Analysis Topic: Interest Rates and the Bond Market
The analysis published under this topic are as follows.
Monday, September 10, 2007
Fed Expected to Cut Interest Rates As US Recession Looms / Interest-Rates / US Interest Rates
By: John_Mauldin
This week in Outside the Box, good friend Paul McCulley of PIMCO fame addresses the important topic of fed fund easing. Paul addresses the predicament the current Fed finds itself in on account of not wanting to bail out those who took excessive risk in what he dubs the "shadow banking system," - comprising an alphabet soup of levered non-bank investment conduits, vehicles, and structures. The crux of the matter as Paul highlights is that the 50bp discount rate reduction still remains a penalty to the Fed Funds rate, hence simply not an attractive source of funding for real banks, who have access to the Fed funds rate. Read full article... Read full article...
Monday, September 10, 2007
Fed September Meeting is Bernanke's Test / Interest-Rates / US Interest Rates
By: David_Urban
The September Federal Reserve meeting becomes a major test for Bernanke's reign as chairman. Wall Street responded positively to the discount rate cut but now the addict that we described earlier will be looking for its next fix. It wants it drug and that drug is liquidity. Since the cut, central banks worldwide have injected more than $300 billion dollars of liquidity into their banking systems through repurchase agreements and other arrangements. This tells me that the problems are not over. They have only moved the liquidity crisis to the backburner hoping, like in March, it corrects itself.Read full article... Read full article...
Sunday, September 09, 2007
Housing Market Impact on the US Economy, Should the Fed Cut Interest Rates? / Interest-Rates / US Interest Rates
By: John_Mauldin
In this issue:
The Shocker in the Employment Numbers
Should the Federal Reserve Cut Interest Rates?
Will A Cut Make Any Difference?
How Housing Woes Hurt the Rest of the Economy
Home Again, Home Again
The unemployment numbers came in today, and if you look under the hood of the data, it is worse than the headline loss of 4,000 jobs. Should the Fed cut the interest rates in two weeks? Will it make a difference? Are we headed into recession (as predicted here in my January 2007 forecast issue)? When do we see a bottom in the housing market? Are we there yet? We look at all this and more. It should make for an interesting letter, if I can get my jet-lagged body to cooperate.
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Saturday, September 08, 2007
Will the Fed Continue to Cut US Interest Rates? / Interest-Rates / US Interest Rates
By: Tim_Wood
It seems like the hot debate on the upcoming Fed meeting is whether or not they will cut the discount rate. Given that we had a cut in August, I'm not sure if we will see another cut in September. But, I can tell you that at present the charts do in fact say that we have entered into an environment in which rates will continue to be cut over the longer-term. Here's why.Read full article... Read full article...
Thursday, September 06, 2007
Gold and Subprime US Dollar Backlash / Interest-Rates / Subprime Mortgage Risks
By: Jim_Willie_CB
A certain nerve has been struck a few times in recent reading on my part by the description of the USDollar as a subprime currency. How true!!! When a debtor has poor credit history, inadequate income, and shoddy assets, the borrower is deemed to be subprime, which means less than good, not up to snuff, of second rate standard. The entire world is growing in its disgust for having been defrauded. While US banking and economic leaders are smugly claiming containment of the problem, foreign officials are acting according to the opposite conclusion. Every single denial of the problem, whether from press pundits, corporate titans, banking officials, government ministers, agency heads, trade representatives, and central bankers, has been incorrect. Read full article... Read full article...
Thursday, September 06, 2007
The Bank of England to the Rescue - The Threadneedle Hotline / Interest-Rates / UK Interest Rates
By: Adrian_Ash
"...The lowest interest rates for 40 years! Employment at a record high! More debt per working family than any other people in history..."
THE BANK OF ENGLAND chose not to raise Sterling base rates on Thursday, despite the UK money supply growing at a two-decade record.
It also made fresh short-term loans available to London 's illiquid money market. But might the UK authorities be considering a more "prudent" response to the credit crunch, too?
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Thursday, September 06, 2007
UK Interest Rates on Hold at 5.75% As Financial Sector Crash Continues / Interest-Rates / UK Interest Rates
By: Nadeem_Walayat
The Bank of England kept interest rates on hold at 5.75%, the move was widely expected as the credit crunch continued to hit the financial sector which has seen sharp drops in stock prices of financial institutions such as Northern Rock as the credit crunch increases financing costs across the sector. This was evidenced by the recent surge in the inter bank LIBOR rate which resulted in the Bank of England to provide additional liquidity.Read full article... Read full article...
