Analysis Topic: Interest Rates and the Bond Market
The analysis published under this topic are as follows.
Monday, June 01, 2020
M2 Velocity Collapses – Could A Bottom In Capital Velocity Be Setting Up? / Interest-Rates / Money Supply
By: Chris_Vermeulen
M2 Velocity is the measurement of capital circulating within the economy. The faster capital circulates within the economy, the more that capital is being deployed within the economy to create output and opportunities for economic growth. When M2 Velocity contracts, capital is being deployed in investments or assets that prevent that capital from further circulation within the economy – thus preventing further output and opportunity growth features.
The decline in M2 Velocity over the past 10+ years has been dramatic and consistent with the dramatic new zero US Federal Reserve interest rates initiated since just after the 2008 credit crisis market collapse. It appears to our researchers that these extended periods of zero interest rates deflate the capability of money circulating throughout the economy and engaging in real growth opportunities for investment and capital inflation.
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Thursday, May 21, 2020
Another Bank Bailout Under Cover of a Virus / Interest-Rates / Banksters
By: Ellen_Brown
Insolvent Wall Street banks have been quietly bailed out again. Banks made risk-free by the government should be public utilities.
When the Dodd Frank Act was passed in 2010, President Obama triumphantly declared, “No more bailouts!” But what the Act actually said was that the next time the banks failed, they would be subject to “bail ins”—the funds of their creditors, including their large depositors, would be tapped to cover their bad loans.
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Monday, April 20, 2020
Federal Reserve Funds 165% Of Record Pandemic Deficit Spending Through Monetary Creation / Interest-Rates / Quantitative Easing
By: Dan_Amerman
Two extraordinary and unprecedented actions are being taken in the attempt to contain the economic damage from the national shutdown, and thereby attempt to prevent a depression. Each are on a scale we have never seen before, and each are almost certain to be very long lasting.
Even if the actions are "successful" - a depression is prevented and a severe recession is shortened - these radical actions occurring over a matter of months and years are not only likely to dominate our investments, savings and retirements throughout the rest of the 2020s, but they are likely to still be changing our lives decades from now, long after the COVID-19 pandemic has been forgotten by most.
Between the economic damage to the nation, the lost earnings and careers for individuals, and the costs of the containment of that damage, the shutdowns being used to "flatten the curve" are likely to be the single most expensive event in U.S. history. How the expenses of attempted containment are funded - will change everything, and the effects will stay with us for the rest of our lives.
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Saturday, April 11, 2020
Federal Reserve Notes Are Now “Backed” by Junk Bonds / Interest-Rates / US Bonds
By: MoneyMetals
Wild price action and unprecedented interventions once again characterized this holiday-shortened trading week.
Oil prices whipsawed lower Thursday on concerns about expected oil production cuts from Russia and Saudi Arabia. But the general trend for most other assets, including metals and equities, was up – way up.
Stocks finished out the week with the major averages posting their biggest weekly gains in decades in the space of just four trading days. Investors went on a buying spree based on hopes that we will soon see a definitive peak in coronavirus cases and begin the process of restarting the economy.
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Sunday, April 05, 2020
US Federal Budget Deficits: To $30 Trillion and Beyond / Interest-Rates / US Debt
By: John_Mauldin
In my decade forecast, I projected that in the next recession that the deficit would climb to over $2 trillion. Clearly, that demonstrates I am an optimist. Here’s a chart I shared back in January.
Between reduced tax revenues and increased spending, I now expect this year’s deficit will be at least $4 trillion.
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Sunday, April 05, 2020
The Lucrative Profitability Of A Move To Negative Interest Rates - Pandemic Edition / Interest-Rates / Negative Interest Rates
By: Dan_Amerman
When it comes to the recession that is being created by the pandemic lockdowns - then the U.S. government and Federal Reserve have no intention of just letting the market forces play out. Instead, the intention is to contain a potential deeper round of crisis with the most extreme interventions yet. One very real possibility is for the Fed to follow the European Central Bank and the Bank of Japan, and to spend trillions of dollars to buy government (and corporate) debt while creating negative interest rates.
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Saturday, March 07, 2020
Think the Fed's Emergency Interest Rate Cut is Proactive? Think Again / Interest-Rates / US Interest Rates
By: EWI
You might think that the Fed's recent, unscheduled 50 basis-point cut in the federal funds rate is a proactive move that places the central bank at the vanguard of revolutionary uses of monetary policy. But that could hardly be further from the truth.
For decades at Elliott Wave International, we've observed that the Fed simply follows the yield on short-term government debt. We say that "the Fed follows the market" because the freely traded bond market determines the yield on government debt. The yield on short-term U.S. Treasuries started falling in earnest in February, and in March the Fed aligned its target rate with the trend of the market. There's nothing radical or revolutionary about it. The Fed merely followed the market yet again. This chart shows the recent history.
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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?