Analysis Topic: Interest Rates and the Bond Market
The analysis published under this topic are as follows.
Monday, July 21, 2008
Bonds Slump as Equities Recovery from the Abyss / Interest-Rates / US Bonds
By: Levente_Mady
After extending its gains for a 4th week in a row, the Treasury market pulled back as equities recovered from the abyss. The trend of bonds and energy trading in lock-step remained intact as bonds now sold off as energy prices corrected sharply. There was a recovery in stocks – especially financials during the latter part of the week, so the reverse safe-haven flows pressed bonds lower. The sharp increase in headline inflation also added fuel to the sell-off. Real returns on Treasury bonds are now negative across the entire yield curve, as even 30 year bonds provide a -.35% return after adjusting for inflation. That is great news for spenders and the government (who gets to borrow massive amounts of money at ultra low rates) but not so good for savers. Read full article... Read full article...
Tuesday, July 15, 2008
US Tax Payers to Fund Banking Losses to Prevent US Bond Market Collapse / Interest-Rates / Credit Crisis 2008
By: Ned_W_Schmidt
Just in case you have been on Mars for the last week, Fannie Mae and Freddie Mac in the U.S. seem to be having some financial trouble. For those outside the U.S., these two private companies are involved in funneling money to the U.S. housing market. Well, funneling might not be the right word. Shoveling, with big ones, might be more appropriate. Now that they are having financial problems a major question must be answered. Read full article... Read full article...
Tuesday, July 15, 2008
Senators Blast Bernanke on Monetary Policy Failures / Interest-Rates / Money Supply
By: Mike_Shedlock
Earlier today Bernanke Chairman Ben S. Bernanke testified Before the U.S. Senate in the Fed's Semiannual Monetary Policy Report to Congress. I commented on his testimony in Bernanke's Hogwash . In an unusual but encouraging development, someone besides Ron Paul is calling Bernanke on his hogwash. Please consider Bunning Statement To The Senate Banking Committee On The Federal Reserve Monetary Policy Report .
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Monday, July 14, 2008
Freddie and Fannie is A Sad Day for U.S. Taxpayers and Investors / Interest-Rates / Credit Crisis 2008
By: Chris_Ciovacco
"Treasury Secretary Hank Paulson swatted back reports of government nationalization of Fannie and Freddie, which would mean making explicit what, has long been an implicit taxpayer guarantee of their liabilities. This would instantly add $5 trillion in liabilities to the federal balance sheet, doubling the U.S. public debt burden and putting America's AAA credit rating at risk. This is a nightmare scenario for taxpayers." Wall Street Journal, Saturday, July 12, 2008 (prior to Sunday's announcements)Read full article... Read full article...
Monday, July 14, 2008
Trillion Dollar Bailouts Will Likely Cripple US Budget and Imperil the Dollar / Interest-Rates / Credit Crisis 2008
By: Mark_OByrne
Gold finished trading in New York on Friday at $959.10, up $18.90 and silver was up to $18.72, up 48 cents. Gold rose in trading in Asia before selling off in early European trading on profit taking due to falling oil prices and a rising dollar this morning. Both gold and silver were up nearly 3% last week on inflation hedging and safe haven buying and profit taking is to be expected.Read full article... Read full article...
Monday, July 14, 2008
Paulson Crosses Rubicon Lands In 5th Dimension / Interest-Rates / Credit Crisis 2008
By: Mike_Shedlock
Earlier today I posted Operation "Rescue Fannie" Underway - Paulson a Blatant Liar . Since then, additional details are trickling out.Consider Paulson's Statement on Freddie Mac, Fannie Mae .
First, as a liquidity backstop, the plan includes a temporary increase in the line of credit the GSEs have with Treasury. Treasury would determine the terms and conditions for accessing the line of credit and the amount to be drawn. Read full article... Read full article...
Sunday, July 13, 2008
Fed is Playing an Incredibly Dangerous Game, a Look Back Over the Past 2 years / Interest-Rates / Credit Crunch
By: Mick_Phoenix
Welcome to the Weekly Report. Normally at An Occasional Letter From The Collection Agency we try to focus attention on the macro-economic near term effects using the Weekly Report, allowing the Occasional Letter to look further into the future by about 18-24 months. We have reached a stage now where it is becoming difficult to keep the various strands of my convoluted thoughts distinct and clear for the readers so, in keeping with one or two other writers it is time for a re-cap. Read full article... Read full article...
