Analysis Topic: Interest Rates and the Bond Market
The analysis published under this topic are as follows.
Tuesday, March 13, 2012
Eurozone Debt Crisis: Hope for the Best, Plan for the Worst / Interest-Rates / Eurozone Debt Crisis
By: Axel_Merk
When Greece's woes first rattled the markets two years ago, the pundits predicted a collapse of the euro.
The resilience of the euro has been due to a number of factors, not least of which is that the eurozone as a whole has a broadly balanced current account. As such, a misbehaving bond market doesn't necessarily cause a plunge in the currency, as foreign buyers are not required to fund a deficit or protect against currency weakness.
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Tuesday, March 13, 2012
European Countries Lining Up to Debt Default / Interest-Rates / Eurozone Debt Crisis
By: John_Mauldin
Today's Outside the Box comes to us from Grant Williams, who covers the world from his perch in Singapore, in his always instructive and always entertaining Things That Make You Go Hmmm... I felt for him right at the outset today, because (like yours truly) he was trying really hard ... not to talk about Greece.And so, he announced, he was going to talk about Spain and about oil; but then, before he even made it through his opening paragraph, there was this:
"... ahhhh NUTS! They did it AGAIN.... ok... the Greek restructuring. It's not as though I could ignore it, now, is it? ... Oil can wait until next time.... no doubt it'll be an issue then too."
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Tuesday, March 13, 2012
European Sovereign Debt Crisis Will Take Years to Play Out / Interest-Rates / Eurozone Debt Crisis
By: Bloomberg
Jerry del Missier, co-chief executive officer of Barclays Capital, spoke to Bloomberg TV's Trish Regan and Adam Johnson today. Del Missier said that the sovereign debt crisis in Europe will take "years to play out" and that the Volcker Rule could "significantly dislocate" some markets for Barclays.
Monday, March 12, 2012
Get Ready to be Disappointed With "Sterilized" QE3 / Interest-Rates / Quantitative Easing
By: Ashvin_Pandurangi
The other big "risk on" news last week, aside from a coercive Greek debt restructuring that was completed "successfully" (but will only make Greece's public debts larger and less sustainable), was a rumor that "sterilized QE3" may be launched by the Fed in the near future (as in, at their meeting this week). The original Wall Street Journal piece by Jon Hilsenrath about this "new novel" program contained precious little in the way of details, yet the pundits and the markets obviously love to jump on the irrational bandwagon first and ask questions later. I, for one, am still very skeptical that the Fed is either able or willing to launch further QE this month.
Sunday, March 11, 2012
There Will Be Euro-zone Debt Crisis Contagion, The Next Greek Tragedy / Interest-Rates / Eurozone Debt Crisis
By: John_Mauldin
… (December 11, 2009) – Greece's prime minister, George Papandreou, told reporters in Brussels on Friday that European Central Bank President Jean-Claude Trichet and Luxembourg Prime Minister Jean-Claude Juncker see "no possibility" of a Greek default, Bloomberg News reported. Papandreou also said that there was no possibility of Greece leaving the euro area, according to the report.
… (January 29, 2010) – There is no bailout and no "plan B" for the Greek economy because there is no risk it will default on its debt, the European monetary affairs commissioner, Joaquin Almunia, insisted on Friday.
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Saturday, March 10, 2012
The Fed gets creative / Interest-Rates / US Interest Rates
By: Alasdair_Macleod
According to a story in Wednesday’s Wall Street Journal, the US Federal Reserve is considering buying long-term Treasury and mortgage bonds in return for deposits held at the Fed. There has been no comment from the Fed and the story might have been no more than a trial balloon, in which case Bernanke and Co may be considering skewing the yield curve so that long-term bonds are less attractive than the time-preferences set by the market.
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Friday, March 09, 2012
If Economy is Recovering, Why Are U.S. Cities Going Bankrupt? / Interest-Rates / US Debt
By: EWI
As pundits chatter about an economic recovery, 80 miles east of San Francisco you'll find a city (pop. 292,000) facing bankruptcy:
Stockton is on the verge of becoming the largest city in the United States to declare bankruptcy...
San Francisco Chronicle (3/4)
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Thursday, March 08, 2012
BoE Interest Rate Ddecision / Interest-Rates / UK Interest Rates
By: Submissions
Gareth Talbot submits: Following today’s Bank of England interest rate decision Phil McHugh, senior analyst at foreign exchange firm Currencies Direct, said:
“The pound fell to a one week low against the euro in the run up to the BoE rate decision although remained steady on the announcement. The decision as expected was to maintain rates at 0.5% and to hold fire on the asset purchasing programme.
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Sunday, March 04, 2012
Debt Crisis Unintended Consquences, What Greece Should Do and What About Ireland? / Interest-Rates / Eurozone Debt Crisis
By: John_Mauldin
"Illusions commend themselves to us because they save us pain and allow us to enjoy pleasure instead. We must therefore accept it without complaint when they sometimes collide with a bit of reality against which they are dashed to pieces."
– Sigmund Freud
Let me introduce Mauldin's Rule of Thumb Concerning Unintended Consequences:
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Friday, March 02, 2012
The Greek Bailout, the CDS Market, and the End of the World / Interest-Rates / Eurozone Debt Crisis
By: Money_Morning
Shah Gilani writes:
A not-so-funny thing happened on the way to the latest Greek bailout.
The terms and conditions of the bond swap Greece agreed to before getting another handout constitutes a theoretical default - but not a technical default.
