Analysis Topic: Interest Rates and the Bond Market
The analysis published under this topic are as follows.
Wednesday, July 04, 2007
UK Interest Rates To Rise to 5.75 percent as a Consequence of Excessive Expansion of Money Supply / Interest-Rates / UK Interest Rates
By: Nadeem_Walayat
The Bank of England is expected to raise UK interest rates tomorrow from 5.50% to 5.75%. This is inline with the Market Oracle two year forecast for UK interest rates to hit 5.75% by Sept 07.
The Money Markets are pricing in a rise in UK interest rates, with the Pound hitting a new 26 year high against the US Dollar trading towards $2.02, and the 3 month Inter bank rate rallying to a near 6 year high of 5.96%.
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Friday, June 29, 2007
Absolute Bond Contagion to Hit Financial Markets / Interest-Rates / US Bonds
By: Jim_Willie_CB
When the contagion (denied no longer) is systemic, pervasive, broad, multi-faceted, and ominous in its lethal potential, perhaps one can calmly conclude that the system is merely adjusting to a total change in the seas. NO WAY !!! Without much doubt whatsoever, Bear Stearns is GROUND ZERO for the bond market firestorm.
BS was forced to extend $3.2 billion in loans to its hedge fund clients, who attempted to liquidate but could not. That represents 25% of the BS entire capital. Don't worry. Both hedge funds will eventually die, but when they do, BS will possibly die with them. A few months time is all they bought. Call it a STAY OF EXECUTION in legal parlance.
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Monday, June 25, 2007
Will The US Bond Market Break The Camel's Back? / Interest-Rates / US Bonds
By: Clif_Droke
“Bond shockwaves to ripple through U.S.” was the big, bold headline that greeted readers of the Financial Times newspaper following the recent bond sell-off and corresponding rise in yields. “A sell-off in the financial markets this week could have serious implications for the whole economy, says Krishna Guha.” Pretty dramatic stuff to say the least. But that's to be expected as the news media uses the latest financial “crisis of the week” to scare the average investor into believing financial collapse is imminent.Read full article... Read full article...
Friday, June 22, 2007
Ain’t No Yield High Enough / Interest-Rates / US Bonds
By: Peter_Schiff
Now that yields on ten-year Treasuries have cracked through 5%, on their way to infinity and beyond, many on Wall Street are wondering how high rates must go before bonds begin to draw investors away from stocks.Read full article... Read full article...
Thursday, June 21, 2007
Rising US Bond Yields - The Big Picture / Interest-Rates / US Bonds
By: Marty_Chenard
We have had a lot of inquiries about rising bond yields because they have been making the market jittery. So this morning we will do an in depth look at the 30 year bond yields to show you what significant event has happened and what the current situation looks like.
Chart 1: First, let's look at the big picture on bond yields from 1999 to June 2007.
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Thursday, June 21, 2007
Bond Convexity From Mortgages Means Higher Interest Rates / Interest-Rates / US Interest Rates
By: Jim_Willie_CB
The cancer that is mortgage bonds does not linger in isolation. Everything in the bond world is connected to almost everything in the bond world, at least within the US sphere of speculative madness. The financial credit market is a confusing jumble of speculation, risk reducing hedges, and leveraged insanity found mainly in the hedge fund arena. Mortgages are causing problems from their bond hedge schemes, both on the loan portfolio side and the bond security side. Always one should consider both, and never are they inseparable. The only separable aspect is who the loser is nowadays.Read full article... Read full article...
Wednesday, June 20, 2007
Interest Rate Rises - Damned If You Do... / Interest-Rates / Money Supply
By: Adrian_Ash
"...The central bank in New Zealand now presents the absurd spectacle of raising its lending rates while trying to depress its own currency by selling it in the open market..."
IF YOU WORRY that the US Fed might be caught between a rock and a hard place – squeezed between inflation on one side and plunging house prices on the other – then pity the poor central bankers in London and Auckland .
