Analysis Topic: Interest Rates and the Bond Market
The analysis published under this topic are as follows.
Monday, April 21, 2008
Bank of England Throws £50 billion of Tax Payers Money at the Banks / Interest-Rates / Credit Crisis 2008
By: Nadeem_Walayat
The credit crisis is forcing the Bank of England to morph the Collaterised
Mortgage Backed Securities Market into the Collaterised UK Government Bond Backed Mortgage Market. In effect the Bank of England is swapping 100% guaranteed Government Bonds for illiquid, un-priceable Mortgage backed junk securities. Thus allowing the banks to offer Government Bonds as security on the Interbank Market. Read full article... Read full article...
Sunday, April 20, 2008
Fed Interest Rate Cut Could Spark Bond Market Panic Selling / Interest-Rates / US Bonds
By: Mick_Phoenix
Welcome to the Weekly Report. This week I have to highlight conditions in the bond markets as a priority, we maybe about to endure a bust of quite large proportions. I will also look at some longer term stock market indicators, confirmation that the Bank of England will follow the US and show why the current rally in stocks is due to a visit from an old friend, as readers at Livecharts.co.uk will know only too well.
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Friday, April 18, 2008
Federal Reserve Notes Backed by Worthless Mortgage Bonds- Who Will Bail Out the Fed? / Interest-Rates / Credit Crisis 2008
By: Andy_Sutton
The silence has been deafening. Since that fateful weekend in the middle of March when they almost lost control, things have been eerily quiet. In fact, today, the DOW finds itself up over 200 points in the face of another $5 Billion in losses at Citigroup. The losses have been spun as positive with most in the financial press saying in essence that we should be happy because it could have been a lot worse. Many have now even boldly called a bottom in the losses stemming from the subprime mortgage crisis. Haven't we heard this before?
Friday, April 18, 2008
LIBOR Sends Another Warning Signal to the Global Financial Markets / Interest-Rates / Credit Crisis 2008
By: Martin_Hutchinson
The news that the London Interbank Offer Rate (LIBOR) system of setting interest rates is running into trouble was surprising at first glance. It seems some banks are giving phony LIBOR quotations that don't reflect the true rates at which they accept deposits. In the perfect financial system, beloved of regulators and academics, this kind of discrepancy shouldn't happen.
In the real world it does, and I'll explain why.
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Thursday, April 17, 2008
Credit Crisis SCOOP- LIBOR Is Now Irrelevant to Derivatives Pricing / Interest-Rates / Credit Crisis 2008
By: Rob_Kirby
In the latest Office of the Comptroller of the Currency – Quarterly Derivatives Report [Q4/07], we learn that outstanding notionals for reporting banks declined by 8 Trillion. Furthermore, we are told that the overall decline was “driven by a 9.2 Trillion reduction in interest rate contracts – mostly swaps with maturities of less than one year .” Read full article... Read full article...
Wednesday, April 16, 2008
Bank of England Prepares to Ramp Up the Money Printing Presses / Interest-Rates / Credit Crisis 2008
By: Nadeem_Walayat
Gordon Brown having bottled out of an October 2007 election ahead of an economic slump during 2008 and 2009, is now attempting to prepare the ground works for an 2009-2010 election by giving the Bank of England the green light to print as much money as is necessary to enable the UK banks to restart lending to the consumer so as to prevent a multi-year housing bear market with accompanying recession that will ensure his election defeat.Read full article... Read full article...
Wednesday, April 16, 2008
Forget the Credit Crisis Headlines, Listen to the Bond Market! / Interest-Rates / US Bonds
By: Clif_Droke
Let's turn our attention to something that isn't often discussed, namely bonds.
I know what some of you are saying already: “But bonds are boring!” Yes, they may well be boring in most instances. But this isn't one of those times. Actually, the message of the bond market is one of the more exciting and optimistic messages being sent anywhere in the financial markets right now and it behooves us to pay close attention to what bonds are saying.
