Analysis Topic: Interest Rates and the Bond Market
The analysis published under this topic are as follows.
Wednesday, January 29, 2014
Continuing Low Interest Rates Environment for Long term U.S. Treasury Bonds / Interest-Rates / US Bonds
By: John_Mauldin
Last week Greg Weldon made the case for rising interest rates on US treasuries. This week Lacy Hunt offers us the case for a continued low-interest-rate environment for long-term treasuries. This is one of the most fascinating tugs-of-war in the investment world today. I’ve made the argument that we are in a deflationary deleveraging world for quite some time to come, or at least until the velocity of money turns around. Lacy makes that point, too, and offers some insights into the velocity of money. This is a fascinating Outside the Box, and I won’t spoil it by stealing any more of Lacy’s thunder.
Sunday, January 26, 2014
TNX Chart: Specter of Rising U.S. Interest Rates / Interest-Rates / US Interest Rates
By: Jim_Willie_CB
We are at the doorstep of a major USTreasury Bond breakdown. The TNX (10-year bond yield) is at the 3.0% doorstep, as 3.5% looms very likely in the coming months. A horrible threat of a 3.7% target is presented in the chart. A rising trend is seen in many characteristics that cannot be easily dimissed. The following graphic is an extremely powerful chart, thus the center piece of the article. If and when the breakout comes, it will make the Taper Talk backfire seem rather insignificant, as a gathering storm will hit like a financial hurricane on every continent. The Jackass is on record with a forecast of 3.5%, which remains in place. One must be patient to watch it unfold, since it can take months to unfold and to manifest itself. That is far more time than the nitwits who are quick to label it a wrong forecast call. But then again they are are loud unimpressive dullards who litter the audience, taking up valuable space.
Thursday, January 23, 2014
Could A Compound Debt Interest Rate Payments Wildfire Threaten US Solvency? / Interest-Rates / US Interest Rates
By: Dan_Amerman
For the first time since the end of World War II, the total US federal debt now equals 100% of the size the US economy. But while that is obviously a situation of great concern, it may not be the worst of the danger.
Instead, the greatest debt-related threat to the solvency of the United States government and the value of the dollar could be the fact that the US isn't actually making any net principal or interest payments on its debt.
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Tuesday, January 21, 2014
The Rock ‘em Sock ‘em Fed Comes Out Swinging / Interest-Rates / US Federal Reserve Bank
By: Money_Morning
Shah Gilani writes: Last Tuesday, January 14, 2014, the Federal Reserve finally had enough.
After supposedly looking into big banks ownership of commodity-related infrastructure operations (like warehouses, oil barges, and utilities) for the last two years, which came on the heels of their 2003 review of the same issues, the rock ‘em sock ‘em Fed came out swinging.
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Friday, January 17, 2014
U.S. Bonds and MBS Buying Program in Reversal? / Interest-Rates / Quantitative Easing
By: Matt_Machaj
After the announced “tapering” all the doubts were centered around the question, how big the “tapering” is. All trails lead us to speculation about how the so-called backing out could influence the market in the long run. First let us illustrate all the different versions of Quantitative and Qualitative Easings (episode 1, episode 2, episode 3…) that happened since 2009. Here is a graph that you’re already familiar with, depicting an immense growth in the balance sheet of the Federal Reserve since 2009. Contrary to graphs presented previously in the Market Overview, which summed up government securities and mortgage backed securities bought by the Federal Reserve and presented them in total:
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Thursday, January 16, 2014
Why We Can Not Buy Our Way Out Of Debt / Interest-Rates / US Debt
By: Raul_I_Meijer
Last week, there was a discussion in our comments section about the financial “crunch”, the big kahuna, and how it still has not happened despite our insisting it is inevitable, with people saying things like: ‘but the stock markets are way up!’, and ‘in my area home prices are up 30%’. As much as I understand the sentiments, at the same time I don’t really. Certainly for people who read The Automatic Earth, I would have thought it would be clearer what is going on “out there”. I have certainly written more articles than I care to remember about what goes on. Debt is what goes on.
Wednesday, January 15, 2014
Federal Reserve Overstepped Bounds with Monetary Policy - Seems like a Bubble / Interest-Rates / US Federal Reserve Bank
By: EconMatters
Checks & Balances
If you think about it the President has checks and balances, the Supreme Court has checks and balances, and even the two houses of Congress have checks and balances. However as we have seen with the last 5 years of Fed policy that there is no actual checks and balances for what the Federal Reserve can and cannot do with regard to monetary policy, and there should be.
