Analysis Topic: Interest Rates and the Bond Market
The analysis published under this topic are as follows.
Tuesday, December 18, 2012
Hidden U.S. Treasury Bond Market Risks? / Interest-Rates / US Bonds
By: Axel_Merk
While Treasuries are said to have no default risk as the Federal Reserve (Fed) can always print money to pay off the debt, hidden risks might be lurking. As oxymoronic as it may sound, the biggest risk to the economy and the U.S. dollar might be, well, economic growth! Let us explain.
Monday, December 17, 2012
Bernanke’s Balance Sheet Ensures Disaster / Interest-Rates / Quantitative Easing
By: Michael_Pento
As expected, Ben Bernanke officially launched QE IV with his announcement last week of $85 billion dollars worth of unsterilized purchases of MBS and Treasuries. In unprecedented fashion, the Fed also tied the continuation of its zero interest rate policy and trillion dollars per annum balance sheet expansion to an unemployment rate that stays above 6.5%. Now, pegging free money and endless counterfeiting to a specific unemployment figure would be a brilliant idea if printing money actually had the ability to increase employment. But it does not.
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Sunday, December 16, 2012
QE4, The Fed's Fantastic Failure / Interest-Rates / Quantitative Easing
By: Clif_Droke
Question: When is an unprecedented economic event tantamount to a non-event? Answer: When another Fed intervention is announced.
The U.S. Federal Reserve bank announced this week the commencement of a new round of Treasury purchases to the tune of $45 billion a month to replace the expiring Operation Twist. This is in addition to the recently launched QE3 program that committed the Fed to buying $40 billion a month in mortgage-backed securities. The grand total of these central bank interventions amounts to some $1 trillion a year in government debt markets.
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Sunday, December 16, 2012
Sorting Out a Decade of Debt, Investment Conclusions / Interest-Rates / US Debt
By: John_Mauldin
In today's Outside the Box I bring you two pieces that, at first glance, may not seem to have much to do with each other. First, Bill Gross, PIMCO managing director, runs down the fierce structural headwinds that our hard-pedaling global economy faces over the next decade. I am going to deal at length with not only his GDP projections for the rest of the decade but those of Grantham and others in the last two Thoughts from the Frontline of this year. This is a challenging environment for traditional portfolio construction, but it’s par for the course as we slog through the secular bear market I was first writing about in 1999.
Saturday, December 15, 2012
U.S. Caught in a Alarming Trap of Continuum of Deficit Spending / Interest-Rates / US Debt
By: David_Galland
Late at night on November 6, along with John Mauldin, Doug Casey and a group of partygoers in a café here in Cafayate, we watched on a small television as Obama's contract was renewed by a majority of the mob. As was the case with many readers, I suspect, my initial reaction was disbelief.
While I try not to pay a lot of attention to the careers of individual politicians, but rather prefer to monitor the carnage they inflict on the world in the collective, I sincerely believed that Obama's steady transgressions against commonsense economics, individual liberty and the rule of law would see him unceremoniously turned out.
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Friday, December 14, 2012
Fed QE Policy Means U.S. Treasury Issuing Debt For Free, Money for Nothing / Interest-Rates / Quantitative Easing
By: Bloomberg
PIMCO's Bill Gross told Bloomberg Television's Betty Liu on "In the Loop" today that the Federal Reserve's latest round of monetary stimulus will enable Treasury to issue debt for no cost.
Gross said, "what really happens, and this is critically important, is that the Treasury issues bonds and the Fed buys them and then it remits interest to the Treasury...It basically means that the Treasury is issuing debt for free...Inflation is one of the complications."
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Wednesday, December 12, 2012
Why Printing Money Is So Easy for the Fed / Interest-Rates / Central Banks
By: InvestmentContrarian
George Leong writes: The Federal Reserve is busy looking at what to do next to try to keep the economic renewal on track, as the central bank meets for the last time this year. The Fed also understands its impact will be hindered by the ongoing battle in Congress regarding the pending fiscal cliff.
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Wednesday, December 12, 2012
U.S. Fiscal Cliff Dynamics Explanation: Household Budget and Family Debt Comparison / Interest-Rates / US Debt
By: DK_Matai
Politicians around the world intuitively understand the importance of translating complicated policy and complex laws into language that non-experts, ie, average voters can understand easily. When it comes to US budget numbers and negotiations, financial complexity can be extremely challenging. Many Americans and non-Americans don’t know how many zeros there are in one “trillion,” much less what a trillion dollar deficit means in terms of the world's largest economy and its overall impact on the global financial markets. In a recent poll question, for example, American respondents were given five multiple-choice answers for the question “how many thousands are [there] in a trillion” and just 21 percent answered correctly, barely more than what one would expect if everyone guessed randomly!
Tuesday, December 11, 2012
U.S. National Deficit / Interest-Rates / US Debt
By: Fred_Sheehan
"Under current law, the Treasury is technically allowed to mint as many coins made of platinum as it wants and can assign them whatever value it pleases. Under this scenario, the U.S. Mint would make a pair of trillion-dollar platinum coins. The president orders the coins to be deposited at the Federal Reserve. The Fed moves this money into Treasury's accounts. And just like that, Treasury suddenly has an extra $ trillion to pay off its obligations for the next two years - without needing to issue new debt. The [current $16.4 trillion national debt] ceiling is no longer an issue." - Brad Plumer, Washington Post, December 6, 2012, "Could the 'Platinum Coin Option' Solve the U.S. Debt Crisis?"
