Analysis Topic: Interest Rates and the Bond Market
The analysis published under this topic are as follows.
Wednesday, March 12, 2008
Are US Interest Rates Fated to Rise? / Interest-Rates / US Interest Rates
By: Greg_Silberman
There is one path in investing that is sure to lead to ruin. It's a dangerous path because it lacks one critical ingredient for success – thought! The path we are speaking about is called “following the consensus”. It is both intellectually and emotionally easy to follow a majority of bullish analysts. Unfortunately the ‘consensus' is seldom right and hardly ever leads to BIG profits.
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Wednesday, March 12, 2008
Credit Overdose! Requiem for a Departing Economic System / Interest-Rates / Credit Crisis 2008
By: Alex_Wallenwein
Continued US Fed liquidity injections like the Fed's previous "Term Auction Facility" (TAF) and today's novel "Term Securities Lending Facility" (TSLF) will only serve to overdose the economy with exactly what ails it: too much credit. This will further boost the price of everything - and in particular, of gold and silver.
The following headline and byline appeared this morning, March 11. 2008, on MarketWatch.com: "Fed's Latest Fix Does the Trick - Wall Street applauds as Fed intercedes, not with fresh rate cut but with a further push to inject funds into the economy."
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Friday, March 07, 2008
Global Credit and Debt Market Crisis- CNBC They Still Don't Get It! / Interest-Rates / Credit Crisis 2008
By: Peter_Schiff
Prior to my last appearance on CNBC in October 2007, I had made more than 50 appearances on the network over the prior two years. In those segments, I repeatedly exposed the superficiality of our prosperity, described the American economy as a “house of cards”, pointed out that borrowing and spending were a ticking time bomb rather than a viable plan for long term economic health, and explained how investors could prepare for the tough times ahead. At the time, those forecasts were met with ridicule and led to my being nicknamed “Dr. Doom”. Now that these predictions have come to pass, most on CNBC now claim that no one saw it coming!Read full article... Read full article...
Friday, March 07, 2008
Central Bankers Meet in Switzerland to Discuss Global Financial Crisis / Interest-Rates / Credit Crisis 2008
By: Adrian_Ash
The Ghost of Gold at the Central Bank Banquet
"Never shake thy gory locks at me...If thou canst nod, speak too."
Macbeth to Banquo's ghost, who's sitting in his chair ( Macbeth Act III, Scene iv)
THIS WEEKEND in Basel, Switzerland, central bankers from the G-10 group of rich nations meet up for one of their regular hoe-downs.
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Thursday, March 06, 2008
UK Interest Rates Expected to be Kept on Hold at 5.25% / Interest-Rates / UK Interest Rates
By: Nadeem_Walayat
The Bank of England
is expected to keep UK interest rates on hold at 5.25% at today's MPC meeting despite economic data confirming a weakening housing market and economy. 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%, which was later followed by a further 0.5% cut to take US interest rates to 3%. Read full article... Read full article...
Wednesday, March 05, 2008
US Treasury Bonds vs. the CRB Point to Bond Market Collapse / Interest-Rates / US Bonds
By: Michael_Pento
From 1980 until the spring of 2002, 10-year Treasury note yields held a positive correlation with the CRB index. Since 2002, however, there has been a dramatic divergence between Treasury yields and commodity prices. This trend is unsustainable in the long term because bond yields must eventually reflect rising inflationary pressures and at some point offer a positive real after-tax return.
There can be only two possible conclusions reached when viewing this disparity, shown in the chart below. One is that commodity prices are no longer an indication of inflationary pressures, a ridiculous contention that cannot be taken seriously. After all, the CRB Index contains 19 commodities that include precious metals, base metals, agriculture and energy, broad measures of the pricing pressures that exist in today's economy.
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Monday, March 03, 2008
Credit Crisis Presents A Great Buying Opportunity? / Interest-Rates / Credit Crisis 2008
By: John_Mauldin
This week we look at yet another rather obscure credit market that is in essential lockdown as the subject of your Outside the Box. My London partner Niels Jensen, head of Absolute Return Partners, has written a very interesting piece on the leveraged loan and bank loan markets, which are now upside down and getting more so in the recent weeks. This situation cannot continue, as what are clearly inferior products are selling for more than there high class cousins. Read full article... Read full article...
