Topic: Interest Rates and the Bond Market
The new items published under this topic are as follows.
Thursday, November 20, 2008
Credit Collapse, U.S. Treasury Yields Fall to Record Lows / Interest-Rates / US Interest Rates
By: Mike_Shedlock
Once again treasury bears who do not understand the implications of a collapse in credit are taking a beating as Treasury Yields Drop to Record Lows .
Treasury yields declined to record lows, with two-year notes dropping below 1 percent for the first time, as global stocks slumped and a deepening recession drove investors to the safest assets.
Read full article... Read full article...
Wednesday, November 19, 2008
U.S. Economy Reflation Challenge and LIBOR Deceptive Manipulation / Interest-Rates / Credit Crisis 2008
By: Jim_Willie_CB
A major challenge looms large on the immediate horizon. The US Economy must be reflated in order to avoid collapse. Debts have become a crippling factor. Liquidation of speculative trades coincides with economic retreat, and hedge funds are under attack by their creditors (largely Wall Street firms) while major companies shed workers by the tens of thousands. When asked about economic prospects, a standard answer lately of mine has been to observe important signals not of recession but of potential disintegration. Read full article... Read full article...
Wednesday, November 19, 2008
Economic Forecast, Peering into a Debt Ridden Future / Interest-Rates / US Interest Rates
By: Mick_Phoenix
Welcome to the weekly report. This week we look at some longer term indicators that will help identify when a turning point in the economy has arrived and why you should cancel Christmas, or at least go back to its traditional meaning, forgoing the pointless consumerism that surrounds it.
Before we start, you may have wondered (or not) why the weekly report wasn't around. I have spent the past 3 weeks laying out the groundwork for an attempt to peer into the longer term future. Subscribers have seen all 3 articles, culminating in the new scenario. I have released the first 2 articles to the public, the final part will also be released but not for awhile yet.
Wednesday, November 19, 2008
Misguided Bets On The Yield Curve Steepening / Interest-Rates / US Bonds
By: Mike_Shedlock
Bloomberg is reporting U.S. Long-Term Treasuries Advance as Consumer Prices Plummet . Treasuries maturing in 10 years or more, the most sensitive to inflation expectations, rose after a government report showed consumer prices dropped in October by the most on record.
Read full article... Read full article...
Saturday, November 15, 2008
Paulson's Blunders as Debt Securitization Market Remains Frozen / Interest-Rates / Credit Crisis Bailouts
By: Mike_Whitney
Henry Paulson's time at Treasury has been one pratfall after another. Even so, on Tuesday he managed to out-due himself. Paulson held a "surprise" press conference where he announced that the $700 billion Troubled Asset Relief Program (TARP) wouldn't be used to buy troubled assets after all. Instead, the money will used to bail out insurance giant AIG, provide extra capital for the banks to hoard, and now (this is new part) give money to "nonbank financial institutions, like insurers and specialty-finance companies" so they can lend to credit-worthy consumers. (Isn't that why we gave money to the banks?) Read full article... Read full article...
Thursday, November 13, 2008
Combating Credit Based Derivatives Deflation / Interest-Rates / Deflation
By: Mick_Phoenix
Welcome to An Occasional Letter. This week we pick up from the end of this article as we begin the process of peering into the future to assemble the next stage of the scenario I have followed over the past 6+ years.
However before we start I have recently had numerous e-mails asking to join my mailing list. I thank those people for their interest but I no longer run a mailing list since converting to a subscription only website. If you would like to know more, visit An Occasional Letter for details.
Wednesday, November 12, 2008
How Low Will the Fed Funds U.S. Interest Rates Go / Interest-Rates / US Interest Rates
By: Hans_Wagner
On Wednesday October 29th, the Federal Reserve lowered the Fed Funds rate by 50 basis points to 1.0%. This comes on top of an earlier rate reduction on October 8, 2008 of 50 basis points. The rate is now at the level former Fed Chairman Alan Greenspan kept during 2003 and 2004. This raises the question can and should the Fed lower rates further?Read full article... Read full article...