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Monday, April 14, 2008
Central Banks' in Tatters- Facts are Stubborn Things Part II / Interest-Rates / Credit Crisis 2008
By: Joseph_Russo
The ALADDIN'S lamp of Central Banking coming FULL Circle - If one is inclined toward general agreement with the notion that the pinnacle of power in the world is the power to create money, - then one must hastily conclude that; the government-aligned private organizations of central banking cartels, whom fund all of the worlds imperial centers of power, – must then be held as the absolute mightiest of powers, whom preside at the highest seat of omnipotent influence over a vast array of interconnected relationships across the entire global landscape. Read full article... Read full article...
Monday, April 14, 2008
Greenspan- He Did It His Way (Unfortunately) / Interest-Rates / Market Manipulation
By: Brady_Willett
Greenspan did another media tour last week, this time defending his legacy in the Financial Times , Wall Street Journal , and on CNBC Television . Unfortunately the story from Greenspan was much the same: he reiterated that the financial markets are best left to self-regulate, and that investors around the world (not the Fed) took control of long-term interest rates thus leading to the U.S. housing bubble. Astonishingly, Greenspan added, “I have no regrets on any of the Federal Reserve policies that we initiated back then…' and ‘I don't remember a case when the process by which the decision making at the Federal Reserve failed.' Read full article... Read full article...
Monday, April 14, 2008
Central Banking- Why Fix What Does Not Work? / Interest-Rates / Credit Crisis 2008
By: Darryl_R_Schoon
Time of the Vulture - In times of expansion, it is to the hare the prizes go. Quick, risk taking, and bold, his qualities are exactly suited to the times. In periods of contraction, the tortoise is favored. Slow and conservative, quick only to retract his vulnerable head and neck, his is the wisest bet when the slow and sure is preferable to the quick and easy.
Every so often, however, there comes a time when neither the hare nor the tortoise is the victor. This is when both the bear and the bull have been vanquished, when the pastures upon which the bull once grazed are long gone and the bear's lair itself lies buried deep beneath the rubble of economic collapse.
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Sunday, April 13, 2008
Bank of England Applies Eggertsson Theory to Interest Rate Cut / Interest-Rates / UK Interest Rates
By: Mick_Phoenix
Welcome to a Weekly Report special, incorporating further discussion of last weeks Occasional Letter.
This week we look at an example of Eggertsson Theory in practise, what really worries the Fed and what is their favourite import, how expectations can be managed, why General Electric are going to struggle and I announce something a little different. A lot to cover and I am pressed for time so let's get on with it.
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Saturday, April 12, 2008
Interbank Market Fails to Respond to UK Interest Rate Cut / Interest-Rates / Credit Crisis 2008
By: Nadeem_Walayat
Following Thursdays UK interest rate cut to 5% from 5.25%, which followed unprecedented action by the Bank of England in providing £15 billion in liquidity to the UK banking system in recent weeks. So far the interbank market has failed to respond to these actions, which saw the 3 Month Libor rate / base rate spread expand to recent credit crunch extremes as illustrated by the below graph.Read full article... Read full article...
Friday, April 11, 2008
Is there anything the US Federal Reserve WON'T do? / Interest-Rates / Credit Crisis 2008
By: Money_and_Markets
That's the question I'm asking myself here as I watch it go further and further down the "extreme activism" road.
As I've pointed out, it's not just the Fed, either. Congress and the Bush administration are stepping up their plans to intervene and support the housing and mortgage markets, too.
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Thursday, April 10, 2008
UK Interest Rates to be Cut to 5% Today on Fears of Housing Recession / Interest-Rates / US Interest Rates
By: Nadeem_Walayat
The Bank of England is expected to cut UK interest rates to 5% at today's MPC meeting following a slump in UK house prices that saw a 2.5% fall in March (Halifax:SA). Interest rates were last cut in February 08 which was inline with the Market Oracle forecast as of August 07 and Sept 07 for UK interest rates to fall to 5% by September 2008, this was revised lower to 4.75% in January 2008 , following the US Panic rate cut of 0.75% on 22nd Jan 08 to 3.5%, and subsequent cuts which has taken the US Fed Funds rate down to 2.25%.Read full article... Read full article...
