Analysis Topic: Interest Rates and the Bond Market

The analysis published under this topic are as follows.

Friday, March 18, 2011

Japan Quake Shakes U.S. Treasury Bond Market Get Ready for Financial Meltdown / Interest-Rates / US Bonds

By: LEAP

Beyond its tragic human consequences (1), the terrible disaster that has just hit Japan weakens the shaky US Treasury Bond market a little more. In the GEAB No. 52, our team had already explained how the sequence of Arab revolutions, this fall of the “petro-dollar” wall (2), would translate during 2011 into the cessation of the massive purchases of US Treasury Bonds by the Gulf States. In this issue, we anticipate that the sudden shock experienced by the Japanese economy will lead not only to the halt in US T-Bond purchases by Japan, but it will force the authorities in Tokyo to make substantial sales of a significant portion of their US Treasury Bond reserves to finance the enormous cost of stabilization, reconstruction and revival of the Japanese economy (3).

Thursday, March 17, 2011

Japanese Fallout May Hit U.S. Treasury Bonds / Interest-Rates / US Bonds

By: John_Browne

Japan is facing two meltdowns in the wake of its devastating earthquake. The first, and more critical, is the meltdown at the Fukushima I Nuclear Plant, 150 miles north of Tokyo. Surely, this is the greater near-term threat. But long-term, another threat looms, having to do with the Japanese government's response to the former.

Thursday, March 17, 2011

Monetary Lunatics, Is QE3 Ahead? / Interest-Rates / Quantitative Easing

By: LewRockwell

Austrian School economists have often explained the business cycle using the metaphor of liquor or drugs. The expansion of paper money and credit gives a sense of exuberance, an economic high that leads to excessive risk-taking and ballooning production. But it can’t be sustained. There is a morning after.

Thursday, March 17, 2011

Japan Natural Disaster to be Fought with a Tsunami of Credit / Interest-Rates / Quantitative Easing

By: Dr_Jeff_Lewis

Following the worst natural disaster in decades, the Japanese central bank will begin an instant round of easing to boost liquidity as Japan continues to recover after disaster.  The country, wrecked by an awful 9.0 earthquake and following tsunami, along with nuclear reactor exposure, will now cope in perhaps the worst way with economic fallout: 15 trillion yen in bond-buying, worth roughly $183 billion.

Wednesday, March 16, 2011

Options Trading Lesson on Triple Calendar Spreads / Interest-Rates / Options & Warrants

By: J_W_Jones

One of the characteristics of option trades that is particularly vexing to the new trader is the almost infinite variation in which individual options can be combined to produce a seemingly infinite array of choices. These combinations of the various individual options are more than a theoretical exercise; each individual combination often produces a unique Profit & Loss curve.

Wednesday, March 16, 2011

E.U. Politicians Seek to Unload PIIGS Bonds / Interest-Rates / Global Debt Crisis

By: Claus_Vogt

Since last Friday all eyes have been geared toward the catastrophe in Japan. That’s indeed understandable. However, there has been another important development with far-reaching implications that is worth discussing today …

While the media was totally focused on the Japanese disaster, German Chancellor Merkel and her European brethren insidiously decided to make a major change within the European Financial Stability Facility (EFSF), the EU’s euro rescue fund …

Tuesday, March 15, 2011

U.S. Government Evermore Reliant on Foreign Investors to Finance Debt / Interest-Rates / US Bonds

By: Kieran_Osborne

Despite the Fed recently surpassing China as the largest owner of U.S. government debt, the U.S. remains heavily reliant on foreigners to fund the government’s ongoing fiscal largess. Geithner’s Treasury Department has firmly focused new issues at the mid to longer end of the yield curve (since Geithner assumed office, the average length of marketable Treasury debt held publicly has increased by nearly one year). Despite the Treasury taking advantage of the ultra-low interest rate and funding environment, there are substantial refinancing issues over the near term; moreover, many of these maturing issues are foreign owned. Should sovereign fiscal concerns spread to the U.S., in concert with the evermore attractive interest rates offered internationally, refinancing the U.S. debt could become increasingly difficult if foreign investors turn their backs.

Tuesday, March 15, 2011

Why U.S. Treasury Bonds Are No Longer the Interest Rate Market Bellwether / Interest-Rates / US Bonds

By: Money_Morning

Shah Gilani writes: Divining the direction of interest rates used to be a lot easier.

With the Federal Funds Rate, policymakers at the U.S. Federal Reserve would indicate precisely what they wanted the overnight lending rate between big banks to be. And the prices of U.S. Treasury securities of all maturities fell in line like obedient soldiers.

Tuesday, March 15, 2011

U.S. Interest Rates Are On The Launch Pad / Interest-Rates / Stock Markets 2011

By: Jack_Steiman

A few months ago, the chorus sung by the recovery cheerleaders reached a crescendo when expanding consumer credit statistics and surging US trade deficits provided them with "evidence" of an economic rebound. In declaring victory, they overlooked the very nucleus of this past crisis: namely, the enormous debt levels and bubbling inflation that created fragile asset bubbles. If they had recognized the original problem, they would have remained silent. In reality, only a reduction in US debt levels or increase in the value of the dollar would have signaled a budding recovery; but, thanks to the Federal Reserve and Obama Administration, there is virtually no way those results will ever be seen.