Wednesday, November 12, 2008
US Treasury Bonds Default Avoidance Means Dollar Death / Interest-Rates / Fiat Currency
By: Jim_Willie_CB
LIQUIDATION & USTBOND SUPPORT - The two main factors pushing up the US Dollar have been liquidation of speculative trades funded by it, and redemption of credit derivatives paid in it. These are not signs of any inherent investment in the US Economy itself, but rather its liquidation. Evidence abounds of severe deterioration within the United States, a collapse of confidence, a fall in business investment, ruin in retail demand, an avalanche of job loss, and a spread of corporate breakdown beyond the financial sector. Demands for nationalization have begun outside the financial sector in a wave certain to grow in strength and breadth. Read full article... Read full article...
Tuesday, November 11, 2008
Corporate Industrial Bond Yields Strongly Support Economic Deflation Thesis / Interest-Rates / Deflation
By: Mike_Shedlock
As one might expect in a credit crunch, default risk is rising. One measure of that risk is corporate bond yields. Let's take a look and see how various grades of bonds are performing. Read full article... Read full article...
Tuesday, November 11, 2008
Credit Crisis Eases as Interbank Rates Hit Multi-year Lows / Interest-Rates / Credit Crisis 2008
By: Ashraf_Laidi
Although signs of easing credit strains are manifested in multi-year lows in interbank rates, the market turmoil has exasperated the already shaky cash situation of US auto manufacturers, retailers and shippers, forcing fresh waves of nation-wide layoffs, which would only feed off the negative loop from rising employment, falling consumption, lower earnings and eroding bank credit. Consequently, JPY retains the last word over the USD, while both low yielding currencies dominate dealing flows against European and antipodean FX as Asian and European markets are mired in prolonged downside, failing to break Mondays sell-off in the US. Read full article... Read full article...
Tuesday, November 11, 2008
Glenn Hubbard Wannabe Fed Chairman Devises New Bailout Plan / Interest-Rates / Credit Crisis Bailouts
By: Brady_Willett
Although he didn't get the nomination to replace Greenspan, Columbia's Glenn Hubbard often comments on what he believes is the best path for policymakers to take. Yesterday Mr. Hubbard was at it again, offering a brief commentary on the Nightly Business Report:Read full article... Read full article...
Monday, November 10, 2008
Deep Interest Rate Cuts to Treat the Threat of Economy Turmoil / Interest-Rates / Recession 2008 - 2009
By: Regent_Markets
Last week the Bank of England hit the headlines with an unexpected 1.5% rate cut. The move was largely pre meditated as a shock tactic to boost the ailing UK economy ahead of the all important Christmas period. Spreading the cut over a number of months would have had much less of an impact as it can take many months for the benefits of a rate cut to filter down to consumers. This is especially the case now with banks being slow to pass on cuts to customers.Read full article... Read full article...
Monday, November 10, 2008
Massive Government Bailouts and Stimulus Packages to Hit Bond Markets / Interest-Rates / Credit Crisis Bailouts
By: Mark_OByrne
Gold rose 2.1% last week and is up another 2% in Asian and early European trading. Consolidation between $700/oz and $760/oz continues but the path of least resistance for the gold market is to the upside especially as market and economic conditions look set to worsen in the coming weeks resulting in more safe haven demand.Read full article... Read full article...
Sunday, November 09, 2008
U.S. Treasury Bonds Set to Crash, Heres How to Make a Killing / Interest-Rates / US Bonds
By: Money_and_Markets
A new president … new ideas … and an old problem: How to pay for it all!
Mike Larson writes: It's been one heck of a week in American politics. We have a new president-elect in Barack Obama … a new approach to governing this country … and lots of new ideas about how to get the economy off its back.
Read full article... Read full article...
