Analysis Topic: Interest Rates and the Bond Market
The analysis published under this topic are as follows.
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...
Tuesday, April 01, 2008
Will Bernanke's Interest Rate Cuts Save the US Economy? / Interest-Rates / US Interest Rates
By: Gerard_Jackson
In the hope of averting a credit crunch and recession Bernanke recently slashed the federal funds rate by 0.75 per cent, bringing it down to 2.25 per cent. Did he do the right thing? Well, Larry Kudlow, NRO's economics editor , certainly thinks so. He eulogised that Bernanke's rate cuts "are vastly more effective than the so-called economic-stimulus rebate plan coming out of Congress and the White House.Read full article... Read full article...
Tuesday, April 01, 2008
Central Banking Cartels- Crisis Cause and Effect / Interest-Rates / Credit Crisis 2008
By: Joseph_Russo
Rarely do circumstances prevail whereby one is compelled to cast aside a natural self-interest in promoting one's trade, to instead share opinion and perspective on a more broad set of shared observations, beliefs, and convictions, intent upon bringing about vigorous constructive public discourse in serving a purpose much larger than oneself.
Now is such a time, and the following is respectfully our patriotic and dutiful contribution in fostering such endeavors. We yield as much time as we may consume, and reserve the balance of our time remaining.
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Tuesday, April 01, 2008
The Fed Leviathan Grows / Interest-Rates / Market Regulation
By: David_Shvartsman
Well, it didn't take long for the rumors of a new Federal Reserve-led regulatory regime to blossom into a full blown policy announcement. Today, Treasury Secretary Hank Paulson announced plans for the an overhaul of the nation's financial regulatory structure.Read full article... Read full article...
Monday, March 31, 2008
Picture du Jour: US Long Bonds in Injury Time / Interest-Rates / US Bonds
By: Prieur_du_Plessis
Since the advent of the credit crisis, stock markets, real estate and the US dollar have been the subject of investors' angst. However, two markets – commodities and long bonds – have remained in bullish trends. That, at least, is the way it looked until recently.
The Reuters/Jeffries CRB Index hit a peak on March 13, and I argued in a subsequent post that although a correction was overdue, the long-term trend was still upwards.
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Friday, March 28, 2008
Federal Reserve has Begun Buying Mortgage Securities / Interest-Rates / Credit Crisis 2008
By: Ty_Andros
The lighting strike in the markets that I looked for in last week's edition did indeed occur across many sectors. It was a belly button moment for many as Commodities, Currencies, Stocks and Interest Rates were rocked midweek and I was forced look around to make sure that “nothing had changed”. The mainstream financial press was quick to say about the ordeal, for those who place their faith and portfolios in Wall Street's hands, that things were on the mend, the commodities BUBBLE was popped and that the implosion of “paper” investments was on its way to being resolved. New bull markets in paper assets. I have two words for their suppositions: NO WAY and KEEP DREAMING. A new phase of the unfolding BAILOUT of the G7 financial and banking systems began in the last 10 days. Read full article... Read full article...
Tuesday, March 25, 2008
Precipitous Drop in Eurodollars is not Sustainable / Interest-Rates / US Interest Rates
By: John_Handbury
These days the markets are getting easier to read. For example, today long term Eurodollars got absolutely killed with Sep 2009 contracts down about 35 basis points. According to the experts this was due mainly to the bullish housing report, which showed that existing housing sales are up slightly from January.Read full article... Read full article...
Sunday, March 23, 2008
Credit Crisis The Problem The Solution / Interest-Rates / Credit Crisis 2008
By: Fake_Ben
First, we must understand the problem, which is fractional banking. The problem with fractional banking is that cash ALWAYS has to be less valuable than other alternatives. Otherwise, there is an immediate desire to deleverage (to get into cash), and the whole interconnected banking system, with all its counterparty risk, comes crashing down. We are seeing this problem now. Read full article... Read full article...
Thursday, March 20, 2008
US Alice in Wonderland Monetary Policy / Interest-Rates / Credit Crisis 2008
By: Peter_Schiff
How do you know when you're through the looking glass? A fairly good indication is when the price of gold, which normally moves up in response to monetary easing, instead plummets in reaction to one of the largest rate cuts in Fed history. Apparently, yesterday's 6% drop in gold resulted from the “hawkishness” shown by the Fed in only cutting rates by 75 basis points, rather than the 100 points that many had expected. It is a testament to how low the bar has been set that the Fed can slash rates in the face of a collapsing dollar and soaring commodity prices and still be viewed as hawkish on inflation. Is it just me, or is Ben Bernanke morphing into the Mad Hatter? Read full article... Read full article...
Saturday, March 15, 2008
Beware a Parabolic Rise Culminates in Market Crash / Interest-Rates / Financial Crash
By: Brian_Bloom
If I have learned one thing in the 40 odd years that I have been watching the markets, it is this: Parabolic rises culminate in crashes. It's a biological phenomenon. The crowd stampedes, or the population explodes, or prices rise with geometrically increasing rapidity – to the point where the rate of increase can no longer be sustained. Because thought paradigms don't change readily, behaviour at the individual level does not adapt appropriately to circumstances and, therefore, behavioural modification is “forced” by the environment. The environment is not able/prepared to tolerate the excessive growth – and the growth collapses in on itself. Read full article... Read full article...
Saturday, March 15, 2008
Fed Money Printing to Solve Banking Crisis Leading to Stagflation / Interest-Rates / Stagflation
By: Andy_Sutton
It doesn't matter what newspaper you picked up. I doesn't matter what TV show you watched. Records fell like no time in recent history with perhaps the exception of Carl Lewis running loose at the Olympics in his heyday.
I wonder how much his Gold medals are worth now?
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