Analysis Topic: Interest Rates and the Bond Market
The analysis published under this topic are as follows.
Tuesday, February 11, 2014
No Honeymoon for Janet Yellen / Interest-Rates / US Federal Reserve Bank
By: Axel_Merk
On Janet Yellen’s first day on the job as Fed Chair, the Dow Jones Industrial Average dropped 326 points; 10-year Treasury yields fell to a mere 2.58%. While a day does not set a trend, let alone create a legacy, there is no honeymoon for Janet Yellen. Volatility, seemingly absent in 2013, is back, with major implications for investors’ portfolios.
Monday, February 10, 2014
Debt Deleveraging Deception Continues / Interest-Rates / Global Debt Crisis 2014
By: Michael_Pento
I first wrote about the “Deleveraging Deception” back in September of 2010. Unfortunately, those that would have you believe the economy has paid down its excessive debt levels are still at work trying to deceive you. But here’s the truth.
In order to perpetuate their deception that the economy has deleveraged, many Wall Street pundits often site the statistic that Household Debt Service payments as a percentage of disposable income has fallen to 9.2%, the lowest level since 1980 and down from 13.18% at the peak of the Great Recession.
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Friday, February 07, 2014
How Can Money Printing Exist and be Absent at the Same Time? / Interest-Rates / Quantitative Easing
By: Matt_Machaj
In the past years, the Federal Reserve dropped many inflationary bombs on the markets. Inflationary in the purely monetary sense by supplying money in almost ridiculous amounts, especially base money figures. During this process some commentators believed that the dollar would soon evaporate, that investors will run away in favor of the euro (like the EBC had not been printing euros for their banks), or maybe in favor of the yen (like the Japanese central bank was not that inflationary), or who knows maybe even the yuan. The dollar was supposed to be either dropped by international investors, or killed from within by internal inflationary rates (or possible by those two factors combined together). None of this happened. How are we to explain this if the Fed went almost crazy in monetary creation?
Wednesday, February 05, 2014
Challenging the Consensus for Rising Interest Rates / Interest-Rates / US Interest Rates
By: John_Mauldin
One of the most universal consensus calls in the markets today is that interest rates are destined to rise. Thirteen out of 13 major investment banks all think that interest rates for global fixed-income will rise this year. I get nervous when everybody is on the same side of the boat. And so does my good friend and business partner Niels Jensen of Absolute Return Partners in London. This week’s Outside the Box is another of his thoughtful essays, giving us five reasons why interest rates may in fact go down this year. That is not to say that we don't both agree that rates have to go back up eventually, but to us the timing is not so obvious as it is to the major investment banks. Rather than tip his thunder, I’ll let Niels advocate for his position. (And you can see more of his consistently excellent work at www.arpinvestments.com.)
Wednesday, February 05, 2014
From the Bernanke Put to the Yellen Trap, Debt Rattle 2014 / Interest-Rates / US Federal Reserve Bank
By: Raul_I_Meijer
Sifting through the debris after the initial wave of the year’s first major storm has subsided, there’s no escaping the realization that the damage is structural, this was no incident, and the next wave may well topple the whole structure. Its foundations have been impaired so thoroughly by many years of intentional neglect that the only sensible thing to do is to raze it, lay down new foundations, and erect a whole new edifice.
Ironically, it’s the utter contempt for the free market system as exhibited by the major players in what still poses as a capitalist society, that has done us in. Recklessly flooding the entire premises with ultra cheap liquidity is the one thing the building proved to have no resistance against. Turns out, if you don’t replace weak pieces with new and stronger ones, if you don’t throw out what has started rotting, you end up compromising the entire foundations.
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Wednesday, February 05, 2014
U.S. Taxes, Entitlements and Federal Debt: The CBO’s Latest Projections / Interest-Rates / Government Spending
By: PhilStockWorld
Courtesy of Doug Short: This morning the Congressional Budget Office published its Budget and Economic Outlook: 2014 to 2024, available as a 175-page PDF file. The main body of the document is divided into four parts: The Budget Outlook, The Economic Outlook, The Spending Outlook and The Revenue Outlook. The Appendix, which constitutes over half the document, covers a range of topics, including four decades of historical data.