Wednesday, September 05, 2007
Bernanke and Bush on Subprime Credit Crunch / Interest-Rates / Credit Crunch
By: David_Urban
Friday was a big day as the markets expected confirmation of a September rate cut in Bernanke's Jackson Hole speech. What they got was confirmation that the Fed is monitoring the situation and stands ready to act if the housing meltdown spills over into the general economy.
‘It is not the responsibility of the Federal Reserve –nor would it be appropriate – to protect lenders and investors from the consequences of their financial decisions. But developments in financial markets can have broad economic effects felt by many outside the markets, and the Federal Reserve must take those effects into account when determining policy.' Bernanke told the markets that it is not the Federal Reserve's job to bail out speculators but they will act if there is a spillover into the general economy.
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Wednesday, September 05, 2007
Fed Wants Mortgage Lenders to Ease Terms and Delay Foreclosures / Interest-Rates / US Interest Rates
By: Adrian_Ash
Hit to the Head with a Two-by-Four
"...The Fed wants mortgage lenders to ease their terms and delay foreclosures. Yet it's just capped new lending at six state-chartered banks, hoping to restore their 'financial soundness'..."
BUSY DOING NOTHING about asset-price bubbles until after they burst, the Federal Reserve has still been chiding no end of miscreant banks, foreign firms, lenders and brokerages about fraud and money-laundering since the Dot Com Bubble burst.
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Tuesday, September 04, 2007
Analysis of Credit Markets Turmoil - Vectors of Credit / Interest-Rates / Credit Crunch
By: John_Mauldin
The credit markets are in turmoil. This week I have asked Michael Lewitt of Harch Capital in Florida to tell us what is going on from his perspective. Michael has been watching the credit markets from the inside for a long time. So, this week we have a sort of insider's Outside the Box.
Michael is one smart guy with a deep understanding of the markets, especially the credit markets, and how they work. I really look forward each month to getting Michael's insights. The firm manages domestic and offshore debt and equity hedge funds and separate accounts. This may get more technical for some readers, but keep reading, as you can get a sense of what we are really facing.
John Mauldin
Editor, Outside the Box
Friday, August 31, 2007
Gold Prices & Leasing Rates Jump as Bush Moves to Rescue Sub-Prime Housing / Interest-Rates / US Interest Rates
By: Adrian_Ash
Treasury Bond Holders Face Surge in Supply
SPOT GOLD PRICES rose strongly throughout the Asian and early London sessions on Friday, gaining nearly $5 per ounce to reach a new high for the week, as President Bush announced a rescue package for subprime US home buyers.
Effectively offering to nationalize the mortgage market for low- and no-income borrowers, Bush's bail-out plan is likely to force a steep increase in US bond issuance. The "safe haven" of choice for large investment institutions during the turmoil in this month's credit markets, Treasury bonds now risk serious, long-term inflation.
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Tuesday, August 28, 2007
The Ongoing Impact of the US Housing Sector / Interest-Rates / Credit Crunch
By: John_Mauldin
Who should we blame for the problems in the credit markets? This week in Outside the Box my good friend Barry Ritholtz takes on the task of pointing his prodigious finger at the guilty parties. As he notes, there is plenty of guilt to go around. This is a problem that is going to stay with us more than a few weeks. As I wrote last week, it is not a problem of liquidity. It is a problem of credibility. Until investors of all types feel safe getting back into the structured finance market water, US mortgages and all sorts of consumer finance are going to be severely hobbled. There is plenty of money on the sidelines, but it is going to take some work to make investors feel comfortable. Read full article... Read full article...
Monday, August 27, 2007
US Fed - A "Slow Motion Train Wreck" / Interest-Rates / Global Financial System
By: Stephen_Lendman
These days, financial/market punditry seems to follow two opposite lines of thinking. It ranges from the predominant view that world economies are growing and sound, problems in them minor and fixable, and current volatility (aka turmoil) is corrective, normal and a healthy reassessing and repricing of risk. Contrarians, on the other hand, believe the sky is falling. Most often, extreme views like these turn out wrong and are best avoided. Things are never that simple and hindsight usually proves only Cassandra was good at forecasting although calling market tops and bottoms wasn't her specialty. Read full article... Read full article...
