Analysis Topic: Interest Rates and the Bond Market
The analysis published under this topic are as follows.
Thursday, January 17, 2013
Bond Market Math / Interest-Rates / US Bonds
By: Fred_Sheehan
This is the year for stocks. So one would gather from the media. The Wall Street Journal offered a lukewarm endorsement on Monday, January 15, 2012, with the headline: "Investors Flock to Stocks - So Far."
The diffident prediction opens: "As 2013 gets underway, one of the biggest questions in financial markets is again bubbling: Will this be the year that investors dump bonds and return to stocks?" The question may have surprised some readers. The S&P 500 has risen 120%, or, at a 21 percent-a-year pace since March 2009. How did stock prices more than double since investors have dumped stocks and bought bonds? A second question: what might we expect of stock market returns if investors stop taking money out of the market and put it in - 40% a year?
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Wednesday, January 16, 2013
The Fiscal Cliff Deal Just Made U.S. Bonds Even More Risky in 2013 / Interest-Rates / US Bonds
By: Money_Morning
Martin Hutchinson writes: It was shaping up to be another be another strong year for U.S. Treasury Bonds right up until the moment it looked like a fiscal cliff deal would be reached.
Since then, 10-year notes yields have been on the rise jumping by as much as 23 basis points since New Year’s Eve. Now you have to wonder whether or not the bond bubble has suddenly sprung a leak.
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Wednesday, January 16, 2013
U.S. Debt Ceiling: Why Platinum and Gold Are Not the Answer / Interest-Rates / US Debt
By: Eric_McWhinnie
In the last press conference of his first term, President Barack Obama warned Congress that it must raise the debt ceiling to avoid disastrous side effects. He goes on to claim that failure to raise the ceiling could cause delays in Social Security benefits and checks for veterans. As usual, the two political parties are not expected to resolve their bickering before the last possible moment, which is creating a debate over bandaid solutions. However, ridiculous platinum coins and the nation’s gold reserves appear to be off the table.
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Tuesday, January 15, 2013
Japan Godzilla, France the Next Greece Whilst US Plays Debt Crisis Games / Interest-Rates / Global Debt Crisis 2013
By: John_Mauldin
“There are decades when nothing happens and there are weeks when decades happen.” – Vladimir Ilyich Lenin
"People only accept change when they are faced with necessity, and only recognize necessity when a crisis is upon them." – Jean Monnet
"If something cannot go on forever, it will stop." –Herbert Stein
As we begin a new year, we again indulge ourselves in the annual (if somewhat futile) rite of forecasting the year ahead. This year I want to look out a little further than just one year in order to think about the changes that are soon going to be forced on the developed world. We are all going to have to make a very agile adaptation to a new economic environment (and it is one that I will welcome). The transition will offer both crisis and loss for those mired in the current system, which must evolve or perish, and opportunity for those who can see the necessity for change and take advantage of the evolution.
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Friday, January 11, 2013
Gargantuan and Growing: The U.S. Debt Figure You've Probably Never Heard Of / Interest-Rates / US Debt
By: EWI
The widely reported $16.1 trillion federal debt is a drop in the bucket
Financial transparency is a must for U.S. publicly traded companies. But if the federal government had to abide by those same regulations, more Americans would know that the often-reported $16.1 trillion federal debt doesn't come close to the truth about the nation's liabilities.
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Thursday, January 10, 2013
When Will U.S. Interest Rates Rise? / Interest-Rates / US Interest Rates
By: Clif_Droke
Recently I was asked a question that I suspect has been on many investors' minds. Here's the question: "Is it possible that the bond market will be the market to tumble into 2014, and as it does, the general market decline is mitigated by the rotation of money out of bonds and into stocks?"
Here's my answer: Anything is possible in today's upside-down world. As my late friend and mentor Bud Kress used to ask, "Does anything surprise you anymore?" But I'd have to say here - and I firmly believe Bud would echo this sentiment - if there's any validity to the 120-year Kress cycle, a sustainable rising interest rate trend isn't likely until after October 2014.