Saturday, February 01, 2014
U.S. Treasury Bonds Defying Dire Forecasts / Interest-Rates / US Bonds
By: Sy_Harding
There was no doubt about it in 2013. If the Fed were ever to cut back on its five years of massive QE bond-buying, bond prices would collapse.
It made sense. Of the $85 billion a month of QE, $40 billion was in mortgage-backed securities, and $45 billion in Treasury bonds.
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Saturday, February 01, 2014
Emerging Markets, Interest Rates and QE Tapering / Interest-Rates / Emerging Markets
By: Alasdair_Macleod
Thanks to the Fed's tapering, a wider public is becoming aware of currency instability in diverse economies, from Turkey to Argentina, and India to Indonesia. Indeed, on Tuesday night Turkey raised overnight interest rates by a whopping 4.5% to 12% in an attempt to stop a run on the lira.
Turkey has her own political problems, perhaps strong enough to knock the stuffing out of her currency on their own, and Argentina seems to be permanently fighting off hyperinflation. But it is a mistake to think that the idiosyncrasies of each currency are solely the cause of their downfall. The fact that these countries' currency problems are all happening at the same time tells us the common factor is currency itself.
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Friday, January 31, 2014
FOMC on Future U.S. Interest Rates / Interest-Rates / US Interest Rates
By: Matt_Machaj
In terms of asset purchases monetary policy was, is and will be accommodative. More importantly so is the case with interest rates, which are still flirting with zero percent range - despite the fact that that lowering was believed by some to be temporary. I remember that even in 2009 there were people seriously arguing that we should expect interest rate hikes in few months. The history has proven them to be astonishingly wrong.
Thursday, January 30, 2014
The Limits of Turkey's Interest Rate Hike / Interest-Rates / Turkey
By: STRATFOR
Summary
With a dramatic hike in Turkey's overnight lending rate from 7.75 to 12.5 percent announced on Jan. 28, Turkish Central Bank Gov. Erdem Basci followed through on his earlier promise to use interest rates as a weapon to defend Turkey's currency, the lira. While the hike is a bolder-than-expected move designed to jolt investor interest, Basci is still, in effect, using a sword to fight off a barrage of artillery as a wrenching political crisis continues to erode investor confidence.
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Wednesday, January 29, 2014
Continuing Low Interest Rates Environment for Long term U.S. Treasury Bonds / Interest-Rates / US Bonds
By: John_Mauldin
Last week Greg Weldon made the case for rising interest rates on US treasuries. This week Lacy Hunt offers us the case for a continued low-interest-rate environment for long-term treasuries. This is one of the most fascinating tugs-of-war in the investment world today. I’ve made the argument that we are in a deflationary deleveraging world for quite some time to come, or at least until the velocity of money turns around. Lacy makes that point, too, and offers some insights into the velocity of money. This is a fascinating Outside the Box, and I won’t spoil it by stealing any more of Lacy’s thunder.
Sunday, January 26, 2014
TNX Chart: Specter of Rising U.S. Interest Rates / Interest-Rates / US Interest Rates
By: Jim_Willie_CB
We are at the doorstep of a major USTreasury Bond breakdown. The TNX (10-year bond yield) is at the 3.0% doorstep, as 3.5% looms very likely in the coming months. A horrible threat of a 3.7% target is presented in the chart. A rising trend is seen in many characteristics that cannot be easily dimissed. The following graphic is an extremely powerful chart, thus the center piece of the article. If and when the breakout comes, it will make the Taper Talk backfire seem rather insignificant, as a gathering storm will hit like a financial hurricane on every continent. The Jackass is on record with a forecast of 3.5%, which remains in place. One must be patient to watch it unfold, since it can take months to unfold and to manifest itself. That is far more time than the nitwits who are quick to label it a wrong forecast call. But then again they are are loud unimpressive dullards who litter the audience, taking up valuable space.
Thursday, January 23, 2014
Could A Compound Debt Interest Rate Payments Wildfire Threaten US Solvency? / Interest-Rates / US Interest Rates
By: Dan_Amerman
For the first time since the end of World War II, the total US federal debt now equals 100% of the size the US economy. But while that is obviously a situation of great concern, it may not be the worst of the danger.
