at the FOMC / Interest-Rates / US Federal Reserve Bank
By: John_Mauldin
“You can’t tell the players without a program. Get your program here!” yelled the stadium vendors of my youth. In today’s Outside the Box I bring you an excellent piece of Fed watching by Nouriel Roubini and colleagues, a “program” of the new Fed members and where they rank on the hawk-dove scale. They point out that, with a new chairperson (Janet Yellen) and vice-chair (Stanley Fischer), and with higher than normal turnover on the Federal Open Market Committee (FOMC) – over the past year, 75% of the FOMC’s membership has changed – the Fed’s need for clear communications with regard to monetary policy and forward guidance is greater than ever.
Thursday, June 19, 2014
The Euro Goes Negative - Sovereign Debt Bubble Is a Bigger Issue / Interest-Rates / ECB Interest Rates
By: Peter_Schiff
Dickson Buchanan writes: The European Central Bank's (ECB) decision to charge a negative interest on overnight deposits is not going to lead to a higher targeted inflation rate, despite ECB President Mario Draghi's insistence that it will. Like all cases of central planning, this decision will have unintended and costly consequences - some of which are already starting to play out. In this particular case, instead of stimulating business lending or higher prices, the decision will only stimulate the increased buying of insolvent government debt - leading us all one step closer to the economy's eventual unravelling.
Thursday, June 19, 2014
Draghi Hits Savers To Salvage Faux Economic Recovery / Interest-Rates / ECB Interest Rates
By: John_Browne
On June 5th, Mario Draghi, President of the European Central Bank (ECB), announced a package of measures, including a policy of negative interest rates, aimed at encouraging or even forcing Eurozone banks to increase their lending to businesses.Although previously imposed by Swiss banks on their depositors, this will be the first time that a central bank has charged negative interest rates. The package also contained a reduction in Base Rate, a further major new Long Term Refinancing Operation (LTRO), a reaffirmation of 'Forward Guidance' to indicate low interest rates for the foreseeable future, and hints that the ECB might in future engage in Bernanke-style Quantitative Easing (QE).
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Thursday, June 19, 2014
Five Reasons For Some FED Action / Interest-Rates / Quantitative Easing
By: Submissions
Sant Manukyan writes:
QE-1? Have to admit it did work pretty well. Unlocked the credit markets, gave a boost to the asset prices and more importantly pushed the rates even lower. QE-2? Depends, but if the intention was to keep the long rates down yes it did work. QE-3? I don’t think it really did work. Not only QE is not “printing money” and “reserves can not be lend” it is not intended to create inflation as well. And before the next recession strikes, been 5 years since the end of the Great Recession, the FED better lock some of it’s tools up into the tool box so that it can them out later. Any reason for tightening? Sure, here they are:
Tuesday, June 17, 2014
Why Negative Interest Rates Are Only the First Step / Interest-Rates / Central Banks
By: Casey_Research
By Jeff Thomas, International Man
In 1946, an American singer, Merle Travis, recorded a song called "Sixteen Tons." The song told the story of a poor coal miner in Kentucky, who lived in a small coal mining town. The town's economy revolved entirely around the mine.
The mining company owned a "company store," which had a monopoly on the sale of provisions. It charged rates that were designed to use up the weekly paycheque of the miner, so that the miner, in effect, was a slave to the mining company. As the song states,
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Monday, June 16, 2014
Bond Market Kings to be Dethroned in Second Half of 2014 / Interest-Rates / US Bonds
By: EconMatters
Jeffrey Gundlach`s Outlook
Jeffrey Gundlach of DoubleLine Capital LP says the 10-year U.S. Treasury note will likely trade in a range between 2.20 and 2.80 percent during the second half of year. Gundlach also said U.S. Treasuries are a buy for investors as they are yielding in the upper half of his projected trading range. He said this on June 10th of 2014 and it seems he still expects the 10-year yield to be lower than the 2.40% bottom put in about 3 weeks and 20 basis points ago.
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Wednesday, June 11, 2014
The European Central Bank’s House of Cards / Interest-Rates / ECB Interest Rates
By: Frank_Hollenbeck
The European Central Bank (ECB) recently imposed negative deposit rates and is preparing a form of quantitative easing (QE) to purchase asset backed securities, corporate bonds or possibly bailout bonds. This policy may seem surprising. Why would the ECB want to try to force banks into making bad loans, or consider implementing a policy of quantitative easing that has clearly been a total failure (with obvious unintended consequences) in both the USA and Japan? The answer lies elsewhere. Under the guise of avoiding deflation or “low-flation,” the ECB is, in reality, panicking and trying to save itself from the executioner’s axe. Of course, the European banking sector and its bought-and-paid-for journalists unanimously support this prospect of continued theft through debasement. They are giddy at the prospects of higher asset prices and higher banker incomes, unjustified by fundamentals, and the implied massive transfer of income and wealth from the have-nots to the haves.
Wednesday, June 11, 2014
Europe's Unprecedented Rate-Slashing Gives Us a Classic Profit Play / Interest-Rates / ECB Interest Rates
By: Money_Morning
Peter Krauth writes: European Central Bank President Mario Draghi is desperate.
The European Union has been plagued with years of falling inflation and stubbornly high unemployment.
And now its central bank is attempting to employ "unconventional" policies to kick-start the economy.