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Tuesday, February 28, 2012
A Primer on the Euro Breakup: Debt Default, Exit and Devaluation as the Optimal Solution / Interest-Rates / Eurozone Debt Crisis
By: John_Mauldin
It's one thing to say that peripheral eurozone countries are better off leaving the euro, but how, exactly? And how severe can we expect the consequences to be, not only for those nations but also for the entire eurozone – and for the rest of us, worldwide? To minimize fallout from the event(s), it would be helpful to have a solid foundation, based on an historical understanding of similar events, on which we could build a reasonable set of expectations.
In the following piece, Jonathan Tepper, my Endgamecoauthor, gives us the cornerstone of just such a foundation. With his London firm, Variant Perception, he has prepared a 53-page report with the very confident title "A Primer on the Euro Breakup: Default, Exit and Devaluation as the Optimal Solution."
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Monday, February 27, 2012
Short Term Interest Rates and Their Implications, Under the Radar / Interest-Rates / US Interest Rates
By: Tony_Caldaro
When a potental economic downturn is first sensed investors gradually start to shift into what is perceived as safe assets, namely Treasury bills, notes and bonds. As more and more investors pick up on this scenario a trend begins to appear. When economic data starts to confirm the downturn, the shift to safety turns into a long term trend and rates drop substantially. The opposite, of course, occurs during an economic upturn. When this occurs investors gradually shift out of the Treasury safe haven, and rates begin to rise. The initial shift, in both situations, is quite subtle, but measurable. We track these events using the 1 year T-bill.
Monday, February 27, 2012
To QE or Not to QE That is The Question / Interest-Rates / Quantitative Easing
By: Tony_Pallotta
The Fed does not like to surprise the markets. They telegraph policy changes well in advance. The coded language of Alan Greenspan has been replaced with plain english and press conferences under Bernanke. The Fed's monetary policy may be questionable but their strategy of being more transparent to the market has improved albeit far from perfect.
Monday, February 27, 2012
The Way Forward for Greece / Interest-Rates / Eurozone Debt Crisis
By: Submissions
Alasdair Macleod writes: Last Monday night, before the US markets opened after President’s Day, bailout terms for Greece were announced. The detail is secondary to assessing whether or not it will work, or whether only a little time has been bought. Theoretically the deal can work, but it is extremely unlikely that it will. Almost everyone knows or suspects this, but the survival of the European political system is at stake, and this systemic priority is more important than hard economic reality.
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Saturday, February 25, 2012
Our Depraved Future of Debt Slavery (Part II) / Interest-Rates / US Debt
By: Ashvin_Pandurangi
"Debt" has been used as a means of slavery throughout human history, in ancient societies dating as far back as thousands of years ago, such as those in Mesopotamia, Egypt, North/South America, etc. Debtors in these societies would be forced to relinquish their crops, land, freedom and even their wives and children to satisfy unpaid debts. Such extravagant periods of debt creation often culminated in the necessity for systemic debt forgiveness (or "Jubilee") by the decree of chiefs, emperors and kings to simply maintain some sense of social order [see Debt: The First 5000 years].
Thursday, February 23, 2012
Investing in Mortgages Makes Sense While Fed Supresses Yields / Interest-Rates / Mortgages
By: Bloomberg
PIMCO founder and co-CIO Bill Gross spoke with Bloomberg Television's Trish Regan, Lisa Murphy and Adam Johnson today about where to invest, the ETF PIMCO is launching next week and the state of the economy.
Gross said that investing in "mortgages make sense" as "yields are not going anywhere for the next two or three years."
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Thursday, February 23, 2012
Solar Cycles And Astro Trading / Interest-Rates / Learn to Trade
By: John_Hampson
There is one (and only one) strand of scientific theory that gives astro trading credibility (astro traders typically operate without reference to science or logical reasoning, and more on faith, which doesn’t sit well with me), namely that planetary alignment influences solar activity (which in turn influences the financial markets through sunspots and geomagnetism), so is there any evidence for this?
Thursday, February 23, 2012
Low Interest Rates, Economic Kill or Cure? / Interest-Rates / Inflation
By: Adrian_Ash
Hold still! This might sting a little...
"TREATING serious medical conditions often has unwanted side effects," said Charles Bean, deputy governor of the Bank of England and a doctor of economics, in a speech in Glasgow on Tuesday.
"But, unpleasant as those side effects sometimes are, treatment is invariably better than the alternative. So it is with the economic medicine of low interest rates and quantitative easing."
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Sunday, February 19, 2012
The Cancer of Debt and Deficits / Interest-Rates / US Debt
By: John_Mauldin
We are coming to the point in the United States when even the US government will no longer be able to borrow at very low long-term rates. That point is a few years off, and we have time to change paths; but as I have shown in previous letters, the longer we wait to get the deficit under control, the fewer choices we have and the more painful they are. NO country can run deficits the size we are currently running, along with unfunded deficits over four times the size of the economy and a growing overall debt burden, without consequences. At some point, investors in bonds will start wondering exactly what the process is by which they will be repaid. And what will the value of those future payments be?
Thursday, February 16, 2012
Investors Turn to TIPS as Warren Buffett Warns on Inflation / Interest-Rates / Inflation
By: Money_Morning
Don Miller writes:
Warren Buffett last week did more than warn investors on the dangers of low interest rates and inflation.
The Oracle of Omaha also had harsh words for traditional bonds.
In a Fortune article Buffett went so far as to say, "Right now bonds should come with a warning label."
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