Tuesday, March 15, 2011

Fed FOMC Interest Rate Meeting March 15th Preview / Interest-Rates / US Interest Rates

By: Asha_Bangalore

The March 15 FOMC meeting is nearly certain to end with no change in the Fed's current monetary policy stance with an indication that it would continue the second round of quantitative easing.  Market participants are keeping a close eye on the policy statement to assess if there is a shift in the Fed's view.  A change in the Fed's outlook, if any, will be visible if the phrase "exceptionally low levels for the federal funds rate for an extended period" is modified.  Differences of opinion within the policy making committee about the quantitative easing program, involving a purchase of $600 billion Treasury securities, suggest a contentious debate.  In addition, an exit plan should be part of the agenda. 

Tuesday, March 15, 2011

RIP Shadow Banking System, Long Live QEx / Interest-Rates / Quantitative Easing

By: Gordon_T_Long

We have unwittingly become trapped in the snarled net of years of bad Public Policy. Like corporations that look no further than this quarter's results, our politicos never stop campaigning to start the tough task of ruling responsibly. A winning election simply represents 'rewards' and 'spoils' to all before quickly resuming the next campaign. 

Monday, March 14, 2011

The Best Opportunity for Safe, Tax-Free Income You'll See in 2011 / Interest-Rates / US Interest Rates

By: DailyWealth

Dr. David Eifrig writes: If you can ignore one of the media's biggest sources of hype, you'll see there's an amazing opportunity for income investors right now...

But if you're interested in collecting this income, I encourage you to act soon. It won't be available for long.

Monday, March 14, 2011

Three Flawed Fed Exit Options / Interest-Rates / Central Banks

By: Robert_Murphy

Whether giving public lectures or teaching at the Mises Academy, I'm often asked whether Bernanke will be able to "pull this off." Specifically, can the Fed gracefully exit from the huge hole it has dug for itself?

Unfortunately my answer is no. In the present article I'll go over three possible exit options, and explain the flaws in each.

Monday, March 14, 2011

The Exponentiality of Municipal Costs (and Some Advice for Endowments and Foundations) / Interest-Rates / US Debt

By: Fred_Sheehan

The word in social media is "exponentiality" of growth. Webster's, American Heritage, and Microsoft Word do not acknowledge it, I don't know how to spell it, but this path-breaking discussion of rising municipal costs deserves a word from the future.

The pension costs of states and municipalities in years hence are often stated in a calculation of future liabilities. For instance, the future obligations of state and municipal pension funds are calculated (in frequently cited studies) at between $1.5 trillion to $3.5 trillion.

Monday, March 14, 2011

U.S. Debt and Deficits Ensure Violent Dollar Sell-Off Ahead / Interest-Rates / US Debt

By: LewRockwell

David Stockman writes: The Triumph of Crony Capitalism occurred on October 3rd 2008. The event was the enactment of TARP – the single greatest economic policy abomination since the 1930s or perhaps ever.

Like most other quantum leaps in statist intervention, the Wall Street bailout was justified as a last resort exercise in breaking the rules to save the system. In the immortal words of George W. Bush, our most economically befuddled President since FDR, "I’ve abandoned free market principles in order to save the free market system."

Saturday, March 12, 2011

It May Be Time To Buy U.S. Treasury Bonds Again! / Interest-Rates / US Bonds

By: Sy_Harding

Slowing economic growth is usually a positive for bonds.

Bonds are bought as a safe haven when global stock markets are in corrections.

Friday, March 11, 2011

The Probability of More Quantitative Easing / Interest-Rates / Quantitative Easing

By: Richard_Daughty

It would be an understatement to say that I was flabbergasted to see that the monetary base jumped $130 billion dollars in two weeks!

Well, using an exclamation point as punctuation seems to confirm my suspicions that I was, indeed, flabbergasted, as the term seems, somehow, appropriate since I felt something more than the usual crushing pains in my chest, numbness running down my left arm, my guts heaving and sphincters tightening kind of reaction I get when I see horrifying, huge increases in money and credit created by the damnable Federal Reserve.

Friday, March 11, 2011

ECB Stuck in Sovereign Debt Garbage, Germany Sets High Price for Bailout Changes on Greence and Ireland / Interest-Rates / Global Debt Crisis

By: Mike_Shedlock

Leaders of 17 eurozone countries meet on Friday in Brussels to discuss the sovereign debt crisis and the stabilization pact, but don't expect much of anything to come from it. Instead, expect to see a lot of bickering interspersed with agreements to agree on non-critical issues.

Thursday, March 10, 2011

Pimco Dumps All U.S. Treasury Bonds, Six Reasons Why They Got it Wrong / Interest-Rates / US Bonds

By: Mike_Shedlock

Pimco's Bill Gross has been dumping US government debt in favor of other alternatives including emerging-market opportunities. Looking ahead, I think it's more likely to be a bullish setup for treasuries than not.

First, please consider the news.

Thursday, March 10, 2011

Bank of England Interest Rate Indecision, UK Rates Held at 0.5% for 2 Years / Interest-Rates / UK Interest Rates

By: Nadeem_Walayat

The Bank of England again decided to do nothing by keeping the UK base interest rate on hold at 0.5% for now 2 full years whilst the inflation fires are burning out of control, rapidly consuming the purchasing power of workers and life time accumulated value of savings. The Bank of England exists purely to service the interest of the bankster elite as evidenced by the fact it funnels cash to the banks at 0.5% to buy government bonds at 3.5% (on leverage) and thus make an instant profit of 60%, whilst the clueless in the mainstream press continue to wonder why the Banks are not lending, they are not lending because they are making risk free profits due artificially held low interest rates, a normalised base interest rate should be north of RPI (5.1%).