Analysis Topic: Interest Rates and the Bond Market
The analysis published under this topic are as follows.
Thursday, February 27, 2020
US Economy Permanently Addicted to Zero Interest Rates / Interest-Rates / NIRP
By: Michael_Pento
In Fed Chair Jerome Powell's appearance before Congress on February 11th, formerly known as The Humphrey-Hawkins testimony, he asserted that the U.S. economy was, "In a very good place" and "There's nothing about this expansion that is unstable or unsustainable." But compare Powell's sophomoric declaration to what Charlie Munger, Vice-Chairman of Berkshire Hathaway and Warren Buffett's longtime right-hand-man, had to say about the market and the economy, "I think there are lots of troubles coming…there's too much-wretched excess."Read full article... Read full article...
Tuesday, February 25, 2020
US Bond Market Yield Curve Patterns – What To Expect In 2020 / Interest-Rates / Inverted Yield Curve
By: Chris_Vermeulen
Quite a bit of information can be gleaned from the US Treasury Yield Curve charts. There are two very interesting components that we identified from the Yield Curve charts below. First, the bottom in late 2018 was a very important price bottom in the US markets. That low presented a very deep bottom in the Yield Curve 30Y-10Y chart. We believe this bottom set up a very dynamic shift in the capital markets that present the current risk factor throughout must of the rest of the world. Second, this same December 2018 price bottom set up a very unique consolidation pattern on the 10Y-3Y Yield Curve chart. This pattern has been seen before, in late 1997-1998 and late 2005-2008.
The reality of these two patterns setting up in the Yield Curve charts suggests that the US and global markets are going to experience a surge in volatility and a very real potential that the US and global markets will contract over the next 6 to 24 months. Within about 3 to 6+ months of these patterns setting up, one of two separate outcomes typically takes place.
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Thursday, January 30, 2020
Fed Keeps Federal Funds Rate Unchanged Again / Interest-Rates / US Interest Rates
By: Arkadiusz_Sieron
The FOMC held its first meeting in both the new year and the decade, keeping interest rates unchanged. But why did the yellow metal move up regardless? Let’s examine the implications for the king of metals.
Yesterday, the FOMC published the monetary policy statement from its latest meeting that took place on January 28-29th. In line with expectations, the US central bank kept the federal funds rate unchanged at 1.50 to 1.75 percent:
Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. The Committee decided to maintain the target range for the federal funds rate at 1 1/2 to 1-3/4 percent. The Committee judges that the current stance of monetary policy is appropriate to support sustained expansion of economic activity, strong labor market conditions, and inflation returning to the Committee's symmetric 2 percent objective.
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Tuesday, January 21, 2020
Former Fed Official Says Government Can Borrow a LOT More / Interest-Rates / US Debt
By: MoneyMetals
Narayana Kocherlakota, the former President of the Federal Reserve bank of Minneapolis wants you to know the Federal Government can never borrow too much money.
Our government already borrowed $23 trillion and deficits are expected to exceed $1 trillion per year. He knows many Americans feel anxious about the federal government going bankrupt, and he has a simple solution.
Tuesday, January 14, 2020
Central Banklers Playing Taps For The Middle Class / Interest-Rates / Quantitative Easing
By: Michael_Pento
It is not at all a mystery as to the cause of the wealth gap that exists between the very rich and the poor. Central bankers are the primary cause of this chasm that is eroding the foundation of the global middle class. The world’s poor are falling deeper into penury and at a faster pace, while the world's richest are accelerating further ahead. To this point, the 500 wealthiest billionaires on Earth added $1.2 trillion to their fortunes in 2019, boosting their collective net worth by 25%, to $5.9 trillion.
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Wednesday, January 08, 2020
The Fed Has Quietly Started QE4 / Interest-Rates / Quantitative Easing
By: John_Mauldin
In September of last year, something still unexplained happened in the “repo” short-term financing market. Liquidity dried up, interest rates spiked, and the Fed stepped in to save the day.
Story over? No. The Fed has had to keep saving the day, every day, since then.
Friday, December 27, 2019
Will Negative Interest Rates Be the Last Straw? / Interest-Rates / Negative Interest Rates
By: MoneyMetals
Zero Interest Rate Policy (ZIRP) was considered “extraordinary” when central bankers rolled that out roughly ten years ago. At that time, people would still have laughed at the idea of negative interest rates. Lenders didn’t pay borrowers and nobody paid their bank to hold their deposits.
So much has changed in the past 10 years. Now negative interest rate policies (NIRP) look set to go viral.
