Analysis Topic: Interest Rates and the Bond Market
The analysis published under this topic are as follows.
Sunday, August 10, 2014
The Bottom Is In For US Treasury Bond Yields / Interest-Rates / US Bonds
By: EconMatters
Russian Invasion Tension
It occurred Friday morning while most traders were asleep in illiquid markets where the 10-Year was forced down to basically 2.35% in Yield first on Ukraine worries over the Russian buildup of troops on the Ukrainian border, and then on the announcement that the US would provide air strikes in Iraq to stem ISIS aggression.
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Friday, August 08, 2014
Argentina's Debt Default: A Devastating Lesson in Unfunded Government Liabilities / Interest-Rates / Global Debt Crisis 2014
By: Peter_Schiff
Dickson Buchanan Jr writes:
Last week, on July 30, the Republic of Argentina was declared to be in default for the third time in 30 years.
Let's put that into perspective. If you were a bank officer who offered a 30-year mortgage to the Government of Argentina in the early '90s you would have spent nearly the entire life of the loan in a perpetual nightmare of refinancing. You would likely be not only fired from your job, but a pariah in the entire industry. This is what Argentina's international creditors and domestic citizens have faced in real life. At the time of writing this article S&P has downgraded Argentina to CCC-, one of the lowest ratings available for sovereign governments.
Friday, August 08, 2014
The QE Could Be Coming to an End – So What? / Interest-Rates / Quantitative Easing
By: Matt_Machaj
It is important to review the minutes released recently by the Fed, since they may well signal a turning point in monetary policy. The programs of active purchasing of government debt and commercial assets may be curtailed. Yet, as we have often discussed at length, it is not the most important element. There are other factors of monetary policy to be considered: interest rates for one, and the Federal Open Market Committee suggested they may start to discuss interest rate hikes. The so called taperie (small version of tapering) process discussed earlier in the Market Overview appears to be slowly finalizing:
Wednesday, August 06, 2014
Confusing Capitalism with Fractional Reserve Banking / Interest-Rates / Global Financial System
By: Frank_Hollenbeck
Today, capitalism is blamed for our current disastrous economic and financial situation and a history of incessant booms and busts. Support for capitalism is eroding worldwide. In a recent global poll, 25 percent (up 2 percent from 2009) of respondents viewed free enterprise as “fatally flawed and needs to be replaced.” The number of Spaniards who hold this view increased from 29 percent in 2009 to 42 percent, the highest amongst those polled. In Indonesia, the percentage went from 17 percent to 32 percent.
Wednesday, August 06, 2014
Inflation Adjusted Bond Prices Tell Different Story on Relative Value / Interest-Rates / US Bonds
By: EconMatters
One of the arguments for why US Bonds are such an attractive investment even at these low yields is that relative to European Bonds the US Treasuries provide such a higher yield, but this analysis is shortsighted because it fails to take into account the factor of inflation. Once you adjust yields based upon inflation it tells investors an entirely different story in regards to relative value of bonds and the comparison is different between European and US Bonds.
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Tuesday, August 05, 2014
Marc Faber on QE Money and a People's Bailout / Interest-Rates / Quantitative Easing
By: Keith_Hilden
Diego A. Saucedo Guerra writes: A Main Street Bailout in Washington or Mexico City?
In our latest Squawkonomics interview with Marc Faber, Keith Hilden raised the question of what Faber thought of the idea of a Main Street Bailout, a real People's Bailout that would lower personal debt and increase the rate of domestic investment and business formation- rather than simply only a Wall Street bailout. The legendary investor also ruminates upon the minimum wage and the role of the government in the economy. Check it out below:
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Tuesday, July 29, 2014
Real U.S. Interest Rates - Fed Exit a Blue Pill? / Interest-Rates / US Interest Rates
By: Axel_Merk
While we are busy arguing whether the Fed’s exit will consist of rising rates, reverse repos or the trimming of its massive portfolio, the Fed may well be fooling all of us. Investors must have been swallowing lots of blue pills not to see the illusion hiding in plain sight.
Friday, July 25, 2014
Yellen Goes Where No Man Has Gone Before / Interest-Rates / US Federal Reserve Bank
By: Peter_Schiff
Although Fed Chairwoman Janet Yellen said nothing new in her carefully manicured semi-annual testimony to Congress last week, her performance there, taken within the context of a lengthy profile in the New Yorker (that came to press at around the same time), should confirm that she is very different from any of her predecessors in the job. Put simply, she is likely the most dovish and politically leftist Fed Chair in the Central Bank's history.
Friday, July 25, 2014
The Bond Markets, Black Swans, and the Tiny Spirit of Santo / Interest-Rates / Credit Crisis 2014
By: Dr_Jeff_Lewis
When The Bank Espirito Santo catches a cold, watch the world sneeze. If this evolving situation doesn't highlight the tight interconnectedness of the paper financial system, nothing else will.This a direct hit and a potential trigger that could set of a daisy chain of events, ultimately calling into question the only market left large enough to back (unofficially) fiat or debt based currencies.