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Monday, December 10, 2012
Side Effects from the Federal Reserve’s Monetary Policy Program / Interest-Rates / US Interest Rates
By: InvestmentContrarian
Sasha Cekerevac writes: The historic and unprecedented action by the Federal Reserve in enacting extremely loose monetary policy is an attempt to stimulate the economy. I’ve always felt that a central bank should have one mandate: the stability of the currency. The Federal Reserve has a dual mandate; in addition to keeping inflation in check, the American central bank also is attempting to lower the unemployment rate through monetary policy, a task not easily achieved.
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Sunday, December 09, 2012
U.S. Treasury Bond Market Yields Update / Interest-Rates / US Bonds
By: PhilStockWorld
Courtesy of Doug Short. I’ve updated the charts below through today’s close. The S&P 500 is now 3.25% 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 today at 1.64, which is 24 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. The latest Freddie Mac Weekly Primary Mortgage Market Survey puts the 30-year fixed at 3.34 percent, three basis point above its historic low set two weeks ago.
Friday, December 07, 2012
US Debt Crisis, Interest Rates and GDP / Interest-Rates / US Debt
By: Zeal_LLC
With the rancorous fiscal-cliff negotiations dominating newsflow, the markets are rightfully on edge. Will a deal be reached as time relentlessly dwindles, or not? How the fiscal cliff is resolved has massive implications for the US economy and markets in 2013 and beyond. But provocatively, the fiscal cliff is a minor sideshow in the real crisis. The United States of America is drowning under federal debt.
Monday, December 03, 2012
A New Strategy for High Income Investing With Ultra-Low Risk / Interest-Rates / Corporate Bonds
By: Investment_U
Steve McDonald writes: The Wall Street Journal recently ran a segment about a fund that’s trading high-yield corporate bonds with virtually no risk! All compliments of a fold in the bond market that has been staring at us for the last hundred years – and no one noticed it.
This type of corporate bond is essentially pre-refunded. That means the money to buy the bonds back is already set aside, and the buyback date is already set – in some cases in as little as a week.
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Monday, December 03, 2012
Bank of England Cancels Britain's Debt, Coalition Government Budget Deficit Crisis is Pure Propaganda / Interest-Rates / Quantitative Easing
By: Nadeem_Walayat
The focus of this article is on Britains debt dynamics as the people of Britain continue to be bombarded with propaganda in respect of the unfolding Inflationary Depression that the country has been immersed in since at least early 2008. In terms of politics, propaganda takes the form of declarations for ever greater needs for economic austerity by the Coalition government whilst the Labour party as usual takes the opposite line, when the reality is that there has been no real net economic austerity in Britain, as there has been no cut in government spending and hence the deficit continues to persist let alone any actual repayment of debt that continues to expand by about £120 billion per year.
Friday, November 30, 2012
Will the U.S. Treasury Bond Bubble Finally Burst in 2013 / Interest-Rates / US Bonds
By: Money_Morning
Shah Gilani writes:
The Federal Reserve's multi-year prescription of targeting super-low interest rates on federal funds, along with various quantitative easing programs, has pushed yields down on all fixed-income instruments to the benefit of issuers and the detriment of investors.
There is little doubt that the Fed's articulated and executed policies have resulted in a bond-bubble with both short and long-term consequences for investors and the economy.
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Thursday, November 29, 2012
Have Interest Rates Finally Bottomed? / Interest-Rates / US Interest Rates
By: Submissions
Timothy Lutts writes: The media in recent weeks have been full of stories about the coming Fiscal Cliff. No one knows exactly how Congress is going to deal with it, but one fairly common opinion is that taxes will go up on investment income.
As a result, many smart people have been making moves to take income now rather than in 2013 (or later.)
Sunday, November 25, 2012
Is The US Bond Market Ponzi Scheme Coming To An End? / Interest-Rates / US Interest Rates
By: WavePatternTraders
The US Bond market has been in a bull market since the 1980s and although I originally was looking for a potential high early this year, we have not really progressed much further, expect that real rates have come down even lower and tested the prior December 2008 lows at 2.5%, potentially creating a double bottom.
Thursday, November 22, 2012
How Spanish Debt Default Would Trigger an Epic Financial Crash / Interest-Rates / Eurozone Debt Crisis
By: Graham_Summers
Over the last week I’ve introduced the concept of collateral: the little known basis for the entire financial system. We’ve also addressed why any EU sovereign default would bring about an epic meltdown as EU bonds, particularly those of Spain and Italy are the collateral underlying hundreds of trillions of Euros worth of trades for EU banks.
Again, the most important issue for the financial system is the search for high quality collateral.
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Thursday, November 22, 2012
Debt Crisis Solutions are Leaving Investors Behind / Interest-Rates / Global Debt Crisis 2012
By: Ben_Traynor
How the losses are being paid for...
It used to be taken for granted that you could put aside some money and earn enough interest to be better off than when you started.
As the world continues to struggle with the aftermath of an enormous credit boom and its subsequent bust, though, this kind of objective seems hopelessly naïve. Events in Europe and the US this week are the latest reminder of this. To see why, let's start with a riddle:
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Thursday, November 15, 2012
US Budget Deficit Soars in October; Do You Trust the Politicians to Solve This Looming Crisis? / Interest-Rates / US Debt
By: InvestmentContrarian
Sasha Cekerevac writes: The U.S. Treasury Department recently released the budget deficit numbers for October, reporting a massive $120 billion deficit. This compares to a budget deficit in October 2011 of “only” $98.0 billion. While the U.S. economy is not growing at a rapid rate, it’s certainly not shrinking. So in the span of one year, with some growth in the U.S. economy, albeit slow growth, we’ve seen an approximate $20.0-billion monthly year-over-year increase in the budget deficit. I think this shows the true ineptitude of our political leaders.
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