Friday, August 24, 2007
US Fed - Write Some Checks! Bail 'Em Out! / Interest-Rates / US Interest Rates
By: Adrian_Ash
"There are more tears shed over answered prayers than over unanswered prayers..." - Teresa of Ávila, patron saint of headache sufferers
BE CAREFUL what you wish for. The entire US Treasury market is betting the Fed will cut rates in September. Goldman Sachs expects rates to finish the year at 4.5%, fully 75-points lower from here.
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Friday, August 24, 2007
More Upside for US Treasuries / Interest-Rates / US Bonds
By: Mike_Paulenoff
The Lehman 20-year Treasury Bond ETF (AMEX: TLT) continues to grind to new 4-month highs….See our recent daily chart, in which we note that our near and intermediate-term work continue to "warn" us to expect another surge in the TLT that thrusts prices towards 89, which appears to be gaining upside strength as we speak. The weakness in the equity indices hardly can be considered acute, yet the long end of the yield curve is ratching down (lower rates) to reflect expectations of…what?
An economic slowdown?
Thursday, August 23, 2007
Desperate Measures For US Fed As Treasury Yields Scream for a Interest Rate Cut / Interest-Rates / US Interest Rates
By: Jim_Willie_CB
The US financial system is experiencing a combination of a heart attack (fibrillation from absent trade recycled surpluses), a massive hairball (subprime debt securities) working through the bank arteries, and a realization (like Wiley Coyote in cartoons) that no terra firma lies beneath the economic feet as the depths below are vividly apparent. Massive money printing constitutes a heart attack, now a crescendo since the Constitutional violation on gold backed currency. The mortgage bonds simply cannot work through the banking system, with hairballs leading to constipation and unspeakable intra-bank distrust. For ten years the USEconomy has relied upon rising stocks or rising home properties to sustain an entire economy, from a structural foundation of inflating assets. For any central bankers or leading economists working as policy maker counselors, this is a purely heretical strategy. Read full article... Read full article...
Wednesday, August 22, 2007
Fed President Lacker Resists Talk of Fed Funds Rate Cut as US Economy Flirts With Recession / Interest-Rates / US Interest Rates
By: Paul_L_Kasriel
Richmond Fed President Lacker is the first Fed official to speak publicly about the recent discount rate cut, liquidity issues and the prospects for FOMC federal funds rate policy. I would assume that his comments were cleared by Fed Chairman Bernanke before being delivered to us. Lacker could have saved his breath about discount policy and liquidity challenges. What enquiring minds really want to know is whether the FOMC intends to cut its federal funds rate target at or before its September 18 meeting.Read full article... Read full article...
Tuesday, August 21, 2007
Black Monday for Bond Yields / Interest-Rates / US Interest Rates
By: Adrian_Ash
"...Monday this week marked the biggest move in Treasury bond yields since Black Monday in Oct. 1987 destroyed more than one-fifth of the US stock market's value..."
REMEMBER HOW INFLATION was the investment world's biggest single worry back in...oh...back in June?
Anyone snapping up 10-year US Treasury bonds back then is now looking clever. Very. Ten weeks ago, the 10-year yield touched a half-decade high of 5.32%. On Monday night in New York it closed below 4.65%.
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Tuesday, August 21, 2007
Why The Fed's Interest Rate Cut Did Not Come As A Surprise / Interest-Rates / US Interest Rates
By: John_Mauldin
This week's Outside the Box is from good friend and South African partner Dr. Prieur du Plessis of Plexus Asset Management. Prieur suggests that we should not be surprised at last week's rate cut, as it is consistent with past rate cut cycles when viewed from the fact that banks are tightening up on their lending standards to both consumer and commercial borrowers. There are a number of very original graphs here with some very interesting analysis that is truly Outside the Box. John Mauldin, Editor
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Monday, August 20, 2007
High Risk Credit / Interest-Rates / US Debt
By: Dr_Ron_Paul
As markets went on a rollercoaster ride last week, our economy is coming close to a day of reckoning for loose credit policies being followed by the Federal Reserve Bank. Simply, foreign banks we have been relying on to buy our debt are waking up to the reality of much higher default rates than predicted, and many mortgage backed securities have been reduced to "junk" ratings. Wall Street fears the possibility of tightening credit and the tightening of America's belts. Why, they say, "if Americans spend only what they can afford, think of the ripple effects throughout the economy!" This is the cry, as the call comes for the fed to cut rates and bail out companies in trouble.Read full article... Read full article...