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Wednesday, July 23, 2014
How to Start Reforming the Federal Reserve Right Now / Interest-Rates / US Federal Reserve Bank
By: MISES
Brendan Brown writes: First the good news. The House Financial Services Committee has held a hearing on “Legislation to Reform the Federal Reserve on its 100-year Anniversary.” The hearing focused on a bill introduced by Scott Garrett and Bill Huizenga which would require the Fed to provide Congress with a clear rule to describe the course of monetary policy. Now for the bad news. The rule is to be an equation showing how the Fed would adjust interest rates in response to changes in certain economic variables. And the star witness before the committee proposing his own version of such a rule is renowned neo-Keynesian economist, ex-Bush official Professor John B. Taylor.
Monday, July 21, 2014
The Municipal Bond World, / Interest-Rates / International Bond Market
By: Frank_Holmes
According to John Derrick
As we move into the second half of 2014, the Federal Reserve has continued to reduce its stimulus measures intended to boost the U.S. economy. Just last week we heard rumors from Fed officials that if the job market improves faster than expected, key interest rates may be increased sooner than expected.
Saturday, July 19, 2014
U.S. Bond Yield Carry Traders Need To Fade Upcoming Econ Events / Interest-Rates / US Bonds
By: EconMatters
Fading Strong Employment Reports
The trend in the bond markets the last several months, and basically all of 2014 has been to buy bonds in the dead periods of econ reports, or the econ reports that would be detrimental to their non-growth, more dovish Fed case. And the last several weeks have been similar to the prior months, basically wait for the stellar job`s report blows yields up to 2.70% on the 10-Year and then buy bonds, pushing down yields in the three weeks after the Employment Report, with the goal of getting out before the next Employment Report.
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Thursday, July 17, 2014
The Fed Needs to Raise U.S. Interest Rates Now! / Interest-Rates / US Interest Rates
By: EconMatters
ZIRP Policy & Asset Valuations
The conditions in so many asset classes are unsustainable from a price perspective once interest rates rise even under a “new normalized rate environment” and the longer rates stay at ZIRP status these unsustainable price levels continue to move in the wrong direction from a sustainability standpoint, i.e., the underlying fundamentals apart from ZIRP policy would not support said asset prices in a natural price discovery process.
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Monday, July 14, 2014
Pimco Steals AIG’s Bond Fund Insurance Playbook / Interest-Rates / US Bonds
By: Michael_Pento
Pimco is putting all their chips on the table, betting that low interest rates, along with lower and more stable global growth, will last for the next 3 to 5 years; an economic condition it is referring to as the "new neutral".
In fact, the company is so convinced of this "sure thing", it's placing a straight bet--selling insurance against price fluctuations on their $230bn flagship bond fund Pimco Total Return. That means it is offering investors price stability in the bond portfolio, in return for a premium.
Monday, July 14, 2014
Fed Officials Trying to Warn Bond Markets / Interest-Rates / US Bonds
By: EconMatters
The Purpose of Complacency Talk
The Fed officials have been coming out in speeches the last couple of weeks with rhetoric about ‘complacency’ and other such code words for chasing risk ahead of what the Federal Reserve knows is going to be an abrupt change in monetary policy over the next six months.
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Saturday, July 12, 2014
The Bond Rally is Not a Good Omen for the Stock Market / Interest-Rates / US Bonds
By: Sy_Harding
The Fed says the economy remains healthy enough that it will continue to taper back its QE stimulus at a rate of $10 billion a month, with plans to have it at zero by October.
Speculation now is on when it will begin the next step toward returning its monetary policy to normal, by beginning to raise interest rates from their current level near zero.
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Saturday, July 12, 2014
U.S. Fed Inside Thoughts on Inflation and Raising Interest Rates / Interest-Rates / US Federal Reserve Bank
By: Bloomberg
In an interview on Bloomberg TV's "Market Makers" with Mike McKee, Philadelphia Fed President Charles Plosser said the Fed is getting closer to its objectives for full employment and price stability. He said, "The data keeps telling us we ought to be raising rates" and that "If we wait too long, we could find ourselves raising rates faster and higher than we want to."
Thursday, July 10, 2014
QE Asset Bubbles Out of Gas / Interest-Rates / Quantitative Easing
By: Michael_Pento
I've written exhaustively about the real purpose behind the Fed's quantitative easing strategy. So one more time for those who still don't get it; the primary goal of QE is to bolster banks' balance sheets through the process of re-inflating equity and real estate prices. If investors look back at the history of QE they will be able to clearly see what happens when the Fed steps on the monetary gas; and also what occurs once it takes the foot off the pedal.
Tuesday, July 08, 2014
This Could End Up as the Biggest Ponzi Finance Scheme in History / Interest-Rates / International Bond Market
By: Money_Morning
Michael E. Lewitt writes: The great economist Hyman Minsky coined the term "Ponzi finance" to describe the situation when borrowers use more borrowed money to pay their debts.
The U.S. government engages in Ponzi finance every day since it is incapable of repaying the more than $17 trillion it has borrowed.
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Tuesday, July 08, 2014
Bond Market Prices in a Rising Rate Environment / Interest-Rates / US Bonds
By: Richard_Shaw
JP Morgan Asset Management put out their Q3 2014 market outlook in which they discuss bond performance in a rising rate market. You should be aware of the key points they make.
In this table, JPM explains how a 1% interest rate change would impact each of several types of bonds:
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