Analysis Topic: Interest Rates and the Bond Market
The analysis published under this topic are as follows.
Thursday, October 07, 2010
Debt Alarm, Financial Toxic Waste Continues to Unravel, Loan Assets Created Out of Thin Air / Interest-Rates / Global Debt Crisis
By: Matthias_Chang
DEBTCON-1 (as in DEFCON-1, the highest level of the alarm system for impending military threats/crisis) have been triggered, but the FED, global central banks and regulatory authorities are still in deep denial and treat the ongoing global financial crisis as still in the state of DEBTCON-5 (i.e. DEFCON-5, the lowest threat alert).
Thursday, October 07, 2010
Japan, U.S. Prepare For More Money Printing / Interest-Rates / Quantitative Easing
By: Chris_Ciovacco
Stalling economies around the globe have prompted central bankers to increase their asset purchase or quantitative easing programs. As central banks print money to purchase assets, they increase the amount of paper dollars in the economy, which is often referred to as “inflating the money supply” or “debasing a currency”. We will continue to look for good entry points to add to our gold positions in numerous client accounts. Our current holdings in copper, silver, oil, and gold can help us protect our purchasing power should central banks be successful in their attempts to create positive inflation via currency debasement.
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Thursday, October 07, 2010
Bank Credit: Securities vs. Loans - Guidance about Lags from History / Interest-Rates / Credit Crisis 2010
By: Asha_Bangalore
The role of bank credit in economic recoveries was the theme of the August U.S. Economic and Interest Rate Outlook (Bank Credit: One Month Does Not Make a Trend, But..). The main conclusion of the commentary: A lack of growth in bank credit is the major culprit behind the lackluster recovery. Chart 1, a repeat from the August commentary, illustrates the close link between bank credit and economic growth.
Wednesday, October 06, 2010
Bank of Japan Goes "All In" To Stem Deflation / Interest-Rates / Japanese Interest Rates
By: James_Pressler
In an attempt to fight off worsening deflation and prevent the economy from falling into another recession, the Bank of Japan (BoJ) announced its largest foray yet into the realm of quantitative easing (QE). It lowered its benchmark interest rate to between zero and 0.1% (effectively 0%), set up a ¥5 trillion ($59.7 billion) fund to purchase government and corporate bonds, and also created a ¥30 trillion lending facility using those assets as collateral. The breadth of such QE measures caught the market off-guard and dispelled most concerns about the BoJ being too timid in the face of another economic downturn. And yet, even though the BoJ seems to be placing its largest wager ever on the table, we cannot help but ask: Is it enough?
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Wednesday, October 06, 2010
Bank Excess Reserves Have to Decline for Fed Policy to be Successful / Interest-Rates / Quantitative Easing
By: Asha_Bangalore
The nature of recent Fed rhetoric has raised the probability of a second round of quantitative easing (QE) as early as the November 2-3 FOMC meeting. New York Fed President Dudley's speech on October 1 makes a case for this action. Irrespective of Fed action on November 3, excess reserves of the banking system have to decline noticeably for self-sustained robust economic growth to occur. Excess reserves of the banking system, stood at $976 billion for the week ended September 22 and are down from a high of 1.192 trillion (see chart 1) in February 2010. Ideally, excess reserves have to be a negligible entity.
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Tuesday, October 05, 2010
Fed Crossing the Line? / Interest-Rates / Central Banks
By: Axel_Merk
William Poole writes: New York Federal Reserve Bank (Fed) president Bill Dudley’s speech Friday attracted much press attention, as it should have. His speech is correctly read, as in the press commentary, as providing a broad hint of more policy easing to come. During my tenure as president of the St. Louis Fed, I overlapped with Dudley, who, along with being president of the New York Fed, is Vice Chairman of the Federal Open Market Committee (FOMC). I know him to be a competent and cautious policymaker. It is hard for me to believe that he would not have cleared this speech with Chairman Bernanke before presenting.
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Tuesday, October 05, 2010
Why Certificates of Deposit (CD's) are More Attractive than U.S. Treasury Bonds Today / Interest-Rates / US Bonds
By: Nilus_Mattive
Last week I told you why many mutual fund investors could be setting themselves up for serious losses in Treasury bonds.
Just to recap — the idea was that mutual funds often buy and sell before their bonds reach maturity, which can translate to big losses for fund holders if interest rates rise. And the upshot was that, if you wanted to truly guarantee against any type of loss, you would have to hold individual bonds to maturity.
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Tuesday, October 05, 2010
Still Bullish on Bonds, Don't Buy the Stock Market Yet / Interest-Rates / International Bond Market
By: John_Mauldin
As readers know, I was in Europe a few weeks ago, making a LOT of presentations. My London-based partners seem to feel that an hour or two of down time is wasted and only for sissies. I learn as much as I impart, and come away with lots of interesting information. Every now and then I learn something that gets into the category of what in the wide, wide world of (multiple expletives deleted) economics is going on? Subprime was like that when I first read about it. Could you really design CDOs that were so patently absurd and then sell them to the Europeans and Asians? Turns out you could.
Sunday, October 03, 2010
Crisis of US Monetary Policy, Quantitative Easing Doesn't Work / Interest-Rates / Quantitative Easing
By: Washingtons_Blog
Ed Yardley notes: Two economists, Seth B. Carpenter and Selva Demiralp, recently posted a discussion paper on the Federal Reserve Board's website, titled "Money, Reserves, and the Transmission of Monetary Policy: Does the Money Multiplier Exist?" [Here's the link.]