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Tuesday, June 10, 2014
European Central Bank Goes Sub Zero / Interest-Rates / ECB Interest Rates
By: Mike_Whitney
On Thursday, European Central Bank chief Mario Draghi dropped rates on overnight deposits to minus 0.1% thereby charging commercial banks to keep their money at the ECB. The move, which was applauded by the media as a “historic measure to fight deflation”, is nothing of the kind. Negative rates have been used in both Sweden and Denmark in recent years, but to little effect. The policy will not “get the banks lending again” as the ECB suggests, nor will it ease the high unemployment and slow growth that have plagued the Eurozone for the last six years. In truth, the rate change will have no impact at all. It’s merely public relations stunt designed to create the impression that the ECB is aggressively addressing the crisis for which it is largely responsible. Here’s how the World Socialist Web Site summed it up:
Tuesday, June 10, 2014
Euro-zone Bond Market Madness as Spanish 10-Year Bond Yield Lowest Since at Least 1789 / Interest-Rates / Euro-Zone
By: Mike_Shedlock
Those searching for absurdity in government bonds can find it in a multitude of places.
For example, and via translation from Libre Mercado (courtesy of my friend Bran who lives in Spain) please note Spanish 10-Year Bond Yield is Lowest Since at Least 1789.
Monday, June 09, 2014
Germany Says Draghi Is A New Bismark And Dangerous / Interest-Rates / ECB Interest Rates
By: Andrew_McKillop
Mario Draghi's Historic Decision
By pushing down the ECB's overnight rate on forced deposits to it, from the Eurozone's private banks to minus 0.1% per year, and holding the ECB's key lending rate to banks and financial establishments in the Eurozone at 0.15% per year, Draghi made a so-called historic decision. Announcing the moves last week, Draghi used several powerful images and allusions. For example Japan's lost decade, but he means 3 lost decades – and staying with Japan, he could have mentioned that BOJ lending rates in Japan have been held below 2% for 30 years. Did that stimulate the Japanese economy?
Sunday, June 08, 2014
European Central Bank Cuts Interest Rate Below Zero / Interest-Rates / ECB Interest Rates
By: Global_Research
Stefan Steinberg writes: The European Central Bank (ECB) slashed one of its interest rates to negative territory and unveiled a €400bn loan package for Europe’s banks in response to the ongoing economic slump and the threat of deflation.
At its meeting in Frankfurt Thursday, the central bank cut its main lending rate to 0.15 percent from its current historic low of 0.25 percent, and its overnight deposit rate from zero to minus 0.10 percent, becoming the largest central bank to lower rates to below zero.
Sunday, June 08, 2014
ECB Negative Interest Rate Is A Dud, Bank Deposits Are Long Gone / Interest-Rates / ECB Interest Rates
By: Raul_I_Meijer
Much ado about nothing. That about sums up the real story behind the heated headlines on the “historic” decision by the ECB to lower its deposit rate into negative territory, from 0% to -0.1%. Because without any actual deposits, the move is empty, meaningless, showmanship, sleight of hand. There was a time when it made sense for banks to park reserves at the central bank, but that time is long gone, since banks don’t have to be afraid of each other’s hidden debts anymore. Not because those debts have disappeared , but because governments and central banks are now on the hook for them.
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Friday, June 06, 2014
ECB Pulls Out Pea Shooter, Fires, Misses Target / Interest-Rates / ECB Interest Rates
By: Mike_Shedlock
In a widely expected move this morning, ECB president Mario Draghi announced negative interest rates, the first-ever move for a major central bank.
The deposit rate in Europe is now negative 0.10%. The ECB also lowered the benchmark rate from 0.25% to 0.15%.
In a display of puffery, Draghi announced “we aren’t finished here”.
Friday, June 06, 2014
Euro-zone Negative Interest Rates, Ready to Pay the Bank to Hold Your Money? / Interest-Rates / ECB Interest Rates
By: Chris_Vermeulen
The six members of the European Central Bank (ECB) Executive Board and the 16 governors of the euro area central banks vote on where to set the rate. We watch interest rate changes closely as short term interest rates are the primary factor in currency valuation.
Friday, June 06, 2014
The Great QE Bubble Lives On / Interest-Rates / Quantitative Easing
By: Raul_I_Meijer
This is one of those days where I wonder what I’m going to say about this one. It’s all too convoluted six ways to Sunday. Yeah, Mario Draghi delivered for markets and investors, and stocks rise a bit more. Like they’re not high enough yet, setting records in . One thing he didn’t do is commit to asset backed securities purchases, and so that is now what markets will be demanding from him next time around. Who cares anymore that ABS were the main conduit to blew up the same markets in 2008? Investors are happy, and Jack and Jill are ignorant. The Great QE Bubble lives to see another day. Yay!
Friday, June 06, 2014
Currency Wars - When Interest Rates Go Negative / Interest-Rates / ECB Interest Rates
By: John_Rubino
Yesterday morning the European Central Bank tried something different. As Bloomberg reported:
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Friday, June 06, 2014
ECB Cuts Base Interest Rate. So What? / Interest-Rates / ECB Interest Rates
By: Jonathan_Davis
I won’t bore you with the minutiae just a couple of details:
The ECB has cut the Base Rate by the staggering amount of, er, 0.1% to 0.15%.
Also, banks depositing funds at their Central Bank (the ECB) will be charged 0.1% for the privilege.
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