Analysis Topic: Interest Rates and the Bond Market
The analysis published under this topic are as follows.Saturday, July 02, 2011
Global Interest Rate Movements: Half-Year Review / Interest-Rates / Central Banks
This article reviews the monetary policy interest rate activity of the world's central banks during the first half of 2011. The key takeaway is that monetary policy tightening has been the dominant game for most emerging market central banks in the first half of the year, however the majority of central banks are still in the no-change camp. Indeed of the 79 central banks that Central Bank News monitors, 33 made net increases to their interest rates, while 40 held their rates net unchanged, and only 6 made net reductions to their policy interest rates.
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Friday, July 01, 2011
Time Table for the Coming U.S. Treasury Bond Market Crash, Moves Every Investor Must Make / Interest-Rates / US Bonds
Martin Hutchinson writes: Since last November, the U.S. Federal Reserve has been buying U.S. Treasury bonds at a rate of about $75 billion a month. That's part of Fed Chairman Ben S. Bernanke's "QE2" program, under which the central bank was to buy $600 billion of the government bonds.
But QE2 ended yesterday (Thursday), meaning the Fed will no longer be a big buyer of Treasury bonds.
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Friday, July 01, 2011
Can the EU Fix Greece? / Interest-Rates / Euro-Zone
The Greek parliament has passed the latest austerity package asked for by the IMF/ EU, and has approved the implementation legislation spelling out the various steps in detail. The markets have heaved a sigh of relief, comforted by the assumption that a new "bailout" plan is in the works. However, nothing has fundamentally changed: Greece is still facing an unsustainable debt burden and the various agencies of the European Union are still unable to come up with a coherent approach to the financial and structural challenges facing many member states.
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Thursday, June 30, 2011
S&P, U.S. Will Lift Debt Ceiling, Avoid Default Rating / Interest-Rates / US Debt
John Chambers, managing director of sovereign ratings at Standard & Poor’s, spoke with Bloomberg Television's Erik Schatzker this morning about the debt ceiling and U.S. credit rating.
Chambers said that S&P would lower its sovereign top-level AAA ranking to D if the U.S. can't pay its debt, but clarified that S&P thinks that the government “will raise the debt ceiling.” He also said that if we get to a situation where the government can’t pay its debts, it will be “much more chaotic” than the September 2008 Lehman collapse.
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Thursday, June 30, 2011
Greek Austerity Package Gets Favorable Vote, Will Bond Yields Head North? / Interest-Rates / Euro-Zone
The Greek parliament voted in favor of the austerity package and the second vote to implement this law is scheduled for June 29. In the meanwhile, 2-year U.S. Treasury note yield moved up 13 basis points in four trading days (0.48% as of June 28 vs. 0.35% as of June 23) and was trading at 0.45% as of this writing.
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Wednesday, June 29, 2011
Dodging Default, French Banks Scramble to Prevent Another Global Collapse / Interest-Rates / Credit Crisis 2011
Kerri Shannon writes: The threat of a Greek default has become so real that French banks, which constitute some of the top Greek debt holders, have intensified their efforts to ease the country's floundering finances.
French lenders, along with their government, have suggested a debt rollover program, the first private-sector proposal to help save Greece.
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Wednesday, June 29, 2011
European Debt Crisis Investing, Buy U.S. Treasury Bills / Interest-Rates / Global Debt Crisis
According to Fortune (citing IMF data), Germany’s banks are now more leveraged than Lehman Brothers at the time of its collapse (Lehman: 31 to 1). Similarly, their leverage is financed by “cheap, short-term loans that are vulnerable to a market shock.” These loans (as we explained last December) are from money market funds here in the U.S. (Investors should Buy Treasury Bills instead.)
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Wednesday, June 29, 2011
Bankrupt Greece Blackmails Europe, Bailout or Euro Zone Dies, Global Financial System Collapse / Interest-Rates / Global Debt Crisis
The Greek population is in constant revolt with another 48 hour national strike underway against ever expanding announcements of economic austerity though to date little of which has actually been implemented and therefore risks at the very a least a delay of the latest tranche of Euro 12 billion in what has now become a permanent flow of funds from core Euro-zone to Greece and other peripheral eurozone countries, therefore tax payers of core Europe and to a lesser degree Britain are being taxed to pay for the unwillingness of the PIIGS to pay their bills.
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Tuesday, June 28, 2011
United States of Denial / Interest-Rates / Global Debt Crisis
The suggestion that there is anything remotely approaching a recovery in the United States, or the world economy, is pure cow pie, as evidenced by the requirement for more borrowing, more easing, and more deterioration in employment and housing. But as the title suggests, its not just America. I’m referring to the heads of state around the world. Apparently too busy jetting back and forth from Washington, New York, Vienna, Athens, Berlin, London and Paris to have anything approaching a grip on reality, we’re delivered surreality by world leaders immersed in United States of Denial. Now the banks in Europe are carving up the assets of Greece as vig for continued lending.
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Tuesday, June 28, 2011
America for Sale: Liquidate Assets to Avert Debt Ceiling Crisis, Republicans Say / Interest-Rates / US Debt
David Zeiler writes: It would be the greatest garage sale in history.