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Wednesday, January 09, 2013
Can Banks Really Just Create Money? / Interest-Rates / Global Financial System
By: Paul_Tustain
It's the banks, not their customers, who actually wind up owing each other money...
OBSERVERS of Fractional Reserve Banking have noticed that your deposit into a bank can cause the bank to offer new loans well above and beyond the size of your deposit.
Those watchers often object on the grounds that this is new money which shouldn't have been created.
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Wednesday, January 09, 2013
Kamikaze Monetary Policy as BOJ Prepares to Launch More Zeros / Interest-Rates / Japanese Interest Rates
By: Michael_Pento
It is an unfortunate truth that Keynesian counterfeiters with their Kamikaze monetary and fiscal policies have taken over the developed world. Politicians and central banks in the United States and Europe have decided to cement firmly in place their addictions to debt, inflation and artificially produced low interest rates. But Japan has now leapfrogged into the lead of those nations that believe prosperity can be brought about by loading up on government debt and increasing the number of zeros being printed by their central bank.
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Wednesday, January 09, 2013
Financial Ticking Time Bomb 2013, Japan the Greece of Asia / Interest-Rates / Global Debt Crisis 2013
By: InvestmentContrarian
Sasha Cekerevac writes: While many eyes are focusing on Europe and America when it comes to the next financial crisis, one sector that people aren’t focusing on is the bond market in Japan. Many investors might not realize it, but Japan might be the next financial ticking time bomb.
How does a financial crisis in the bond market affect the average person? On a basic level, the bond market prices move based on supply and demand, which affect interest rates. With greater demand in the bond market, this pushes up prices and lowers interest rates. A lower interest rate obviously helps prevent a financial crisis from occurring, as it takes less money to pay off the debt—much like a credit card interest rate being reduced.
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Wednesday, January 09, 2013
Federal Reserve May Pause Quantitative Easing / Interest-Rates / Quantitative Easing
By: BATR
An obscure report that the Federal Reserve may suspend the monetization of purchasing Treasury Bonds has the smell of disinformation. The perennial efforts to lift economic spirits with the beginning of a New Year often are packed with wishful thinking. Quantitative Easing is being treated as a useful tool for turning on and off the spigot of liquidity infusion. In reality, the results of the massive origination of debt created monies fundamental purpose is to save the commercial banks from insolvency.
Wednesday, January 09, 2013
Global Debt Crisis Explained / Interest-Rates / Global Debt Crisis 2012
By: Submissions
Liam Fisher writes: "The global debt crisis is continuing, largely unabated. While significant
measures are being put into place by governments around the world, there
is little tangible effect being had on deficits that are continuing to
pile up. Indeed, there is only limited agreement amongst economists on the
severity of the debt crisis and its implications for the people of the
world or the best ways to go about rectifying the problem. Some advocate
drastic austerity measures and strict fiscal conservatism, while others
take a more Keynesian approach that sees deficit spending as a way out of
recession.
Sunday, January 06, 2013
U.S. Interest Rates Forecast 2013, Don’t Fight The Fed! / Interest-Rates / US Interest Rates
By: Robert_M_Williams
I’ve been watching the Fed for years and like everyone else, I’ve always paid attention to the old saying that, “You don’t fight the Fed.” So it stands to reason that when the Fed says they’ll keep interest rates at zero well into 2015, you would expect rates to stay at or close to zero. They even went so far as to put an exclamation point on this policy two weeks ago when they announced that they were buying as much as 90% of all new issues. In short the US Federal Reserve is now acting as a buyer of last resort. That statement set off all sorts of warning bells in the deep recesses of my mind as my experience tells me that whenever a government is acting as a buyer of last, it’s in deep trouble. It brings back memories of many failed banana republics’!
Saturday, January 05, 2013
Over Due U.S. Treasury Bond Sell-off To Become More Serious! / Interest-Rates / US Bonds
By: Sy_Harding
With my indicators on a sell signal for bonds since August 16, I have been warning about bonds being overbought and in danger of rolling over into a serious correction for several months. And indeed, the 20-year U.S. Treasury bond has already lost 11% of its value just since its late July peak.