Saturday, December 21, 2019
Farewell Paul Volcker Hello Monetary Madness / Interest-Rates / Quantitative Easing
By: Michael_Pento
God bless Paul Volcker. He was truly a one of a kind central banker and we probably won't see another one like him ever again. It took his extreme bravery to crush the inflation caused by the monetary recklessness of Arthur Burns and the fiscal profligacy of Presidents Johnson & Nixon. Raising interest rates to 20% by March 1980 was wildly unpopular at the time. But in the end, it was what the nation needed and paved the way for a long period of economic stability and prosperity.Back in 1971 the world fully had developed a new monetary "technology". Governments learned that money need no longer be representative of prior efforts, or energy expended, or previous production, or have any real value whatsoever. It can be just created by a monetary magic wand; and done so without any baneful economic consequences.
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Tuesday, December 10, 2019
Central Planners: Out of Room and Running Out of Time / Interest-Rates / Quantitative Easing
By: Michael_Pento
One would have to place their trust in unicorns, sasquatch, leprechauns, and the tooth fairy to believe the current economic construct is sustainable. You also need to be woefully ignorant of history. In fact, there has never been a nation that engaged in massive debt monetization and did not eventually face hyperinflation, depression, and mass chaos. There is simply no such thing as magic, and you can’t build an economy on the foundation of debt, asset bubbles, and unlimited fiat money printing.
Perhaps the reason why the market hasn’t imploded yet is that the developed world has coordinated this so-called “strategy” of unbridled central bank lunacy to engage in permanent ZIRP and QE. Therefore, a currency crisis has been averted so far. However, now that these money printers have gone all-in, the next recession or freeze-up in credit markets cannot be averted by a dovish turnaround in monetary policies, as governments already have the gas pedal to the monetary and fiscal floor. The globe now has $255 trillion in debt, and the U.S alone is adding one trillion to that pile each year. The Fed is back in QE, along with the ECB and BOJ. And, no central bank in the developed world has room any longer to cut rates enough to boost consumption.
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Wednesday, December 04, 2019
Elephant in the Room: Why Nobody Talks About Ballooning Federal Deficits / Interest-Rates / US Debt
By: MoneyMetals
The presidential race will mesmerize Americans over the next 11 months. The country hasn’t been this polarized since the Civil War.
Voters on the left desperately want a story which undermines support for President Trump. They are also searching for a candidate who can actually win.
Many Republicans are outraged about the Deep State and corporate media campaign obsession with unseating a duly elected president – and they worry an avowed socialist could win the Democratic primary and, just possibly, the general election.
Friday, November 29, 2019
Hidden Failure of SIFI Banks / Interest-Rates / Financial Crisis 2019
By: Jim_Willie_CB
Big systemically important banks could be in failure mode. A small group of big Western banks are in deep trouble. The officials might keep it all secret, working feverishly behind the curtains to patch their myriad holes with paper. These SIFI banks are likely major recipients of USFed overnight aid in the form of Repurchase (REPO) and Permanent Open Market Operations (POMO) activity, plus gigantic hidden funny money infusions. Beware the advent of chaos, with lost control. Possibly the main markets will remain tame under tight controls, while the precious metals prices zoom to multiples higher. Always keep in mind then when the POMO volume rises significantly, it means that QE has returned. When the volume is tremendous, it means that Infinite QE is here. Since Chairman Powell admitted in May that QE was a permanent feature with monetary policy, we must conclude that we are at the doorstep of Infinite QE Forever. Thus the Gold price will be required to double and the Silver price triple. All in time. It is written; it will be done.
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Friday, November 22, 2019
FOMC Minutes Reveal an Important Shift That’s Key for Gold, Too / Interest-Rates / US Interest Rates
By: Arkadiusz_Sieron
Yesterday, the Fed released minutes from its last meeting. They show an important shift among the meeting participants. In September, the FOMC turned more worried about the state of the U.S. economy, while just six weeks later in October, the Committee felt more optimistic again. Indeed, the central bankers noted that certain downside risks had softened:
Uncertainties associated with trade tensions as well as geopolitical risks had eased somewhat, though they remained elevated (…) Some risks were seen to have eased a bit, although they remained elevated. There were some tentative signs that trade tensions were easing, the probability of a no-deal Brexit was judged to have lessened, and some other geopolitical tensions had diminished.
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Tuesday, November 19, 2019
Interest Rates Heading Zero or Negative to Prop Up Debt Bubble / Interest-Rates / Negative Interest Rates
By: MoneyMetals
Mike Gleason: It is my privilege now to welcome back the one and the only Gerald Celente, publisher of the renowned Trends Journal. Mr. Celente is a frequent guest on the Money Metals Podcast and is perhaps the most well-known trends forecaster in the world. And it's always great to have him on with us.
Gerald, thanks for the time again today, and welcome back.
Gerald Celente: Oh, my pleasure. Thanks for having me on.