Tuesday, April 08, 2008
Did Greenspan Have to Cut the Fed Funds Interest Rate as Much? / Interest-Rates / US Interest Rates
By: Paul_L_Kasriel
In today's Financial Times , Greenspan is generously given yet another chance to defend his legacy. Greenspan's argument that it was not his doing that set off the U.S. housing bubble reminds me of my two perfect children. When they appeared to err, it was never their fault. Greenspan's main defense lies on the fact that long-term interest rates were falling in the early 2000s due to global factors beyond his control. To start with, let's give him this one. But even if the decline in long rates were beyond his control, did he have to cut the fed funds rate - an interest rate he did control - as much as he did and hold it at the low level as long as he did (see Chart 1)? Read full article... Read full article...
Tuesday, April 08, 2008
Interest Rates and the Keynesian Myth / Interest-Rates / US Economy
By: Gerard_Jackson
Still lurking in the Keynesian woodshed is the myth that interest is a monetary phenomenon that is artificially keeping capital scarce. Eliminate interest and presto! Capital will become superabundant. Keynes repeated this preposterous fallacy in the Paper of the British Experts , 8 April 1943, in which he asserted that "Credit expansion performs the miracle . . . of turning stone into bread".Read full article... Read full article...
Tuesday, April 08, 2008
Lessons from Japan: Prepare for 0% US Interest Rates / Interest-Rates / US Interest Rates
By: Jim_Willie_CB
The prospect of a US Fed 0% rate becoming a reality has been on my mind since August when the subprime made news hit. In my view, the entire mortgage bond structure would suffer massive losses in a successive of waves, beginning with subprimes, extending to primes, and concluding with commercials. How could housing distress not spread to nearby shopping malls, office complexes, and urban centers? First, USTreasurys would draw huge sums of money, reducing bond yields across the entire set of maturities. Second, the coincident event would be a painful recession. The US financial system would be unable this time to pull the US Economy out of the quicksand. Far too many vicious cycles would kick into gear, unleashing powerful feedback loops. We are seeing them in full glory now. Housing prices and foreclosures, bank write downs with sliding home collateral, US Dollar decline with a slower US Economy, household spending with rising costs, they are work to sustain more pain. Read full article... Read full article...
Friday, April 04, 2008
US Tax Payer Bail-out Ideas Stabilize US Dollar, Sovereign Wealth Funds to the Rescue? / Interest-Rates / Credit Crisis 2008
By: Gary_Dorsch
It was “April Fools” day, and Wall Street was busy spinning bad financial news into bouts of irrational exuberance. News of a $19 billion write-down of toxic sub-prime mortgage debt at Swiss bank UBS and a $4 billion hit at Deutsche Bank might have sparked a panic sell-off in global stock markets a few weeks ago. But on “April Fools” day, the Dow Jones Industrials soared 391-points, and the broader S&P 500 Index jumped 3.6%, posting its best 2nd-quarter start since 1938. Shares of UBS soared 18%, after the Swiss bank said it could plug the craters in its balance sheet with a $15 billion rights offering, led by a syndicate of JP Morgan, Morgan Stanley, BNP Paribas and Goldman Sachs. Shares of Lehman Bros jumped 22% after it raised $4 billion from the sale of convertible preferred shares, and squeezing bearish speculators in LEH puts in the process.
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Friday, April 04, 2008
Credit Crisis Reflections and Mark to Market Myths / Interest-Rates / Credit Crisis 2008
By: Ty_Andros
The tumultuous 1st quarter is now behind us and what a quarter it was. VOLATILITY IS OPPORTUNITY and wonderful fireworks of volatility exploded across all asset classes providing bucket loads of OPPORTUNITIES for prepared investors. Your investment portfolios should be considerably higher in value, for rarely do we see moves of this magnitude across all sectors almost without interruption. This phase is now coming to an end and, as we all know, markets are NOT one-way affairs and the inevitable intermediate term corrections now appear to be beginning to unfold. Read full article... Read full article...
Thursday, April 03, 2008
Where's the “Protection” in Treasury-Inflation Protected Securities (TIPS) / Interest-Rates / Inflation
By: Michael_Pento
Every investment product on planet earth is designed to at least offer a chance at a positive, real after-tax return. Put another way, all investments are designed to bring you a return that is greater than the rate of inflation. Some offer a higher stated yield because of their inherent risk, while others display smaller yields due to their perceived relative safety. But all true investments are designed to outpace inflation.Read full article... Read full article...