Friday, January 04, 2013
U.S. Treasury Bonds, The Worst Investment for 2013 and the Next Decade / Interest-Rates / US Bonds
By: InvestmentContrarian
Sasha Cekerevac writes: One of the biggest investor mistakes by the average retail investor is to be late to cash in on an investment theme. These investor mistakes are not limited to just the stock market, but all types of investments. If we look at investor mistakes by the retail public for buying real estate, most people were bullish at the top of the market and were selling, or were forced to sell, their real estate at the bottom. Buying high and selling low is one of the most common investor mistakes by the majority of the public.
Friday, January 04, 2013
Market Valuation, Inflation and Treasury Yields: Clues from the Past / Interest-Rates / Inflation
By: PhilStockWorld
My monthly market valuation updates have long had the same conclusion: US stock indexes are significantly overvalued, which suggests cautious expectations on investment returns. In a “normal” market environment — one with normal business cycles, Federal Reserve policy, interest rates and inflation — current valuation levels would be a serious concern.
Saturday, December 29, 2012
What Happens When the Bond Markets Turn Against the US? / Interest-Rates / US Bonds
By: Graham_Summers
The US Fed is committed to keeping interest rates low for the simple fact that if interest rates were to rise then the payments on the debt would send the US into an EU-syle debt crisis along with the commensurate intense austerity measures being implemented.
Unfortunately for the Fed, the bond markets may indeed force this in spite of the Fed’s efforts.
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Monday, December 24, 2012
Ben Bernanke's Ghost of QE Past, Present, and Future / Interest-Rates / Quantitative Easing
By: DeviantInvestor
It was the best of times; it might be the worst of times.
Dollar bills glide effortlessly to the ground, dropped from the giant QE machine in the sky. All is quiet, all is calm. There is peace on earth, well, at least in Washington D.C. and on Wall Street. And then with a horrible crash, another Mortgage Backed Security (MBS) explodes and collateral damage spreads far and wide.
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Friday, December 21, 2012
UK Interest Rate Swaps Financial Armageddon, Bankster Mis-Selling Bigger than PPI? / Interest-Rates / Banksters
By: Nadeem_Walayat
Following the multi-billion PPI Mis-selling scandal, just when you thought it could not get any worse, Britain's crime syndicate that is our biggest banks have been revealed to have taken another systematic bite out of thousands of unsuspecting small businesses on a scale that could end up resulting to be as big as that of the mis-selling of PPI insurance.
Thursday, December 20, 2012
U.S. Treasury Bond Yield Operation Twise and QE3 / Interest-Rates / US Bonds
By: PhilStockWorld
Courtesy of Doug Short. I’ve updated the charts below through yesterday’s close. The S&P 500 is now only 1.29% off its interim high of 1,465.77 set on September 14th, the day after QE3 was announced. The interim low since then was 1,353.52, a decline of 7.66% a month later on November 15. The 10-year note closed yesterday at 1.84, which is only 4 basis points off its interim high of 1.88, also set the day after QE3 was announced. The historic closing low was 1.43 on July 25th. With what looks like a Santa Rally in stocks underway, yields have risen to levels last seen about two months ago. What will be particularly interesting is how yields (and equities) fare in the last four market days of 2012 if the various Fiscal Cliff issues are not resolved by the end of this week.
Tuesday, December 18, 2012
Basel’s Capital Curse, Beating the Drums of Bank Recapitalization / Interest-Rates / Credit Crisis Bailouts
By: Steve_H_Hanke
In the aftermath of the financial crisis, the oracles of money and banking have been beating the drums for “recapitalization” — telling us that, to avoid future crises, banks must be made stronger. To accomplish this, governments across the developed world are compelling banks to raise fresh capital and strengthen their balance sheets. And, if banks can’t raise more capital, they are told to shrink the amount of risk assets (loans) on their books. In any case, we are told that one way or another, banks’ capital-asset ratios must be increased — the higher, the better.