Sunday, November 09, 2008
Bank of England's 1.5% Interest Rate Cut to Prevent Severe Recession / Interest-Rates / Recession 2008 - 2009
By: Victoria_Marklew
The Bank of England's Monetary Policy Committee (MPC) acted decisively Thursday morning, cutting the Bank Rate 150bps to 3.00% - its lowest level in over fifty years and the largest rate cut since the Bank gained full policy independence in 1997. Read full article... Read full article...
Sunday, November 09, 2008
Bank of England Plays Interest Rate Catch-up as Sterling Suffers / Interest-Rates / UK Interest Rates
By: Ashraf_Laidi
The Bank of England's shocker 150-bp cut to 3.00% (lowest level since 1955) against expectations of 50-bp cut is the biggest rate cut since the central bank acquired operation independence 11 years ago. The Swiss National Bank also surprised with an unscheduled 50-bp rate cut to 1.75%. The European Central Bank stuck with a widely expected 50-bp cut to 3.25%. ECB president JC Trichet says the bank does not rule out further rate cuts and cannot rule out sharp decline in inflation next year. Read full article... Read full article...
Friday, November 07, 2008
UK Shock and Awe Interest Rate Cut / Interest-Rates / UK Interest Rates
By: Adrian_Ash
"I say, I say, I say – Did you hear about the joke of a central banker...?"
SHOCK and AWE was never supposed to be the Bank of England's approach.
Read full article... Read full article...
Friday, November 07, 2008
US Treasury Bonds to be Hit by $500 Billion Quarterly Flood / Interest-Rates / US Bonds
By: Money_Morning
Martin Hutchinson writes:
The U.S. Treasury Department announced Nov. 3 that it intended to
borrow a record $550 billion in the fourth quarter. That represents a staggering $408 billion increase over Treasury's borrowing estimate from early August and includes $260 billion for the recapitalization of U.S. banks.
Make no mistake about it: There will be enough U.S. Treasury bonds to choke on, as the government tries to finance this debt.
Read full article... Read full article...
Thursday, November 06, 2008
Global Interest Rate Cuts ECB .50% BOE 1.5% Equals Deflation / Interest-Rates / Deflation
By: Mike_Shedlock
The Bank of England cut rates by 1.5% in a larger than expected move, The Swiss National Bank by 50 basis points in an emergency action when it was not even meeting, and the European Central Bank cut rates as expected by 50 basis points earlier today. Read full article... Read full article...
Thursday, November 06, 2008
UK Interest Rate Cut by 1.50% / Interest-Rates / US Interest Rates
By: Nadeem_Walayat
The Bank of England surprised all market participants by cutting UK interest rates by 1.5%, far more than the consensus forecast of 0.5%, and even greater than the Market Oracle forecast cut of 1%.Read full article... Read full article...
Thursday, November 06, 2008
UK 1% Interest Rate Cut / Interest-Rates / UK Interest Rates
By: Nadeem_Walayat
The MPC meeting is widely expected by the consensus to cut UK interest rates by 0.5% today, however as my recent articles (Credit Quake Persists Ahead of UK Interest Rate Cut of 1%?) have concluded that effectively Gordon Brown cracked the MPC round table in half when he stood up at the House of Commons despatch box on 8th October to announce the interest rate cut of 0.5%, which was followed by the Bank of England's announcement. This suggests that the Monetary Policy Committee is now no longer totally in the control of setting UK interest rates and therefore in many aspects control has been transferred back into the Governments hands.Read full article... Read full article...
Wednesday, November 05, 2008
Abbey Raises Rates by 0.5% ahead of Interest UK Rate Cut / Interest-Rates / UK Interest Rates
By: Nadeem_Walayat
The Abbey in a slight of hand raised interest rates by 0.5% on its tracker range of mortgages in advance of Thursdays expected 0.5% UK base interest rate cut. This slight of hand of raising rates ahead of a rate cut then announcing cuts following the Bank of England rate cut is nothing new, for I first voiced this bad practice some 10 months ago in the article - UK Interest Rates Cuts Will Not Help the Housing Market. That the banks practice of quietly raising rates prior to interest rate cuts followed by loud announcements following the cuts thus little or no change in the mortgage rates. Read full article... Read full article...