Every time they raise their interest rates, house prices increase!
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Tuesday, June 19, 2007
Effect of Rising Interest Rates on World Financial Markets, Currencies and Gold / Interest-Rates / Financial Markets
By: Christopher_Laird
In this article, we discuss what rising interest rates will do to world financial markets, currencies, commodities, and gold.
Leveraged markets do not like rising interest rates
With rising interest rates, financial markets are in the beginning of a major trend change. I like to call it a major sea change. For the last 5 years (further back actually considering Japan) world interest rates have been way below historical averages. During this time, unprecedented leverage has found its way into asset and financial markets such as stocks.
Historical average interest rates run about 6%, going centuries back.
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Monday, June 18, 2007
Super Heroes of Central Bank Policy / Interest-Rates / Global Financial System
By: Adrian_Ash
"Is it a bird, is it a plane...or is it a central banker wearing his underpants over his trousers...?"
JUST HOW POWERFUL are the world's central bankers? As comic-book super heroes go, these mild-mannered scholars would no doubt confess that they look a bit weedy.
The massed talents of the Federal Reserve or Bank of England, for instance, hardly ever leap over tall buildings in a single bound. Ben Bernanke and Mervyn King don't own a flowing cape between them, not judging by the multi-year wait for long-dated bond yields to catch up with their gently rising overnight base rates.
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Saturday, June 16, 2007
Interest Rates and Global Growth / Interest-Rates / Inflation
By: Hans_Wagner
If investors want to beat the market, they need to understand how global growth is affecting interest rates and inflation. Bill Gross of Pimco Bonds, the world's largest bond management firm, stated in his most recent investment outlook that “With the possibility of creeping inflationary tendencies, especially in weak currency countries including the U.S., combined with the potential reduction of financial flow subsidies which to this point have favored fixed income vs. equity and real commodity investments, we come to the following range forecasts for the secular timeframe from 2007 to 2011.”Read full article... Read full article...
Friday, June 15, 2007
Long-term Bond Yield Mega Trend - A Unique Era / Interest-Rates / US Bonds
By: Aden_Forecast
The gold market has been under pressure lately and some investors are feeling a little nervous. But the major trend is clearly up. That being the case, let's stand back and look at the facts...
Gold has been rising for over six years and it's gained 158% since then. That works out to 26% per annum, which has consistently been better than most other markets. The recent weakness is a bump in the road and it's not unusual. We continue to believe that gold will likely rise for years to come, eventually reaching at least $2000 and it'll probably go even higher.
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Friday, June 15, 2007
WIll China Keep Throwing Good Money After Bad? / Interest-Rates / US Bonds
By: Peter_Schiff
At a commercial real estate conference earlier this week, Alan Greenspan downplayed concerns that the Chinese might sell their significant holdings of U.S. Treasuries. The former Fed chairman based his opinion not on the inherent investment merits of Treasuries, but rather on their lack of them. His confidence stems simply from his belief that the Chinese have no one to whom they can sell. Furthermore, Greenspan sees this as a problem for the Chinese and not the U.S.Read full article... Read full article...
Friday, June 15, 2007
When will this Bond Market Rout End? / Interest-Rates / US Bonds
By: Money_and_Markets
Mike Larson writes : If bond traders thought the worst was over last week, they had another thing coming to 'em. Long Bond futures prices fell Monday … dropped sharply Tuesday … bounced Wednesday … then slumped again yesterday. All told, Treasuries lost value in seven out of the past eight days.
Meanwhile, 10-year Treasury Note yields have soared! They're up more than three-quarters of a percentage point from their December low. In fact, 10-year yields briefly touched 5.30% this week, the highest level in five years.
