Analysis Topic: Interest Rates and the Bond Market
The analysis published under this topic are as follows.
Friday, August 23, 2019
Seven Key Words That Explain "Stupidly High" Bond Market Prices / Interest-Rates / International Bond Market
By: Dan_Amerman
The front page of the August 16th Wall Street Journal contains the information found in the remarkable graph below.
As can be clearly seen, year to date around the world - including in Austria, Japan, Germany, and the U.S. and the U.K. - we are in practice seeing some of the most astonishing short-term returns ever seen when it comes to long and ultralong bonds.
The title of the WSJ article is "Forget Stocks. Ultralong Bonds Are The Real Gamble", and the author refers to the current bond price levels around the world as being "stupidly high". If we look at the dominant investment theories from prior decades, which the great majority of financial planners, financial journalists and retirement investors still treat as being the gospel wisdom for today - then he makes some very strong points about just how ridiculous those prices are, and why they shouldn't exist.
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Thursday, August 22, 2019
Economist Lays Out the Next Step to Wonderland for the Fed / Interest-Rates / US Interest Rates
By: Gary_Tanashian
Mr. Steven Ricchiuto, he of a Masters in Economics from Columbia, has laid out the proper plan for the Federal Reserve in this oh so noisy environment in which an unassuming and fairly quiet man is trying to tune out a personal bully on Twitter, tune out the stock market’s daily whipsaw and do what he perceives to be the right thing.
Today, the academic named above throws in with Trump and politely harangues Chairman Powell thusly in an open letter. You can read it by hitting the graphic…
https://www.marketwatch.com/story/the....
Stagflation this, Volcker that, deflation the other thing… blah blah blah. But then he gets to the interesting parts, the money parts. Of the post-Volcker era he states…
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Tuesday, August 20, 2019
The Tip of the Debt-Bomb Iceberg / Interest-Rates / US Debt
By: Harry_Dent
This week I wanted to bring your attention to a key development. And while overlooked by many, is part of the trigger that will set off the next financial crisis.All eyes were focused intently this week on US Treasury yields. And a lot of people might have missed what I believe will prove to be a very big event – after the dust from the next big implosion finally settles.
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Friday, August 16, 2019
When the US Bond Market Bubble Blows Up! / Interest-Rates / US Bonds
By: Gary_Tanashian
Amazing isn’t it? It was only back in H2 2018 when everybody but you (because you are as smart as I think you are or because you read NFTRH or nftrh.com) and me was unbelievably bearish about the TREASURY BOND BEAR MARKET!!!
Today… not so much. The herd is absolutely pile driving bonds right now.
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Thursday, August 15, 2019
US Negative Interest Rates Go Mainstream - With Some Glaring Omissions / Interest-Rates / Negative Interest Rates
By: Dan_Amerman
The discussion of negative interest rates in the United States has now officially gone mainstream, with the front page of the August 12, 2019 print edition of the Wall Street Journal carrying a prominent discussion of the possibility.
Most of the article consists of various institutional investors talking about why this could be a real possibility. However, as will be explored herein, there were three glaring omissions in the article.
1) What the real source of the negative interest rates would be.
2) The historically unprecedented profits that would be created by such a move.
3) Who those unprecedented profits would mostly go to (and it isn't to the average investor).
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Wednesday, August 14, 2019
You Have to Buy Bonds Even When Interest Rates Are Low / Interest-Rates / US Bonds
By: Jared_Dillian
Interest rates are currently low.That is by far the biggest concern among bond investors. They are drowning in worry about low interest rates and their effect on bonds. So let’s address that.
Saying interest rates are currently low is another way of saying that bonds are expensive—which makes people not want to invest in bonds. Fair enough.
Stocks are also expensive—but you invest in those!
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Sunday, August 11, 2019
Gold and the Bond Yield Continuum / Interest-Rates / US Bonds
By: Gary_Tanashian
Have you heard the news? US Treasury bonds are sky rocketing as it turns out there is no inflation amid a global central bank NIRP-a-thon and race to the currency bottom. Going the other way, our 30yr Treasury yield Continuum is burrowing southward.
If you check out yesterday’s post you’ll see proof that the 2018 NFTRH view that people should tune out the bond experts instructing BOND BEAR MARKET!! was 100% on target.
