Analysis Topic: Interest Rates and the Bond Market
The analysis published under this topic are as follows.
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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Wednesday, February 15, 2012
FOMC Meeting: Divided House about Additional Quantitative Easing / Interest-Rates / Quantitative Easing
By: Asha_Bangalore
The minutes of the FOMC meeting of January 24-25 presented a range of opinions about whether further monetary accommodation through asset purchases (QE3) is necessary. At one end of the spectrum, “a few members observed that, in their judgment, current and prospective economic conditions – including elevated unemployment and inflation at or below the Committee’s objective – could initiate the purchases of additional securities before long.” A more qualified position was held by other members who indicated that “such policy action would become necessary if the economy lost momentum or inflation seemed likely to remain below is mandate consistent rate of 2 percent in the medium run.” In stark contrast to these two opinions that suggest an inclination toward additional asset purchases or QE3, on member viewed maintaining the current extent of monetary accommodation more than the near term as “inappropriate.”
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Wednesday, February 15, 2012
The Lesson of "Half-Hearted" QE Money Printing / Interest-Rates / Quantitative Easing
By: Adrian_Ash
Take 40 trillion Yen, add another 22 trillion, and you still aren't doing enough!
SO HOW MUCH quantitative easing is enough quantitative easing?
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Monday, February 13, 2012
What Does the Bank of England Think It's Doing? / Interest-Rates / Quantitative Easing
By: Adrian_Ash
Quantitative easing has not worked as advertised so far. Why push ahead with more...?
"YOU'VE lost control – Bank of England takes over," says the Bank of England's cute little game for school-kids if you let the hot-air balloon you control crash into the ground, rather than happily floating it around the 2.0% annual inflation target.
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Monday, February 13, 2012
Bullish Set-up for Treasury Bonds TLT ETF / Interest-Rates / US Bonds
By: Mike_Paulenoff
My near- and intermediate-term work indicate that the iShares Barclays 20 Year Treasury ETF (TLT) established a significant corrective low at 114.62 on Feb 9 and that since then the price structure is doing the work to create a powerfully bullish technical set-up that should propel it towards 120 in a hurry.
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Thursday, February 09, 2012
The Fed's Quasi-Fiscal Policies / Interest-Rates / Quantitative Easing
By: David_Howden
The policies that the Fed embarked on in late 2007 are a sharp departure from the old way of performing monetary policy. In fact, it is difficult to state that the Fed is any longer in the business of traditional monetary policy — understood in the United States as aiming for low inflation and smoothed output volatility. A new breed of monetary policies better referred to as "quasi-fiscal" policies has become the norm.
Wednesday, February 08, 2012
The Deception of 0% Interest Rates, High Costs and Capital Destruction / Interest-Rates / US Interest Rates
By: Jim_Willie_CB
The interminable extension by the US Federal Reserve on the 0% rate into 2014 represents history in the making. It is the adoption of pure heresy in monetary policy, making it mainstream. Worse, it forces foreign central banks to adopt the same destructive policy in the Competing Currency War. Once upon a time, the highest priests from the central bank would admit in a guiding tone that accommodation on interest rates must be temporary. Nowadays it is engrained in the market mindset and permanent in monetary policy. The chronic 0% means the entire financial and monetary system is totally irreparably broken. The old pendulum where the tilt was toward bonds during recession, then toward stocks during recovery, that is all gone, shattered by the endless financial crisis. One must incorporate a new thinking, that the entire financial and monetary system is totally irreparably broken, then adapt in fierce defense. Larry Fink of Blackrock private equity firm made news today by suggesting that 0% bond yields offer no return on investment. How true! He did not offer any accurate reflection of reality that the financial structures are broken, nor that all attempts at remedy were flimsy and misdirected. He gave the ALL IN signal for buying stocks in 2012, thus putting on the risk trade. The immediate ancillary signal is to back up the truck and load up with GOLD also.
Wednesday, February 08, 2012
Bell Rings for U.S. Treasury Bond Bubble / Interest-Rates / US Bonds
By: Michael_Pento
They always tell you no one rings a bell when a market top or bottom is reached. But a bell is now ringing for the end of the thirty-year bull market in U.S. debt. And ironically, the bell ringer is our very own U.S. Treasury!Read full article... Read full article...
Wednesday, February 08, 2012
Has Zero Interest Rate Policy Held Back Economic Recovery? / Interest-Rates / US Interest Rates
By: Asha_Bangalore
The Fed instituted the zero-interest-rate policy (ZIRP) in December 2008 in response to the financial crisis. The ZIRP policy has been extended to late-2014 following the January 24-25 FOMC meeting, which will make it a six-year project. The current ZIRP policy of the Fed has its critics and advocates; Bill Gross presents arguments in today's Financial Times article for putting an end to the ZIRP policy because it is the root cause of economic woes today. His focus is on the absence of incentives for banks to find suitable projects to finance if they can park money at the Fed risk free for 25bps. He also adds that investors are most likely to shun Treasury securities as "there are multiples of downside price risk compared to appreciation."