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Thursday, June 14, 2007
US Bond Market Upheaval and Confusion / Interest-Rates / US Bonds
By: Jim_Willie_CB
In late March, an article pointed out the massive powerful cross currents in the USTreasury bond world. We are seeing the forces described finally at work. The aftermath has generated more questions than answers. In “Cross Currents for USTBonds” (click here ), several bullish factors were cited for bonds, but also several bearish factors were cited also. This will be a short review of relevant points, since the Vancouver Gold Show is this weekend.Read full article... Read full article...
Thursday, June 14, 2007
Higher Interest Rates Reflect Default Risk as Credit Boom comes to an End / Interest-Rates / Liquidity Bubble
By: Paul_Lamont
From our last report on the Panic of 1837, titled ‘ May 10th Credit Collapse ':
“In late 1836, the Bank of England concerned with inflation raised interest rates. As rates rose in England, credit tightened, and U.S. asset prices began to fall. On May 10 th , investors panicked and scrambled for cash.”
The markets are now tightening credit with higher interest rates. The 10 year Treasury Bond has recently confirmed its break out of the 1982-2006 trend channel.
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Thursday, June 14, 2007
The Global Bond Bear Market on the Back of the Inflationary Boom Ahead / Interest-Rates / Global Financial System
By: Ty_Andros
- First Stage in motion, with small signs of wake up!
- Ethanol Blow Back
CRACK-UP BOOM, part II
In this edition of the “Crack-up Boom” series, we will begin to discuss more in depth how the CRACK-UP BOOM is principally dollar-based now and we will show its fingerprints in US-based money flows, both into and out of the United States, as investors begin to take the actions necessary to protect themselves from the ensuing tsunami of inflation which can be expected.
Thursday, June 14, 2007
Debt Bubble - Feeling Normal Yet? / Interest-Rates / Liquidity Bubble
By: Adrian_Ash
"Might this bubble in debt really have grown so enormous that somehow it can end – as no bubble before it – without bursting...?"
"TOO MANY PEOPLE think risk is dead, that they can't lose money anymore," said Tom Metzold, manager of the Eaton Vance Municipals Fund, at the Reuters Investment Outlook Summit in New York earlier this week.
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Thursday, June 14, 2007
US Interest Rates and Inflation - Until is Now: How Fear becomes Risk / Interest-Rates / US Interest Rates
By: Paul_Petillo
How high can the markets go I asked last week, running the risk that as soon as a signed that article, it was almost guaranteeing that the markets would fall. How precipitously was unknown. The risk that everyone knew was built into the markets months ago became fear seemingly overnight.
The bond markets, acting as the canary in the coal mine have begun to choke on its own ambivalence. Regarded as the barometer of economic strength and weakness, fixed income has remained somewhat benign as the Dow set records almost daily.
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Wednesday, June 13, 2007
A Pyrrhic Victory for the Fed as Long Interest Rates Rise / Interest-Rates / US Bonds
By: Michael_Pento
The recent sell-off in equity prices illustrates how vulnerable markets are to higher interest rates. It is my contention that the catalyst for the correction had more to do with Syria and Kuwait dropping their peg to the dollar than some epiphany from investors that the U.S. has entered into a secular trend of robust G.D.P. growth; regardless, the questions of particular saliency now are: how high will rates go? Why must they go higher at all? And does the Fed really target economic growth when it raises the Fed Funds rate?Read full article... Read full article...
Monday, June 11, 2007
Bank of England Governor Warns of another Interest Rate Rise / Interest-Rates / UK Interest Rates
By: Nadeem_Walayat
The Bank of England governor Mervyn King again warned of higher UK interest rates due to strong economic activity and continuing inflationary pressures at a CBI Event.
In his reasoning for raising UK interest rates to 5.5% in May , he stated : "The Monetary Policy Committee will be watching closely indicators of capacity pressures, pricing intentions, and inflation expectations. If these indicators remain elevated, the MPC may need to take further action. There is no simple or self-evident answer to the question of what path of interest rates will be necessary to bring inflation back to the 2% target and keep it there."
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