Instead, the greatest debt-related threat to the solvency of the United States government and the value of the dollar could be the fact that the US isn't actually making any net principal or interest payments on its debt.
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Tuesday, January 21, 2014
The Rock ‘em Sock ‘em Fed Comes Out Swinging / Interest-Rates / US Federal Reserve Bank
By: Money_Morning
Shah Gilani writes: Last Tuesday, January 14, 2014, the Federal Reserve finally had enough.
After supposedly looking into big banks ownership of commodity-related infrastructure operations (like warehouses, oil barges, and utilities) for the last two years, which came on the heels of their 2003 review of the same issues, the rock ‘em sock ‘em Fed came out swinging.
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Friday, January 17, 2014
U.S. Bonds and MBS Buying Program in Reversal? / Interest-Rates / Quantitative Easing
By: Matt_Machaj
After the announced “tapering” all the doubts were centered around the question, how big the “tapering” is. All trails lead us to speculation about how the so-called backing out could influence the market in the long run. First let us illustrate all the different versions of Quantitative and Qualitative Easings (episode 1, episode 2, episode 3…) that happened since 2009. Here is a graph that you’re already familiar with, depicting an immense growth in the balance sheet of the Federal Reserve since 2009. Contrary to graphs presented previously in the Market Overview, which summed up government securities and mortgage backed securities bought by the Federal Reserve and presented them in total:
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Thursday, January 16, 2014
Why We Can Not Buy Our Way Out Of Debt / Interest-Rates / US Debt
By: Raul_I_Meijer
Last week, there was a discussion in our comments section about the financial “crunch”, the big kahuna, and how it still has not happened despite our insisting it is inevitable, with people saying things like: ‘but the stock markets are way up!’, and ‘in my area home prices are up 30%’. As much as I understand the sentiments, at the same time I don’t really. Certainly for people who read The Automatic Earth, I would have thought it would be clearer what is going on “out there”. I have certainly written more articles than I care to remember about what goes on. Debt is what goes on.
Wednesday, January 15, 2014
Federal Reserve Overstepped Bounds with Monetary Policy - Seems like a Bubble / Interest-Rates / US Federal Reserve Bank
By: EconMatters
Checks & Balances
If you think about it the President has checks and balances, the Supreme Court has checks and balances, and even the two houses of Congress have checks and balances. However as we have seen with the last 5 years of Fed policy that there is no actual checks and balances for what the Federal Reserve can and cannot do with regard to monetary policy, and there should be.
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Wednesday, January 15, 2014
Where the Fed Went Wrong When It Decided to Taper QE / Interest-Rates / Quantitative Easing
By: DailyGainsLetter
John Paul Whitefoot writes: The merriment, mirth, and cheer on Wall Street over the holiday season may have been a bit premature; in fact, the optimism about the U.S. economy that ushered in the New Year may have already come to a screeching halt.
In mid-December, the Federal Reserve surprised investors when it announced it was going to start tapering it’s generous $85.0-billion-per-month easy money policy in January to just $75.0 billion per month. The pullback was a surprise, because the Federal Reserve initially hinted it wouldn’t ease its monetary policy until the U.S. unemployment rate fell to 6.5% and inflation rose to 2.5%. At the time of the announcement, U.S. unemployment stood at seven percent and inflation was hovering around historic lows below one percent.
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Sunday, January 05, 2014
Fed Admits It's Clueless How QE Actually Works / Interest-Rates / Quantitative Easing
By: Mike_Shedlock
Inquiring minds are investigating three articles from today, stating opinions of three different Fed governors.
Thursday, January 02, 2014
Behind the Fed’s Magical Curtain: The US Monetary Base and the Impact of Excess Reserves / Interest-Rates / US Federal Reserve Bank
By: Submissions
Kim Collard writes: The Federal Reserves actions since the Global Financial Crisis have been watched and analysed more than at any other time in history. This makes pretty good sense, as its actions have obviously had a profound impact on these markets.
However, I believe all the many and varied analyses of these actions have fallen into a carefully laid perception trap.