Sunday, July 13, 2008
Farewell Indymac, What's Next? Say Hello to the 1970s Inflation Rate (Part2) / Interest-Rates / Inflation
By: Mike_Stathis
Those of you who are familiar with my previous publications know my real estate forecasts remain unchanged since first published in 2006. To reiterate, I'm expecting an average decline from peak prices of 30% (best case scenario) to 35% (worst case scenario), sending home values back to pre-1999 levels. Within the next three years, mortgage rates should approach 8% and take off thereafter. Soon, we will see a 1970s type inflationary period. This will bode well for owners of real estate rental units. Read full article... Read full article...
Sunday, July 13, 2008
Federal Reserve Strikes Gold! A Genius to Save the US Economy / Interest-Rates / Credit Crisis 2008
By: Money_Morning
Keith Fitz-Gerald writes: Every market cycle has its genius. Even a market cycle as wild and volatile as this one has been.
And the latest genius might be just what the U.S. Federal Reserve needs to restore order around here: She might even be able to bring credibility back to the global financial markets.
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Thursday, July 10, 2008
Long-Term Treasury Bond Market Paradox / Interest-Rates / US Bonds
By: Jim_Willie_CB
The US Treasury Bond market can be confusing. Price inflation in the United States is intentionally made confusing. That keeps the public ignorant and poorly prepared to interrupt grand larceny and elite control of the printing press, the result of which has been a few decades of hidden confiscation of Middle Class work, wealth, and dreams. Long-term bond yields have many fundamental reasons why they should fall lower in the United States . They are interwoven and integrated. The US Economy is being killed by rising costs, in no way justifying higher borrowing costs. Yet amateurish opinions seem to coalesce in an absurd consensus. The Asian renaissance contributes mightily to both the impoverishment of America and its economic stagnation. Anyone who believes the US and Europe should share a consistent rhyming monetary policy is asleep at the analytic wheel. In the zero-sum game that is currencies, higher prices in the United States come with lower prices in Europe . Refer to marginal incremental movement in prices.Read full article... Read full article...
Thursday, July 10, 2008
Parasitic G7 Government Policies of Insolvency- Crack Up BOOM Part4 / Interest-Rates / Fiat Currency
By: Ty_Andros
Parasitic governments of the G7 have outgrown the hosts in the private sector and have substituted deficit spending, FIAT currency and credit creation for the policies of wealth creation and growing economies.
As the next chapter in the unfolding insolvency of the G7 financial and banking system progresses, the next round of balance sheet destruction is at hand. Look no further than gold and silver, which it appears is about to embark on their next leg higher in confirmation of the next round of monetary debasement that looms directly ahead. “Volatility is Opportunity ” for the prepared investor and it has created opportunities GALORE in all markets: stocks, interest rates, metals, currencies, raw materials, grains, commodity and energy markets. Which side of these opportunities are you on? The positive or the negative? If it's the latter you have homework to do…
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Thursday, July 10, 2008
UK Interest Rates On Hold as Bank of England is Paralysed by Fear of Inflation / Interest-Rates / UK Interest Rates
By: Nadeem_Walayat
The Bank of England Monetary Policy Committee is expected to keep interest rates on hold for a third month at 5%
at today's meeting despite widespread calls for a rate cut in response to a collapsing housing market and an economy that is fast falling off the edge of a cliff, which is accompanied by more distress in the banking sector that saw Bradford and Bingley teetering on the brink of collapse earlier this week which resulted in the FSA leaning on the big UK banks to bailout the mortgage bank by agreeing to buy unsold stock at the rights issue price of 55p, against yesterdays close of 43p.Read full article... Read full article...
Tuesday, July 08, 2008
Toxic CDOs Renamed ALT-A Garbage Repackaged / Interest-Rates / Credit Crisis 2008
By: Mike_Shedlock
“What's in a name? That which we call a rose By any other name would smell as sweet.” William Shakespeare, Romeo and JulietBloomberg is reporting Toxic CDOs Renamed Re-Remics, Come to Life With Pension Funds .
Collateralized debt obligations that helped drive banks to $400 billion of writedowns and credit losses are finding buyers under a different name: Re-Remics.