Tuesday, February 07, 2012
The Fed Resumes Printing Money to Monetize U.S. Government Debt / Interest-Rates / Quantitative Easing
By: Casey_Research
Bud Conrad, Casey Research writes: The Federal Reserve recently announced important policy changes after its Federal Open Market Committee (FOMC) meeting. Here are the three most important takeaways, in its own words:
1.The Committee decided today to keep the target range for the federal funds rate at 0 to 1/4 percent and currently anticipates that economic conditions – including low rates of resource utilization and a subdued outlook for inflation over the medium run – are likely to warrant exceptionally low levels for the federal funds rate at least through late 2014.
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Tuesday, February 07, 2012
Ben Bernanke and QE3 / Interest-Rates / Quantitative Easing
By: Michael_S_Rozeff
Ben, if you and the other members of the FRB are thinking of the factors that I shall mention, then you are likely not to do QE3 any time soon. If not, then, on your own grounds of economic thought, I believe that you are making a mistake.
My general argument is that the risks of QE3 outweigh the prospective gains, on your grounds, not mine. (My preference is no central bank and free banking and/or privately produced money and credit, but I am laying that aside in this article.)
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Tuesday, February 07, 2012
US Debt Will Explode Without Changes / Interest-Rates / US Debt
By: Bloomberg
John Taylor, economics professor at Stanford University, spoke to Bloomberg Television's Trish Regan today and said that the U.S. "could get into a situation like Greece, quite frankly."
Taylor went on to say, "People have to realize it is a precarious situation. The debt is going to explode if we don't make some changes."
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Monday, February 06, 2012
Bond Investors Pour into Emerging Market Debt in Hunt for Higher Yields / Interest-Rates / International Bond Market
By: Money_Morning
Don Miller writes:
The never-ending hunt for higher yield is leading investors to bet record amounts on emerging market debt.
In just the first two weeks of 2012, governments of undeveloped economies from Asia to Africa sold more than $30.6 billion in dollar-denominated bonds according to Bloomberg News.
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Saturday, February 04, 2012
The Euro Zone and the Crisis of Sovereign Debt / Interest-Rates / Eurozone Debt Crisis
By: Bob_Chapman
The creation of the euro zone may have given participants one currency, but it created other problems as well. One interest rate was supposed to fit all. Those sovereigns on the financial periphery of the 17 nations found low interest rates too good to be true. As a result, the borrowed funds they shouldn’t have borrowed to finance current debt, was thrown off by the economy. During the 1990s we wrote that one interest rate for all would destroy the euro, but as usual no one wanted to listen. The reason was simple, each nation was and is at a different stage of development and a nation paying 2% rates could now borrow at 4%, which is a giant difference. As debt grew the credit crisis occurred and the rules changed externally. As rates rose sovereigns got into more and more trouble.
Friday, February 03, 2012
FOMC Pushes Unchanged Interest Rates Forecast Out to 2014, Fed Sets Inflation Target / Interest-Rates / US Interest Rates
By: Dr_Jeff_Lewis
Among the recent price consolidation, it should not be forgotten that the U.S. Federal Open Market Committee of the Federal Reserve Board decided to leave rates at 0.0% to 0.25% until at least late 2014, according to the FOMC statement released on January 25th.Read full article... Read full article...
Thursday, February 02, 2012
How Far Will Debt Deleveraging Go? How Much LSD Can an Elephant Take? / Interest-Rates / US Debt
By: Andrew_Butter
There is a growing suspicion that the amount debt piled on by both government and the private sector in developed nations over the past few years, is causing distressing symptoms of overdose.
On the subject of overdose, any druggie will tell you, dosage is important. Get that wrong and you can suffer unintended consequences. The other thing, once you popped the pills and the substance is absorbed into your blood, well, you just got to hang on and bear the consequences, until the stuff works its way through your system, if you don’t die first.
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Sunday, January 29, 2012
The Fed's Inflation Target; QE3, QE4, QE5, etc. are in the Queue / Interest-Rates / Quantitative Easing
By: David_Knox_Barker
The U.S. Federal Reserve policy announcement on Tuesday, January 25, 2012 marks an important moment in monetary history. The forecast by a majority of the members of the FOMC for interest rates to hug zero until late 2014 was of interest and points to the FOMC conviction extended global economic stagnation at best, reflecting the long wave forces at work in the global economy. However, more importantly, it was the first time that the U.S. Federal Reserve has clarified its interpretation of its mandate for price stability, i.e. the target for inflation.
Sunday, January 29, 2012
Fed Transparency Gap, Central Banks High Wire Balancing Act, Greek Exhaustion Syndrome / Interest-Rates / Global Debt Crisis 2012
By: John_Mauldin
This week we take a brief pause in our series on the choices facing the developed world to look at some items that are catching my attention. We will get back to the US next week, as somehow I think we will not solve our problems between now and next Friday, and there will be plenty left for us to talk about. So today we look at the “shift” in Fed policy, and at the balance sheets of central banks, US GDP, Portugal and the ECB, the LTRO policy, and yes, there’s even a tidbit on Greece. Plenty of ground to cover, so with no “but first,” let’s get started.