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Sunday, October 03, 2010
The Bernanke Treasury Bond Market Put / Interest-Rates / US Bonds
By: Peter_Navarro
According to Market Edge: “After four weeks of impressive gains, stocks took a breather last week as both the DJIA and the NASDAQ ended the period with minor losses. The DJIA started the week with a 48.22 point (-0.4%) loss which was just the fifth losing session in September. Traders bought the dips throughout the week as the DJIA saw triple digit intra-day swings on both Tuesday and Thursday. Despite several disappointing economic reports, traders kept a bullish outlook throughout the week. For the period, the Dow lost 30 points (-0.3%) to close at 10829, snapping its four week win streak.&r
Saturday, October 02, 2010
QE2 Money Printing, Why This Time Is Different / Interest-Rates / Quantitative Easing
By: Bryan_Rich
Since the Fed’s most recent meeting, everyone seems to have an opinion about another round of extraordinary monetary stimulus and the economic and market reactions such a move could leave in its wake.
Many believe “this time is different” … words that tend to have a very poor track record of coming true.
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Saturday, October 02, 2010
Irish Financial Crisis Worsens, Peter Sutherland and Ireland’s Sovereign Wealth Fund / Interest-Rates / Credit Crisis 2010
By: Christopher_Quigley
Last week, on “black Thursday” the Irish government in essence finally nationalized Allied Irish Bank. In response to the horrific national financial picture painted by Mr. Brian Lenihan, Ireland’s finance minister, Peter Sutherland, former Irish attorney general, hit the media road. Mr. Sutherland’s mantra was similar to that previously presented by his acolyte Mr. Honohan (head of the Irish Central Bank). This mantra stated that though the figures were lamentable they were “manageable.”
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Friday, October 01, 2010
Regime Uncertainty and Treasury Bond Yields / Interest-Rates / US Bonds
By: Robert_Higgs
Regime uncertainty has gained increasing recognition as the current economic troubles have persisted with little or no improvement since the economy reached a cyclical trough early in 2009. As described in my 1997 paper, regime uncertainty pertains to the likelihood that investors' private property rights in their capital and the income it yields will be attenuated further by government action.
Friday, October 01, 2010
World Sovereign Debt Map / Interest-Rates / Global Debt Crisis
By: Seth_Barani
Debt creates problems. It is seldom known to solve problems, especially in the long run. Countries with high debt are vulnerable to currency weakening as debt drives assets out of those countries towards low risk, high yielding countries.
Thursday, September 30, 2010
How Bar Chart Patterns Signal High-probability Trade Setups / Interest-Rates / Learn to Trade
By: EWI
There's a little known joke among the trading community that goes like this: "A trader walks into a bar... pattern: 'Ouch!' "
Fact is, if you don't know what you're doing, price bar analysis can be a bit "painful." Finding a discernable pattern in their grouping can feel like finding a hair in a hay stack.
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Wednesday, September 29, 2010
U.S. Debt Options of Default or Hyperinflation / Interest-Rates / US Debt
By: Graham_Summers
The big financial myth-buster of the week is that the alleged deleveraging of the US consumer has in fact been a giant myth. According to the Wall Street Journal, if you account for defaults, US consumers have only pared down their debts by an annual rate of 0.8% since mid-2008.
Tuesday, September 28, 2010
Could Debtflation Cause Gold's Big Sell Off? / Interest-Rates / US Debt
By: David_Galland
David Galland, Managing Editor, The Casey Report writes: We recently received the following comment in our Q&A Knowledge Base.
Read full article... Read full article...Investors should be prepared to sell gold as either increased inflation expectations or doubts around debt sustainability force a sharp increase in US Treasury bond yields. Simply put, in an environment of high real interest rates, the allure of gold could disappear as quickly as it did in the early 1980s when Paul Volcker took control of the Federal Reserve.
Tuesday, September 28, 2010
The Risks of Buying U.S. Treasury Bond Funds / Interest-Rates / US Bonds
By: Nilus_Mattive
A number of us here at Weiss have been warning you about the dangers of buying bonds in this ultra-low-interest-rate environment, especially longer-dated U.S. Treasuries.
But as I recently told my Dad’s Income Portfolio subscribers, I think mainstream investors are still ignoring the risks they’re taking with bonds, particularly when it comes to fixed-income mutual funds and exchange-traded funds.
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Monday, September 27, 2010
Bank of England Confirms Policy of Stealing Savers Wealth via Negative Real Interest Rates / Interest-Rates / Savings Accounts
By: Nadeem_Walayat
The Deputy Governor of the Bank of England Charlie Bean effectively told savers to forget about receiving inflation beating interest rates and therefore should seek to spend their savings to boost the economy. The BoE's strategy continues to transfer wealth from savers to borrowers, with more than £20 billion transferred to date by means of negative real interest rates which typically pay savers half the rate of inflation CPI (3.1%) and 1/3rd the rate of the more recognised RPI inflation rate (4.7%) with the trend not relenting as rates continue to be cut all the way towards the bank base rate of just 0.5%.
Monday, September 27, 2010
Are German Bunds Recovering? / Interest-Rates / International Bond Market
By: Seven_Days_Ahead
The story of the Bund throughout much of September was one of decline as traders first took profits and then went short. The Bund had enjoyed a long rally as traders fretted over the global economy and more specifically the US economic recovery, but sentiment changed early in September. Why was that?