Tuesday, November 04, 2008
IMF Bailout of the United States Coming? / Interest-Rates / Credit Crisis Bailouts
By: Darryl_R_Schoon
Economics has less to do with money than power. - Modern economics is not rocket science. Modern economics is a fraud. Metrics such as “monetary aggregates” and the “velocity of money” are merely devices meant to divert attention away from the fraud in progress.
Focusing on such metrics has been a critical component in the success of the bankers' extraordinary shell game of modern economics. But the current crisis has not only interrupted the bankers' confidence game, it has shed unexpected light on the precarious positions of those fleeced
Read full article... Read full article...
Monday, November 03, 2008
U.S. Bonds Weaker in advance of Massive Issuance of Bailout Treasury Bills / Interest-Rates / US Bonds
By: Levente_Mady
The bond market lost 4 points last week as the yield on the 10 year note gravitated back to the 4% level that seems to be acting as a magnet of equilibrium these days. While the bounce in the stock market has put some pressure on US Treasury and other government bonds, the real driver for interest rates at the present time is supply. There are certainly a number of other problems that are supportive for the bond market, but all the bailouts, guarantees and government as well as Federal Reserve programs will have to be paid for. It will be done with a massive increase in the issuance of Treasury Bills, Notes and Bonds. Read full article... Read full article...
Monday, November 03, 2008
Credit Quake Persists Ahead of UK Interest Rate Cut of 1%? / Interest-Rates / UK Interest Rates
By: Nadeem_Walayat
The Bank of England is expected to follow last weeks U.S. interest rate cut of 0.5% by cutting UK interest rates at Thursdays MPC meeting, speculation is growing that in the face of the economic meltdown of the economy that is falling off the edge of a cliff, that the Bank will take the unprecedented action of cutting interest rates by a whole 1%. The problem here is that as I have observed and commented on these past few years is that the Bank of England's MPC is incompetent , having repeatedly failed in all respects, which is especially apparent in its primary objective of pegging UK inflation at CPI 2% and between the boundaries of 1% and 3%, therefore will the MPC be able to make the leap and cut interest rates by a whole 1% as the economy demands ? , read on... Read full article... Read full article...
Sunday, November 02, 2008
Global Zero Interest Rate Policy and the "Impossible Economic Contraction" / Interest-Rates / Recession 2008 - 2009
By: Mike_Shedlock
The global race to ZIRP is on. Let's recap the state of affairs of the mad march to zero interest rates.
Bank of Japan Cuts Rate to 0.3%
In an attempt to fend off a prolonged recession, the Bank of Japan Cuts Rate to 0.3% .
Read full article... Read full article...
Sunday, November 02, 2008
LIBOR Unfreezing as Fed Takes Aggressive Action to Boost Economy / Interest-Rates / US Economy
By: Prieur_du_Plessis
CNNMoney.com: Bernanke discusses future of Fannie and Freddie “Federal Reserve Chairman Ben Bernanke said Friday that the federal government will need to continue to play a role in the future of the mortgage financing market.
Read full article... Read full article...
Saturday, November 01, 2008
Fed Desperate U.S. Interest Rate Measures / Interest-Rates / US Interest Rates
By: Tim_Wood
The Fed's action to either raise or lower rates has become a major focal point for the markets in recent years. It seems that the vast majority of the public believes that the Fed is actually controlling interest rates and as a result that they are controlling the credit and equity markets. For a week before the Fed meeting it seems that the entire global markets focus on “what the Fed is going to do.” Will they cut a quarter, will they cut a half or will they not cut at all? Then, after the meeting the talking heads and analysts sit around and try to analyze the meaning of their “Fed Speak.” This is a joke. I am about to show you the proof that the Fed follows the short-term credit market and that in reality they do not lead. The data simply does not support this widely held belief. I realize that this may come as a shock to you, but reality is what it is. The data speaks for itself. Read full article... Read full article...