But today the din is coming from the opposite pole. Everywhere you look on the financial websites it’s now about tanking yields, decelerating growth, trade war damage and deflation. Here is the 30 year bond yield (TYX), which is front and center in this hysteria (click the charts below for the clearest view). That is one impulsive looking drop.
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Saturday, August 10, 2019
US Corporate Debt Is at Risk of a Flash Crash / Interest-Rates / Corporate Bonds
By: John_Mauldin
The world is awash in debt.
While some countries are more indebted than others, very few are in good shape.
The entire world is roughly 225% leveraged to its economic output. Emerging markets are a bit less and advanced economies a little more.
But regardless, everyone’s “real” debt is likely much bigger, since the official totals miss a lot of unfunded liabilities and other obligations.
Debt is an asset owned by the lender. It has a price, which—like anything else—can go up or down. The main variable is the lender’s confidence in repayment, which is always uncertain.
Saturday, August 10, 2019
EURODOLLAR futures above 2016 highs: FED to cut over 100 bps quickly / Interest-Rates / US Bonds
By: QUANTO
The sceptre of recesion is growing worldwide. German industrial production registered its biggest annual decline in almost a decade when it reported numbers in June. We covered it here The result was country’s flattest yield curve since the financial crisis.
Wednesday, August 07, 2019
Are You Still Trying To “Fade” The Bond Market Rally? / Interest-Rates / US Bonds
By: Avi_Gilburt
For weeks, if not months, I have been reading one bearish bond article after another. In fact, many of these same writers have been arguing with me for months about the bond rally I expected back in November of 2018. One suggests that this rally is really a “fake,” whereas another has been strongly suggesting that investors fade this rally, with many more supporting their opinions. The problem is that these analysts have been trying to “fade” this rally for the last 10-15% up. Yet, I will gladly bank my “fake” 20% profits on this trade.
As each week goes by, I continue to chuckle about how many people do not understand the context of the markets upon which they opine. Remember how certain analysts and investors were that rates were only headed higher back in November of 2018?
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Friday, August 02, 2019
Post FED US Bond Market Yield Spread Falls Further: Risk Aversion is at the Door / Interest-Rates / US Bonds
By: QUANTO
All Powell needed to do was cut rates and to soften the blow on the short end of the curve, he needed to speak of the strong economy and that would have controlled the 1 month and 3 month and 2 year yields. Instead he ended up confusing about recovery and talking of nonsensicall comical terms like insurance cut etc. These are jargons that one should never use.
The reaction from the bond market was immediate as the 1 month and 3 month yield jumped sharply. Money was flowing out to the long end which is exactly what Powell didnt want to happen when he said "inflation gets baked in to bond yields". Even as he was saying, that is what was happening. We take a look at some of the charts which define and go beyond normal technical and trend lines for forex. We have always suggested: NEVER TRADE FOREX ON TECHNICAL INDICATORS. THEY ARE LAGGING. TO LOOK BACK AND TRADE FORWARD IS FOOLISHNESS.
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Thursday, August 01, 2019
US Yield Curve Inverted Months Earlier than Most Think / Interest-Rates / Inverted Yield Curve
By: John_Mauldin
The inverted yield curve is one of the more reliable recession indicators.
I discussed it at length last December. At that point, we had not yet seen a full inversion. Now we have, and it appears the curve was “inverted” back then, and we just didn’t know it.
The Powell Fed spent 2018 gradually raising rates and reducing the balance sheet assets it had accumulated in the QE years.
This amounted to an additional tightening. In fact, the balance sheet reduction may have had more impactthan lower rates.
Now if you assume, as Morgan Stanley does, every $200B balance sheet reduction is equivalent to another 0.25% rate increase, which I think is reasonable, then the curve effectively inverted months earlier than most now think.
Tuesday, July 30, 2019
US Fed Infinite QE Forever at Zero Bound / Interest-Rates / Quantitative Easing
By: Jim_Willie_CB
The widespread profound and recognized global recession, complete with numerous icon corporate failures, will lead the US Federal Reserve to return to unlimited Quantitative Easing with a Zero Percent chaser. The Jackass calls it a return to Infinite QE Forever at the Zero Bound. Not only is the double step of return to QE with a sequence of interest rate cuts urgently necessary, but the financial markets are demanding it. In fact, they are holding the USFed hostage, as the venerable august body is backed into a policy corner. This time seems different. For ten years, the USFed has relied upon coordinated policy with the Euro Central Bank, having used all the most extreme measures, yet has a systemic failure on its hands. Witness extreme monetary policy failure. The systemic failure is both financial and economic. The bond purchase program wrecked the bond market by driving away legitimate investors, while the ultra-low interest rates wrecked the economy by distorting asset allocation.