The United States Treasury possesses 261.5 million ounces of gold, worth about $392.25 billion at current prices.
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Tuesday, June 28, 2011
Credit Default Swaps: Why Washington Warnings / Interest-Rates / Global Debt Crisis
Martin Hutchinson writes: Three years ago, I told you that Wall Street's newest invention - credit default swaps - would cause a major financial crash.
Now, I'll concede that credit default swaps (CDS) weren't the only cause of the financial meltdown that brought about the collapse of Lehman Brothers Holdings (OTC: LEHMQ) and nearly brought down American International Group Inc. (NYSE: AIG). But these financial derivatives were a major exacerbating factor - which is why I also warned that credit default swaps should be banned.
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Tuesday, June 28, 2011
Big time trouble dead ahead thanks to the Federal Reserve / Interest-Rates / US Interest Rates
Sam Houston writes: The paper money dollar experiment of the last 40 years has reached an unsolvable impasse. Since 1971, when Nixon defaulted on the dollars convertibility into gold there has been no restraint whatsoever on the Federal Reserve's ability to finance the U.S. government's boondoggle spending programs both foreign and domestic.
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Tuesday, June 28, 2011
Can The Fed Stop Quantitative Easing? / Interest-Rates / Quantitative Easing
If the Fed stops QE, confidence in the US dollar would rise. Money would flow into US investments, both supporting the US stock market and helping to finance the large US budget deficit. Gold and silver prices would decline. Negative dollar expectations would be squeezed out of oil and grain prices, although drought, flood, and supply factors would continue to impact grain prices and the administration’s wars can impact oil prices.
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Sunday, June 26, 2011
More Treachery at the Fed? / Interest-Rates / US Interest Rates
No one expects the Fed to announce a rate-hike at the end of the today's FOMC meeting, but that doesn't mean there won't be a few surprises. The problem is that the recovery has stalled and the Fed can't decide whether we've just hit a "soft patch" or if it's something more serious. If it is more serious, then the Fed will need a contingency plan for kick-starting the economy. So, what's it going to be; another round of Quantitative Easing (QE), rate caps on short-term Treasuries or something else altogether? That's what the financial media will want to know, and only Fed chairman Ben Bernanke knows the answers.
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Sunday, June 26, 2011
Global Debt Crisis Illusions Versus Reality / Interest-Rates / Global Debt Crisis
"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
Our global society needs a reset. The insolvency of Greece or the growing US fiscal imbalance are only symptoms of a much deeper problem. It is easy for market participants to sit behind their red and green charts and point blame at "the Bernank." It is easy for homeowners to forego their mortgage payment to fund the expenses they are "entitled" to. It is easy for the Mortgage Bankers Association to "strategically default," after all it's a "business decision."
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Saturday, June 25, 2011
U.S. Debt Crisis, Proof that 1975 was the year it Began / Interest-Rates / US Debt
Note from the chart below how US public debt began to climb from 1975 onwards. Source: eh.net/encyclopedia/article/noll.publicdebt
Saturday, June 25, 2011
Fed Benefits from Global Economic Fears / Interest-Rates / Central Banks
This week, in the second in a series of less-than-impressive press conferences, Fed Chairman Ben Bernanke offered market observers little hope that any additional quantitative easing programs are on the horizon. The Chairman continues to cling to the position that the economy is improving (with the recent "soft patch" attributable to external forces) to the extent that additional Fed support will be unnecessary. Left unsaid was any guidance as to who the Chairman believes will buy the massive amounts of Treasury debt formerly swallowed up by the QE II program?Read full article... Read full article...
Saturday, June 25, 2011
Bernanke - Concern? / Interest-Rates / US Interest Rates
When Ben Bernanke was appointed the Chairman of the U.S. Federal Reserve in early 2006 I then said he was the person that lost the game of musical chairs. Bernanke has always impressed me as a sincere and honest man who inherited problems not of his own making. I believe he works hard at - as golfer Bobby Jones might have said to him - playing the ball as it lies with little if any complaint. As best I know he is paid something north of U.S.$200,000 per year - hardly a princely sum for someone who holds one of the most important financial jobs in the world. How ridiculous is that when measured against the Wall Street, Bay Street, London City, and corporate executive salaries. One side of that equation is materially wrong - you decide which one.
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Friday, June 24, 2011
Mervyn King's Interest Rate Spread Bet / Interest-Rates / UK Interest Rates
The Bank of England won't raise rates until it knows it won't make a difference…
THE BANK OF ENGLAND is getting more dovish. It seems less inclined than ever to raise interest rates – despite inflation currently running at over twice the target rate.
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Friday, June 24, 2011
Silver, Comex and The War Over Money / Interest-Rates / Global Debt Crisis
Once again, S&P is at it, issuing its monthly threat to the USGovt to fall into compliance or risk its AAA credit rating. On the surface, these warnings have become rather laughable in that the ratings agency feels the need to say something while, in effect, saying nothing. As time has gone by, the idea that the markets would be jittered by an actual ratings cut has become equally absurd. To hear it reported, you’d think the market consisted of a bunch of first graders who need S&P, Moody’s or Fitch to tell them the sky is blue.
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