Analysis Topic: Interest Rates and the Bond Market
The analysis published under this topic are as follows.
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.
Friday, January 27, 2012
Credit Crisis Perfect Storm, Robert Prechter Discusses What's Backing Your Dollars / Interest-Rates / Credit Crisis 2012
By: EWI
In this video clip, taken from Robert Prechter's interview with The Mind of Money, Prechter and host Douglass Lodmell discuss "real" money vs the FIAT money system, and what is backing your dollars under our current system. Enjoy this 4-minute clip and then watch Prechter's full 45-minute interview here >>
Thursday, January 26, 2012
Merkel Casts Doubt on Saving Greece, ECB insists on Profits on Greek Bonds / Interest-Rates / Eurozone Debt Crisis
By: Mike_Shedlock
Amazingly, smack in the midst of deal to save Greece from bankruptcy, the ECB not only insists on taking no losses on Greek bonds its holds, it wants a profit on them because it bought them at what seemed at the time to be a substantial discount. The discount was imaginary. The bonds were trading at 7% at the time.
Wednesday, January 25, 2012
The Demise of State Sovereignty: Pressures on the Euro Amidst Rising Debt Levels / Interest-Rates / Eurozone Debt Crisis
By: Bob_Chapman
We announced our belief a few weeks ago that the Fed loan to the ECB could with fractional banking be $10 trillion. This past week we found that Credit Suisse shares our ideas as well. We believe that what this move by the Fed and the ECB is telling us that this is probably it. We also ask again how can the banks in the LTRP repay the funds in a timely manner? No plan has been presented before or since, there is no plan. Again, just throw money at the problem. The only player really capable of saving Europe is Germany and they would destroy themselves in the process. Everyone should have seen this coming but no one did except a handful of insiders. The resultant use of funds since the ECB distribution is hardly even mentioned in the media. It is a big dark secret.
Wednesday, January 25, 2012
The EU Gives a Lesson in How Not to Restructure Sovereign Debt / Interest-Rates / Eurozone Debt Crisis
By: David_Urban
Debt yields appear to be coming off with the exception of Greece, where the EU is now attempting to strong arm creditors once again with respect to the interest rate on the New Greek debt.
What the EU failed to realize is in that their rush to rescue the banking sector and bail out Greece they have created a bifurcated market in European sovereign debt. The Greek bailout will only apply to private holders of Greek debt, excluding pension funds, the EU and IMF from the bailout.
Tuesday, January 24, 2012
Greek Private Bondholders Reject Greece 'Haircut' Debt Default Deal / Interest-Rates / Eurozone Debt Crisis
By: Mike_Shedlock
Reuters reports Euro zone ministers reject private bondholders' Greece offer
Read full article... Read full article...Euro zone finance ministers Monday rejected as insufficient an offer made by private bondholders to help restructure Greece's debts, sending negotiators back to the drawing board and raising the threat of Greek default.
Tuesday, January 24, 2012
How to Work Out of the Long and Painful Debt Deleveraging Process / Interest-Rates / Global Debt Crisis 2012
By: John_Mauldin
This week we look at a report called “Working Out of Debt,” about debt and deleveraging, from the McKinsey Global Institute. This is a well-done summary of their longer paper, which has been updated, called “Debt and deleveraging: Uneven progress on the path to growth.” I discussed the original paper both in my regular letter and in Endgame. It is one of the best, most definitive pieces on the topic I have read. For those trying to understand how the deleveraging process will affect their particular world, I think it is a must-read. I have been spending more and more time thinking about the whole process of deleveraging, and am coming to think deleveraging is the critical and fundamental factor shaping the economic environment and impacting every decision countries and businesses are faced with. This paper was done by Karen Croxson, Susan Lund, and Charles Roxburgh; and they are to be especially commended for their insight and work.
Friday, January 20, 2012
UK Gold and Real Interest Rates, A Free Nation Drowining in Debt / Interest-Rates / UK Debt
By: Adrian_Ash
Take record-high debt, add record-low interest rates, and what do you get in gold...?
SECOND ONLY to Japan, the UK now wears the greatest debt burden of any major economy today – in total, more than 5 years' entire economic output.
Friday, January 20, 2012
Roubini Says Greece Will be a Credit Event, Regardless of Debt Deal / Interest-Rates / Global Debt Crisis 2012
By: Bloomberg
Bloomberg Exclusive: Nouriel Roubini and Ian Bremmer spoke with Bloomberg Television's Margaret Brennan about the state of the global economy.
Roubini said that the "probability of a recession in the United States is lower than 60 percent right now." On Europe, he said that even if an agreement is reached on Greece, "there are going to be so many holdouts that then they'll have a problem" and "either way you're going to get a credit event."
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Friday, January 20, 2012
Marc Faber: Still Predicting U.S. Treasury Bond Bubble Will Burst / Interest-Rates / US Bonds
By: Bloomberg
Marc Faber, publisher of the Gloom, Boom and Doom report, spoke to Bloomberg Television's Sara Eisen and Erik Schatzker and said that investors have created a "bubble" in the "highest-quality" government bonds and should move to equities.
Faber said, "People feel so insecure that they say, 'I'd rather be in a Treasury in America with almost no yield or in Germany with negative yield and get my money back.' But it doesn't make them a good buy in the long term."
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Friday, January 20, 2012
Eurozone Debt Crisis, The Reality of the European Downgrades / Interest-Rates / Eurozone Debt Crisis
By: Money_Morning
Jack Barnes writes:
It turned out to be a ruinous Friday the 13th for Europe last week.
After the close, Standard & Poor's downgraded nine of the sovereign states in the European Union (EU).
That included dropping Austria and France to AA+ status from their formerly lofty AAA rating.
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