Analysis Topic: Interest Rates and the Bond MarketThe analysis published under this topic are as follows.
Wednesday, April 23, 2014
A lot of words are being spent again these days on deflation and the QE measures that are supposed to “cure” it. Paul Krugman, who when it comes to stimulus is a hammer seeing nails only, now has it in for Sweden’s central bank, which he labels monetary sadists for not opening the spigots. But it’s all a hugely deceptive false flag; it’s not an issue of whether you launch QE or not. There’s a third, and much more valid, way of looking at this.Read full article... Read full article...
Wednesday, April 23, 2014
G-20 and the US Tell the Bank of Japan to End Quantitative Easing / Interest-Rates / Quantitative Easing
The bigwigs in the G-20 have put the kibosh on Japan’s money printing extravaganza. While most analysts expect the Bank of Japan (BoJ) to announce more “easing” in the days ahead to counter weakening economic data and droopy stock prices; it’s not going to happen. Why? Because the big boys have told the BoJ to knock it the hell off, that’s why? Here’s the scoop from the Japan Times:Read full article... Read full article...
Tuesday, April 22, 2014
Back in December our firm noted that ‘everyone’ was saying interest rates would soon rise. After all, they said, The Governor of the Bank of England and the Federal Reserve of the US had all but announced it.
We also noted that rates had been falling for getting on for 40 years.
We wondered if those saying higher rates are coming were looking in the wrong places.Read full article... Read full article...
Thursday, April 17, 2014
Here’s something you don’t see very often: For a day and a half this week, the Japanese government’s benchmark 10-year bonds attracted not a single successful private sector bid. At today’s artificially-depressed yields, no one wants this paper — except of course the Bank of Japan, which is buying up the bonds with newly-created yen. As the Gulf Times noted:Read full article... Read full article...
Wednesday, April 16, 2014
Glaring Q.E. Failure Spotted - Money Velocity Is Falling Rapidly / Interest-Rates / Quantitative Easing
Sometimes pictures are far more effective in communicating an important point. They are extremely effective in undermining respect and confidence, when in the cartoon format. A sequence of graphics struck the cognitive circuits recently. Long explanations will not serve well. The US Federal Reserve has been printing money since 2011 to cover USGovt debt securities in a frenetic manner. They have lost control. They call it stimulus, when it is actually the opposite. It does assist the speculators with nearly zero cost money to borrow, but one must be a club member to win loan grants.Read full article... Read full article...
Tuesday, April 15, 2014
Free markets are a function of supply and demand whereas capital markets are a function of credit and debt
The bankers’ ponzi-scheme – which began with the distortion of free markets in 1694 when the Bank of England began issuing debt-based paper banknotes alongside the Royal Mint’s gold and silver coins – is coming to an end.
The bankers’ wildly successful and long-running scheme, dependent on the uneasy equilibrium between credit and debt, has now been irrevocably destabilized. Aggregate levels of debt are now so high that credit—no matter how cheap and available—cannot restore the balance.Read full article... Read full article...
Monday, April 14, 2014
Peter Krauth writes: When Gutenberg introduced the printing press to Europe, he never could have imagined this.
Like so many revolutionary inventions, it's proven a doubled-edged sword.
The U.S. Fed has begun winding down its latest QE program (for now), and the baton's already been passed to Japan with its own massive easing campaign.Read full article... Read full article...
Thursday, April 10, 2014
The headlines are great, but then so is the headfake. “Greece makes ‘triumphant’ return to the markets in €3 billion bond sale”, says the Guardian. CNBC speaks of a “voracious appetite” for Greek bonds, but does question whether it’s justified. Still, at first glance it certainly looks like the Greeks have been welcomed back into the fold of civilized people:
Greece, the country once held responsible for sparking the sovereign debt crisis, managed to attract €20 billion ($27.7 billion) of offers for a new five-year bond and is set to sell €3 billion at a yield of 4.95%.Read full article... Read full article...
Thursday, April 10, 2014
Recent weeks were not bad for those gold investors’ hearts filled with golden hopes. The price of gold depends on many factors, but past patterns can give us important hints and suggest which of them are to be carefully studied and properly comprehended. If history were to teach us anything about gold’s past market values it would most primarily be the following: watch out for the feds! Wise observation of government policies is the main driving force for what is happening in the gold market (surely along with supply factors in the longer run). As we discussed a month ago, this is the main reason for the observed correlation between the gold price and the interest rates. Not because interest rates per se are always casually linked to the gold price. But because interest rates are a reflection of current government policies.Read full article... Read full article...
Monday, April 07, 2014
The entire global economy now clings precariously to one crucial phenomenon. That is, how much longer can the central banks of the developed world artificially suppress interest rates at near zero percent?
The violently-negative market reaction to Janet Yellen's comments during her first press conference was a clear indication of how vulnerable the stock market is to the eventual reality of rising interest rates. All Ms. Yellen did was remind investors that the Fed Funds Rate would have to be moved up from zero percent -- probably beginning in the middle of next year. That was enough to send the major averages cascading downward faster than you could say the words "flash trading."
Wednesday, April 02, 2014
There is an outside chance that the European Central Bank could upstage the normally all important US Non-Farm Payroll figures due this Friday with an announcement over new stimulus measures to combat potential deflationary pressures.
Last week Bundesbank President Jens Weidmann and ECB executive board member left open the possibility that the central bank could engage in quantitative easing to counter deflationary pressures in the Eurozone.Read full article... Read full article...
Thursday, March 27, 2014
I first warned about the impending bust of Japanese Government Bonds (JGBs) when I wrote "Abe Pulls Pin on JGBs" back in January of 2013. In that commentary I laid out the math behind a collapse of the Japanese bond market and economy stemming from the nation's massive amount of government debt, combined with the Bank of Japan's (BOJ's) folly of pursuing an inflation target.Read full article... Read full article...
Tuesday, March 25, 2014
There are two ways a nation can use economic growth to reduce budget deficits. The first method is to participate in economic growth, with a growing economy increasing tax collections. A second method is to raise taxes so drastically that they consume all economic growth.Read full article... Read full article...
Monday, March 24, 2014
Message to the U.S. Fed: Here Are a Few Things That You Can’t Do / Interest-Rates / US Federal Reserve Bank
[A]sset purchases are not on a preset course, and the Committee’s decisions about their pace will remain contingent on the Committee’s outlook for the labor market and inflation as well as its assessment of the likely efficacy and costs of such purchases. -March 19 FOMC statement
The excerpt above or some variation has appeared in every one of the Fed’s post-FOMC meeting statements since the beginning of QE3 in September 2012.Read full article... Read full article...
Thursday, March 20, 2014
The New Chairperson of the Federal Reserve showed off her dovish feathers after the latest meeting of the FOMC. Ms. Yellen abrogated the threshold of 6.5% on the unemployment rate as the starting point for short term rate hikes and replaced it with amorphous and ambiguous language that allows plenty of wiggle room with rates.
Just like a child sometimes changes the rules of a game in mid-stream in order to guarantee a favorable outcome, the Fed has ripped up the rulebook to suit its own needs.