Friday, February 29, 2008
Loss of Confidence in the US Fed / Interest-Rates / Inflation
By: Peter_Schiff
Hear Me Now - Believe Me Later - Having neither the will nor the means to confront our major economic challenges, Washington is instead hanging its hopes on words alone. This week, despite the clearest signs yet that the dollar is in critical condition, President Bush and Treasury Secretary Paulson tried to provide reassurance by once again invoking the name of the mythical “strong dollar policy”. Meanwhile across town, with the latest crop of inflation figures pointing to the greatest price surges in a generation, Fed Chairman Ben Bernanke tried to do the Administration one better by insisting that inflation expectations remained “well anchored”, and that stagflation was nowhere in sight. Read full article... Read full article...
Sunday, February 24, 2008
Colossal Collateral Damage- Financial Tsunami Part V / Interest-Rates / Credit Crisis 2008
By: F_William_Engdahl
The Predators had a ball - The multi-trillion dollar US-centered securitization debacle began to unravel in June 2007 with the liquidity crisis in two hedge funds owned by Bear Stearns, one of the world's largest and most successful investment banks. The funds were heavily invested in sub-prime mortgage securities. The damage soon spread across the Atlantic to a little-known German state-owned bank, IKB. In July 2007, IKB's wholly-owned conduit, Rhineland Funding, had approximately €20 billion of Asset Backed Commercial Paper (ABCP). In mid-July, investors refused to rollover part of Rhineland Funding's ABCP. That forced the European Central Bank to inject record volumes of liquidity into the market to keep the banking system liquid. Read full article... Read full article...
Friday, February 22, 2008
Fed Interest Rate Cuts have Resulted in Surging Commodity Price Inflation / Interest-Rates / Inflation
By: Adrian_Ash
Six Months of Fun, Fun, Fun from the Fed - "...If Bernanke was expecting a 13% rise on Wall Street, he's got a 45% rise in gold instead – plus a real disaster in US Treasury bond yields..."
THIS WEEK marked the six-month anniversary of the Fed's first cut to US interest rates during the current world banking crisis.
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Tuesday, February 19, 2008
The Credit Crash - The Next Shoe to Drop Will Be... / Interest-Rates / Credit Crisis 2008
By: John_Mauldin
As everyone by now knows, there is chaos in the municipal bond market. This week's Outside the Box is from good friend and Maine fishing buddy David Kotok of Cumberland Advisors ( www.cumber.com ).
Briefly, he outlines the problems we are seeing in munis, but then he goes on to warn of the possible next shoe to drop in closed end municipal bond funds. David is one of the smarter advisors I know, and when he points out a problem, I would suggest taking action.
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Friday, February 15, 2008
US Treasury Bonds: Safe Haven or Wealth Cemetery? / Interest-Rates / US Bonds
By: Alex_Wallenwein
You know the spiel. Every time the stock markets drop, the financial press reports that US treasuries benefitted from the move in a “safe haven bid” - whatever that means.
Let's examine how safe US treasuries really are:
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Friday, February 15, 2008
Looming US Treasury Bond Market Crash / Interest-Rates / US Bonds
By: Clive_Maund
Like frightened rabbits scurrying back to the apparent safety of their hutches, investors rattled by the sub-prime shocks and the associated tremors in stockmarkets have been fleeing to the perceived safety of Treasury Bonds and Notes. The bad news is that this time the poacher knows where the rabbits are hiding and rabbit stew is on the menu tonight.
Let's just stop and think about this for a moment - just what is a Treasury Bond? - it is a piece of paper telling you that you are going to receive a fixed sum of US dollars at some designated point in the future.
Thursday, February 14, 2008
Central Banks Other Option, Crossing the Rubicon / Interest-Rates / Credit Crisis 2008
By: Christopher_Laird
Rubicon ( Rubicō , Italian: Rubicone ) is a 29km long river in northern Italy. The river flows from the Appennines to the Adriatic sea through the southern Emilia-Romagna region between the towns of Rimini and Cesena. The river is notable as Roman law forbade its generals from crossing it with an army. The river was considered to mark the boundary between the Roman province of Cisalpine Gaul to the north and Italy proper to the south; the law thus protected the republic from internal military threat. When Julius Caesar crossed the Rubicon in 49 BC, supposedly on January 10 of the Roman calendar, to make his way to Rome he broke that law and made armed conflict inevitable. According to Suetonius he uttered the famous phrase ālea iacta est ("the die is cast").[2] Read full article... Read full article...