Tuesday, July 23, 2019
We Are in for Decades of Ultra-Loose Monetary Policy / Interest-Rates / Quantitative Easing
By: Jared_Dillian
President Trump recently nominated Judy Shelton to the Federal Reserve Board of Governors. She is the United States director for the European Bank for Reconstruction and Development, which I had never heard of until her nomination.
Shelton is a Republican and believes in the adoption of a gold standard. She currently believes in lowering interest rates, after spending the Obama years criticizing the Fed for lowering interest rates.
You may wonder how a person can be in favor of a gold standard and also for lowering interest rates at the same time.
I am wondering that, too.
Monday, July 22, 2019
What the World Doesn’t Need Now is Lower Interest Rates / Interest-Rates / Global Financial System
By: Michael_Pento
The Q2 earnings season is upon us and the risks to the rally that started after the worst December on record at the close of last year is in serious jeopardy. We received a glimpse of this with some of the current companies that have reported. For example, to understand how dangerous this earnings reporting season can be, take a look at what one of the largest US multinational firms had to say recently after it reported earnings. The Minnesota-based Fastenal, which is the largest fastener distributor in North America, reported worse-than-expected second-quarter earnings and revenue. Shares of Fastenal promptly tanked more than 4%. But what the management said about the quarter was very interesting. The company said in its press release that its strategy to raise prices to offset tariffs placed to date on products sourced from China were not sufficient to also counter general inflation in the marketplace. Read full article... Read full article...
Wednesday, July 17, 2019
Federal Debt Ceiling Reached as Federal Spending Rages / Interest-Rates / US Debt
By: MoneyMetals
The federal government will soon run up against its self-imposed borrowing cap once again.
Current estimates are for the government to max out its credit limit at a little over $22 trillion in early September. Congress goes on recess in August, so there is some pressure to address the cap right now.
Treasury Secretary Steve Mnuchin has been fulfilling what seems to be the most sacred responsibility of his position: borrowing money. It’s one that each of his predecessors has also undertaken, without fail and without regard to party affiliation, in recent decades.
Wednesday, July 17, 2019
Boost your Trading Results - FREE eBook / Interest-Rates / Learn to Trade
By: Submissions
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Friday, July 12, 2019
The Hidden Reason Why Fed and "Systemically Important" Banks Oppose a Gold Standard / Interest-Rates / US Federal Reserve Bank
By: MoneyMetals
Chairman Powell’s testimony this week was closely scrutinized not just for its economic implications but also for its political overtones. Powell cited “trade tensions” as cause for concern about the strength of the global economy. He clearly seemed to be blaming President Trump’s tariffs.
But if the tariffs are what ultimately move the Fed to cut rates, Trump will have finally gotten what he wants out of Powell. In recent weeks, Trump has stepped up his attacks on the central bank, calling it the biggest problem facing the economy, floating the idea of firing Powell, and suggesting his administration would match China’s and Europe’s "currency manipulation game."
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Wednesday, July 10, 2019
Government-Pumped Student Loan Bubble Sets Up Next Financial Crisis / Interest-Rates / Student Finances
By: MoneyMetals
Presidential candidates Bernie Sanders and Elizabeth Warren are promising as much as $1.6 trillion in student debt forgiveness for millions of borrowers. Critics smell a cynical campaign ploy to try to buy the youth vote.
How is it either realistic or fair to declare an entire category of debt to be assumed by taxpayers?
Regardless, pie-in-the-sky proposals to cancel student debt shed light on a very down-to-earth problem for not only college students and recent graduates – but also for the economy and financial markets.
Student loans now rank as the second largest category of American consumer debt – bigger than credit cards, bigger than auto loans, and behind only mortgages.
Friday, July 05, 2019
The Fed May Give Trump His Interest Rate Cut, but It Won’t Help / Interest-Rates / US Interest Rates
By: Patrick_Watson
Investors are in a buying mood despite many economic warning signs. Why?For some, it’s because they expect the Federal Reserve to cut interest rates and otherwise “stimulate” the economy. They believe (correctly) it would drive stock and real estate prices higher.
At the risk of stating the obvious… higher asset prices mainly benefit those who own the assets. Which, in the stock market’s case, is not most Americans.
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