Friday, October 31, 2008
Interest Rate Conundrum Heralds More Stock Market Distress / Interest-Rates / Stocks Bear Market
By: Money_and_Markets
Mike Larson writes: Step into my interest rate time machine for a minute, if you will. We're going back to February 16, 2005 — the day former Federal Reserve Chairman Alan Greenspan testified before the Senate Banking Committee.
The topic of the day was the broader economy.
Read full article... Read full article...
Friday, October 31, 2008
U.S. Fed Zero Interest Rate Policy Coming? / Interest-Rates / US Interest Rates
By: Mike_Shedlock
The Fed did not want to cut the Fed Funds Rate below 2%. And because Congress recently granted authority for the Fed to pay interest on reserves, Bernanke thought incorrectly that he could keep rates above 2%. So much for that academic theory. Now many are wondering if ZIRP (Zero Interest Rate Policy) is coming to the Fed. Read full article... Read full article...
Wednesday, October 29, 2008
U.S. Fed Anticipated 0.5% Interest Rate Cut / Interest-Rates / US Interest Rates
By: Ashraf_Laidi
The main question is whether today's anticipated Fed rate cut will succeed in maintaining the current boost to global risk appetite, regardless of the size of the easing. Since the beginning of the market crisis 7 weeks ago, the Federal Reserve has proven more creative in its overall actions than surprisingly dovish in its rate cuts. At the last scheduled FOMC meeting, the Committee kept rates unchanged despite the collapse of Lehman Bros but offered a bridge loan to AIG. In keeping with current Modus Operandi, a 50-bp rate cut in the fed funds rate is the most likely scenario, while a 25-bp easing is more plausible than 75-bps. Read full article... Read full article...
Tuesday, October 28, 2008
Pullback in U.S. Treasury Bonds Appears Complete / Interest-Rates / US Bonds
By: Mike_Paulenoff
The large 6-week coil pattern in the Lehman 20-Year T-Bond ETF (AMEX: TLT) hit its 3rd coordinate on the high side last Friday at 100.00 (off of the 10/17 low at 93.02), and since has pulled back to this morning's low at 96.02, which represents a 60% correction of the 10/17-10/24 upleg. The strength off of 96.02 suggests strongly that the pullback is complete and is turning to the upside to enter a new upleg that will retest and likely hurdle resistance between 100.00 and 100.86 -- on the way to 102.00.Read full article... Read full article...
Tuesday, October 28, 2008
Global Economic Outlook Suggests Concerted Interest Rate Cuts / Interest-Rates / Global Economy
By: Prieur_du_Plessis
The financial panic that began in early September has been a body blow to global business confidence and the global economy which, according to the Survey of Business Confidence of the World conducted by Moody's Economy.com , is now in recession.
How bad is the shape of the US and global economy?
Read full article... Read full article...
Thursday, October 23, 2008
Mortgage Interest Rate Resets May Fuel LIBOR Market Manipulation / Interest-Rates / Credit Crisis 2008
By: Money_Morning
Shah Gilani writes:It's panic time for U.S. legislators, regulators, banks and lenders. More than $24 billion worth of adjustable-rate mortgages (ARMs) are expected to “re-set” to higher interest rates in November – boosting the likelihood of further home foreclosures.
And it gets worse. That increase in borrowing costs will spread to other parts of the global debt market, representing an across-the board threat to corporate, institutional and sovereign borrowers. If interest rates remain high and interbank lending remains tight, the credit crisis is not likely to recede.
Read full article... Read full article...
Wednesday, October 22, 2008
Investment Opportunities in Municipal Bonds? / Interest-Rates / US Bonds
By: Richard_Shaw
The $2.66 trillion municipal bond market is embroiled in the overall credit market mess, creating an unusual complex of risks and opportunities.
The supply-demand forces in the municipal bond market have been unfavorable in the past year, causing prices to decline.
Read full article... Read full article...