Tuesday, February 12, 2008
US Tax Payer to Bail Out Bankers From Default - The Mother of All Rip-offs / Interest-Rates / Credit Crisis 2008
By: Mike_Whitney
Low interest credit and “financial innovation” are a deadly-combo. They've knocked the banking system for a loop, clogged the credit markets with billions of dollars of subprime sludge, and left the real estate market sprawling on the canvas. Still---even though $2 trillion of capitalization has been wiped-out from falling home prices; and even though the financial system is in a terminal state of paralysis---no one has been held accountable. In fact, not one trader, mortgage lender, rating's-agency official, fund manager, or investment banker has been indicted or charged with criminal wrongdoing. Read full article... Read full article...
Friday, February 08, 2008
US Treasury Bond Market - The Mother of all Bubbles / Interest-Rates / US Bonds
By: Peter_Schiff
In contrast to the dismal forecasting record of mainstream economists over the last few years, the forecasts that I have made regarding the dollar, oil, commodities, precious metals, global stock markets, inflation, and the U.S. economy have all come to pass. In addition, unlike the top economic oracles on Wall Street and in Washington, I can also point to similar accuracy in predicting the bursting of growing bubbles, first with technology in the late 1990's, and more recently with real estate. However, my long-standing prediction about the fate of the bond market has fared much worse. I still do believe this prediction was not wrong, but simply premature. Read full article... Read full article...
Friday, February 08, 2008
ECB Smoke and Mirrors to Mask Explosive Money Supply Growth Fueling Inflation / Interest-Rates / ECB Interest Rates
By: Gary_Dorsch
European Central Bank chief, Jean "Tricky" Trichet, likes to operate behind a veil of "Smoke and Mirrors" in managing the Euro zone's monetary policy, which is designed to fool most people, most of the time. Most importantly, "Tricky" Trichet, has fueled the fastest growth in the Euro M3 money supply in history, running at three times the rate of the ECB's original guidelines, deemed consistent with low inflation.
So it shouldn't have been a surprise to learn that inflation in the Euro zone hit an all-time high of 3.2% in January, and far above the ECB's inflation target of 2 percent. Euro zone producer price inflation picked up to an annual 4.3% in December, led by higher food and energy costs. Trichet and his band of propaganda artists have given plenty of lip service to fighting inflation in recent months, but behind the veil of "Smoke and Mirrors", haven't lifted a finger to put empty words into action.
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Thursday, February 07, 2008
European Central Bank (ECB) Monetary Policy Interest Rate Decision Statement / Interest-Rates / ECB Interest Rates
By: ECB
Ladies and gentlemen, the Vice-President and I are very pleased to welcome you to our press conference. Let me report on the outcome of our meeting, which was also attended by Commissioner Almunia.
On the basis of our regular economic and monetary analyses, we decided at today's meeting to leave the key ECB interest rates unchanged. This decision reflects our assessment that risks to price stability over the medium term are on the upside, in a context of very vigorous money and credit growth. The current short-term upward pressure on inflation must not spill over to the medium term. The firm anchoring of inflation expectations over the medium and long term is of the highest priority to the Governing Council, reflecting its mandate.
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Thursday, February 07, 2008
UK Interest Rates Cut to 5.25% - Will Not Help the Housing Market / Interest-Rates / UK Interest Rates
By: Nadeem_Walayat
The Bank of England is expected to cut UK interest rates by a quarter point to 5.25% following on from data confirming a weakening housing market and economy. The rate cut would be 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 0.75% on 22nd Jan 08 to 3.5% which was later followed by a further 0.5% cut to 3% Read full article... Read full article...
Wednesday, February 06, 2008
Reasons Why the US Bond Market is Wrong on Inflation / Interest-Rates / Inflation
By: Michael_Pento
There is no shortage of market gurus on Wall St. who will tell you that inflation is low. The main evidence for their argument stems from the relatively low rates on Treasury bond yields and the narrow spreads on inflation protection securities know as TIPS. Whereas I believe the currently low yields on Treasury debt to be explainable, it is very dangerous to draw the wrong conclusion about inflation from bonds' elevated prices. Read full article... Read full article...