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Sunday, July 06, 2008
US Treasury Bonds Trend Higher Despite Inflation as Economy Continues to Weaken / Interest-Rates / US Bonds
By: Levente_Mady
The Treasury market extended its incredible winning streak to 3 weeks in a row! The trend remained intact as bonds continue to strangely trade higher with increasing energy prices. There was no relief for the financial sector as the US stock market started the second half the same way it finished the first half: round the bowl and down the hole… Credit spreads remain under pressure and liquidity is not improving. In spite of crude oil continuing to set new highs week after week, energy stocks are diverging noticeably. The lack of M&A activity even in the sector is just another sign of how severely liquidity has gone missing.Read full article... Read full article...
Thursday, July 03, 2008
ECB Increases Interest Rates as Trichet Warns of 'Exploding' Inflation / Interest-Rates / Euro-Zone
By: Mark_OByrne
Gold rose to $94 4 .80 in New York yesterday and was up $ 2.0 0 and silver closed at $18. 33 , up 13 cents.Gold has remained firm near 10 week highs on the surging oil price which reached a new record high today < $145.72 - Light Sweet Crude Oil Future - Combined - AUG08>. The dollar is flat today after it's decline in value in recent days. Against the euro, the dollar looks set to fall through support at 1.60 in the coming days and 1.70 euro/dollar looks like a very real possibility by the end of September. Longer term the likelihood of a sharp long recession in the U.S. could well see the euro reach 1.80 or even 2.00 against the dollar (as sterling did to the surprise of many in recent years).
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Tuesday, July 01, 2008
Treasury Bond Investors Mysteriously Prepared to Receive Negative Real Returns / Interest-Rates / US Bonds
By: Michael_Pento
It has become apparent to me that investors who continue to place money in the U.S. Treasury market don't have any idea how to protect themselves from inflation or how to achieve a real return on their investments. Even though inflation is running at a multi-decade high (according to official government numbers), we find that these fixed income investors were willing to send the yield on the 10 year note to an historical low of 3.38% on March 19th of this year. As amazing as that sounds in a world of 4+% “official” inflation rates, it was nothing compared to what happened just last month.Read full article... Read full article...
Tuesday, July 01, 2008
US Treasuries May Be Ending Recovery Rally Phase / Interest-Rates / US Bonds
By: Mike_Paulenoff
Once again perhaps we can derive a message from the action of the Lehman 20-Year T-Bond ETF (AMEX: TLT), which today failed to climb above yesterday's 6-week recovery high at 92.81 in what I thought would be an extension of the "flight to safety" syndrome in an otherwise treacherous equity market. No such action has taken place thus far this morning.Read full article... Read full article...
Tuesday, July 01, 2008
Credit Conditions Worst in 35 years as US Manufacturing Contracts / Interest-Rates / Credit Crisis 2008
By: Paul_L_Kasriel
Not to belabor the point I have made in recent commentaries, but last Friday afternoon's report from the Fed of assets and liabilities of commercial banks in the U.S. showed the sharpest 13-week contraction in bank credit - loans and investments - in the history of the series, which dates back to January 3, 1973. In the 13 weeks ended June 18, bank credit contracted at an annualized rate of 9.14% (see Chart 1 below). Because of current or expected capital inadequacy, banks are reining in their earning assets and, therefore, are not availing themselves of the cheap credit the Fed is offering to fund them at. This suggests that the 2% fed funds rate in the current context does not represent as accommodative a monetary policy as it would if the banking system were willing and able to extend credit to the private sector. Read full article... Read full article...
Monday, June 30, 2008
US Treasury's Retain Steepening Yield Curve Trend / Interest-Rates / US Bonds
By: Levente_Mady
The Treasury market is on a tremendous winning streak: it is up for the second week in a row! Safe haven flows continue to dominate as bonds strangely trade higher in step with increasing energy prices. The financial sector continues to melt away in spectacular fashion as the US stock market looks to be heading for one of its top 10 largest monthly drops ever. Credit spreads remain under pressure and liquidity is not improving. Quarter end window dressing will definitely not help the sectors that have been beaten down at least for the next few days.Read full article... Read full article...
Saturday, June 28, 2008
Fed Money Supply and Aggregate Credit Not Fueling US Inflation / Interest-Rates / Money Supply
By: Paul_L_Kasriel
One of the tenets of that now allegedly defunct economic schools, monetarism, is that you cannot judge the stance of monetary policy by the level of the policy interest rate. Sometimes a 2% fed funds rate might be accommodative; sometimes restrictive. Right now, the 2% fed funds rate is not the catalyst for excessive growth in the money and credit aggregates. Let's start with the credit directly created out of thin air (similar to counterfeit money) by the Federal Reserve - the monetary base. Read full article... Read full article...