Tuesday, October 21, 2008
Keynesian Economic Claptrap From PIMCO / Interest-Rates / Credit Crisis 2008
By: Mike_Shedlock
The amount of total nonsense currently circulating on the so called Paradox of Thrift is staggering. The paradox: An increase in saving, which is generally good advice for an individual during bad economic times, can actually worsen the macroeconomy causing a reduction in aggregate income, production, and paradoxically a decrease in saving.
Read full article... Read full article...
Tuesday, October 21, 2008
How LIBOR Threatened to Destroy the Global Banking System / Interest-Rates / Credit Crisis 2008
By: Money_Morning
Martin Hutchinson writes: largest financial crisis since the Great Depression has revolved around an interest rate that many U.S. investors are only now hearing about for the very first time: The London Interbank Offered Rate (LIBOR).
But if you understand that rate, and study the forces that have been influencing it, chances are very good that you can figure out how we can escape the current banking-sector mess without wrecking the entire world economy.
Read full article... Read full article...
Sunday, October 19, 2008
The Mechanism Of Capital Destruction / Interest-Rates / Credit Crisis 2008
By: Professor_Emeritus
Address at the Annual Dinner of the Committee for Monetary Research and Education, CMRE
on October 16, 2008
New York City
Read full article... Read full article...
Friday, October 17, 2008
Why Mortgage Interest Rates Are Rising Despite Government Actions! / Interest-Rates / Credit Crisis 2008
By: Money_and_Markets
Mike Larson writes: The government is throwing everything … and I do mean EVERYTHING … at the credit and mortgage markets.
It has taken over Fannie Mae and Freddie Mac.
Read full article... Read full article...
Thursday, October 16, 2008
Debt vs Interest Rates Conundrum / Interest-Rates / US Debt
By: Michael_Pento
I've written before about the dramatic rise in fixed income rates that face investors in the very near future due to the funding issues associated with our entitlement programs coupled with the incalculable measures taken by the government in the past few weeks to stem the credit crisis. Those efforts ensure the amount of Treasury issuance will explode. Read full article... Read full article...
Wednesday, October 15, 2008
U.S. Forcing Banks to Resume Lending at Bazooka Point / Interest-Rates / Credit Crisis Bailouts
By: Mike_Shedlock
For now, you can force banks to take money, but you can't force them to lend it. Let's explore this theory starting with a look at the Drama Behind a $250 Billion Banking Deal .
The chief executives of the nine largest banks in the United States trooped into a gilded conference room at the Treasury Department at 3 p.m. Monday. To their astonishment, they were each handed a one-page document that said they agreed to sell shares to the government, then Treasury Secretary Henry M. Paulson Jr. said they must sign it before they left.
Read full article... Read full article...
Tuesday, October 14, 2008
US Treasury Bond Market Crash / Interest-Rates / US Bonds
By: Money_and_Markets
Martin here with an urgent update on these wild, wild markets.
The key factor many investors seem to be forgetting: While stock markets have enjoyed a historic rally, bond markets are suffering a dramatic decline.
Read full article... Read full article...
Tuesday, October 14, 2008
Treasury Bonds ETF Inverse Trend to Stock Market Indices / Interest-Rates / US Bonds
By: Mike_Paulenoff
To some degree, the TLTs (Lehman 20 Yr T-bond, ETF) trades inversely to the equity indices like the SPYs (for instance); however, my sense is the recent upside explosion in the stock averages and the recent plunge in TLT prices have "corrected" and defused the bulk of that relationship, which if accurate, means that a new relationship is forming based less on flight-to-safety and more on the still-challenging (to put it mildly) economic fundamentals that will not be corrected any time soon. Read full article... Read full article...
Monday, October 13, 2008
How Credit Crises Begin and End / Interest-Rates / Credit Crisis 2008
By: Clif_Droke
From the standpoint of investor sentiment the credit crisis has reached the point of maximum saturation. Every TV news program and political commentator, every newspaper and every magazine in town is writing about it. It is being depicted as a virtual apocalypse that can't be stopped. For example, the headline for the latest cover of Time magazine reads: "The New Hard Times.” It features a photograph of a soup line from the Great Depression. Read full article... Read full article...