Mike Gleason: Well, Gerald, since we spoke last in August, the Federal Reserve has begun propping up the repo markets, and they resumed buying government debt. They tell us the program on bond purchases should in no way be confused with prior bond purchasing programs, also known as Quantitative Easing. They don't want us to worry about it. Just a little extra boost for an economy struggling with some fears over trade and a minor temporary problem in the repo markets is what they're saying. The only trouble is that hundreds of billions of dollars are involved so far, and it could wind up being trillions. So once again, the Fed is shoveling freshly-printed cash at banks and the Treasury Department. What is your guess as to why the Fed has engaged in this stealth bailout, and why aren't more people talking about it?
Thursday, November 14, 2019
Is Yield Emerging Out Of A 38-Year Bear Market? / Interest-Rates / US Bonds
By: Mike_Paulenoff
Yield has been in a bear market for 38 years. Is that about to end?
The 10-Year Treasury Yield has backed up from the Sep-Oct lows at 1.43% and 1.51% to a high at 1.97% last week. Is this a mere recovery "rally" in a still dominant 38-year bear market? Or is it a secondary low -- i.e., double-bottom -- 3+ years after the July 2016 historic low at 1.32%?
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Wednesday, November 13, 2019
What to Do NOW in Case of a Future Banking System Breakdown / Interest-Rates / Global Financial System
By: MoneyMetals
The banking system may not be as sound we’ve been led to believe. It continues to get propped up through central bank interventions, which strongly suggests it wouldn’t be able to stand on its own.
Last Thursday, the Federal Reserve injected another $115 billion into financial markets via “temporary operations.” The Fed is targeting the repo market in particular, through which banks lend to each other on an overnight basis.
For some reason, banks have grown weary of committing liquidity to each other in what should be one of the safest lending markets on the planet.
Tuesday, November 12, 2019
Fed Can't See the Bubbles Through the Lather / Interest-Rates / Liquidity Bubble
By: Michael_Pento
Recently, there has been a parade of central bankers along with their lackeys on Wall Street coming on the financial news networks and desperately trying to convince investors that there are no bubbles extant in the world today. Indeed, the Fed sees no economic or market imbalances anywhere that should give perma-bulls cause for concern. You can listen to Jerome Powell’s upbeat assessment of the situation in his own words during the latest FOMC press conference here. The Fed Chair did, however, manage to acknowledge that corporate debt levels are in fact a bit on the high side. But he added that “we have been monitoring it carefully and taken appropriate steps.” By taking appropriate steps to reduce debt levels Powell must mean slashing interest rates and going back into QE. The problem with that strategy being that is exactly what caused the debt binge and overleveraged condition of corporations in the first place.Read full article... Read full article...
Thursday, November 07, 2019
The Fed Is Chasing Its Own Tail; It Doesn’t Care What You Think / Interest-Rates / US Federal Reserve Bank
By: Kelsey_Williams
Did you ever watch a dog get caught up in the act of chasing its own tail? It continues to run in a circle as the object of its fascination and intention continues to elude it. The action is quite comical, almost hilarious.
The expectations of the animal are both foolish and amusing. You might feel inclined to want to communicate the unrealistic expectations to the engaged participant, but you know your efforts would be in vain.
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Thursday, November 07, 2019
Shades of 2007–2008 - Modern Central Banking Is More Vulnerable than We Think / Interest-Rates / Central Banks
By: John_Mauldin
Banks are a place where you store your cash, right? Not exactly.When you deposit money in a checking or savings account, you aren’t just letting the bank hold it on your behalf. You are lending the bank that money and the bank is borrowing it.
That’s why deposits show as a liability on the bank’s balance sheet.
We think of banks as lenders, and they are, but they’re also borrowers. They make money by lending at higher rates than they pay as borrowers, and by leveraging their deposits via fractional reserves.
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Monday, November 04, 2019
The Fed’s Policy Is Like Swatting Flies with Nuclear Weapons / Interest-Rates / US Interest Rates
By: John_Mauldin
The Federal Open Market Committee had an unscheduled meeting on October 4. That happens occasionally and they often don’t reveal it occurred until the next regular meeting. That would mean Oct. 30, in this case.
But for some reason (and you can bet they had a reason) they decided to announce this one on Oct. 11.
In between, Fed Chair Jerome Powell said in an Oct. 8 speech that the Fed would soon start growing its balance sheet again.
Saturday, November 02, 2019
Fed’s Own Forecasts Again Dead Wrong as QE4 Accelerates / Interest-Rates / Quantitative Easing
By: MoneyMetals
Precious metals markets enter November’s trading with bulls eying a potential year-end rally.
Gold and silver prices did manage to post gains on Wednesday and Thursday after the Federal Reserve announced a quarter point rate cut. But the Fed followed up its move with language suggesting interest rate policy is now on pause.
News Anchor #1: The Federal Reserve cut the benchmark rate by a quarter of a percentage point. It's now at 1.5% to 1.75%. The rate cuts come on a global slowdown; they say. Also muted inflation. Now the Fed does signal in this statement a pause for future rate cuts. The Federal Reserve statement changes the words from “act as appropriate” to “assess.”
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