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Wednesday, January 15, 2014
Where the Fed Went Wrong When It Decided to Taper QE / Interest-Rates / Quantitative Easing
By: DailyGainsLetter
John Paul Whitefoot writes: The merriment, mirth, and cheer on Wall Street over the holiday season may have been a bit premature; in fact, the optimism about the U.S. economy that ushered in the New Year may have already come to a screeching halt.
In mid-December, the Federal Reserve surprised investors when it announced it was going to start tapering it’s generous $85.0-billion-per-month easy money policy in January to just $75.0 billion per month. The pullback was a surprise, because the Federal Reserve initially hinted it wouldn’t ease its monetary policy until the U.S. unemployment rate fell to 6.5% and inflation rose to 2.5%. At the time of the announcement, U.S. unemployment stood at seven percent and inflation was hovering around historic lows below one percent.
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Sunday, January 05, 2014
Fed Admits It's Clueless How QE Actually Works / Interest-Rates / Quantitative Easing
By: Mike_Shedlock
Inquiring minds are investigating three articles from today, stating opinions of three different Fed governors.
Thursday, January 02, 2014
Behind the Fed’s Magical Curtain: The US Monetary Base and the Impact of Excess Reserves / Interest-Rates / US Federal Reserve Bank
By: Submissions
Kim Collard writes: The Federal Reserves actions since the Global Financial Crisis have been watched and analysed more than at any other time in history. This makes pretty good sense, as its actions have obviously had a profound impact on these markets.
However, I believe all the many and varied analyses of these actions have fallen into a carefully laid perception trap.
Tuesday, December 31, 2013
Quantifornication - Did Bernanke Get It Right? / Interest-Rates / Quantitative Easing
By: Richard_Mills
The Federal Reserve thinks recent economic news from the U.S. is good:
- Jobs are being created
- Consumers are spending money
- Trade & manufacturing growth is strong
So on Dec. 18th 2013, they announced a decelerating QE III environment.
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Tuesday, December 31, 2013
QE Tapering Lessons for 2014 / Interest-Rates / Quantitative Easing
By: Matt_Machaj
In the last Market Overviews (and also to a considerable extent in the last several Premium Updates) we have discussed in detail differences between tapering and tightening. As we have stated, a personal change of the Fed's chairman will not change the essence of its policy. Now we hear that some form of tapering will indeed happen. Despite this we have three varied tools to consider about some forms of backing out from its expansive policies:
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Sunday, December 29, 2013
The QE Taper and the China Power Struggle Credit Squeeze / Interest-Rates / Credit Crisis 2014
By: Raul_I_Meijer
There is a crisis a-brewing in China that evolves around interest rates, with interbank rates as, let’s say, the initial center piece. The underlying cause of the crisis is that both official banks and the shadow banking system seek to escape the restrictions placed on the financial system by the government and the central People’s Bank of China (PBoC), who in essence want to set all interest rates and all policies. At the very moment the regulators recently decided to let markets set some interest rates, a move intended to cool things down, money market rates went up so fast that more action by the PBoC, after an initial refusal, was deemed necessary.
Saturday, December 28, 2013
U.S. Treasury Bond Yields Creeping Higher / Interest-Rates / US Interest Rates
By: PhilStockWorld
Courtesy of Doug Short: What’s New: The 10-year note closed the week at 3.02%, up 17 bps since the close before the latest FOMC minutes were released and the highest since July 25, 2011. The interim closing low was 1.43%, exactly one year later on July 25, 2012.
The latest Freddie Mac Weekly Primary Mortgage Market Survey, released yesterday, puts the 30-year fixed at 4.48%, 117 bps above its all-time low of 3.31% in late November of last year and 10 bps below its interim high reported on August 22nd.
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Friday, December 27, 2013
Why the Fed Will likely NOT Taper QE 2014 Despite December Statement / Interest-Rates / Quantitative Easing
By: Submissions
Georgi Ivanov writes: A largely unnoticed message from the Chinese Central Bank in late November has raised questions about the upcoming tapering of the Federal Reserve’s quantitative easing (QE) initiative, which would mean an end to the monthly $85 billion of fresh money that enter the American monetary system. Signals about the end of the Fed’s stimulus package began in 2012, and were supposed to end in the fall of this year. However, the Bernanke and co unexpectedly announced that the policy shifted gears and QE is now supposed by the middle of 2014.
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Tuesday, December 24, 2013
Ben Bernanke's Spoonful of Sugar / Interest-Rates / Quantitative Easing
By: Peter_Schiff
The press has framed Ben Bernanke's valedictory press conference last week in heroic terms. It's as if a veteran quarterback engineered a stunning come-from-behind drive in his final game, and graciously bowed out of the game with the ball sitting on the opponent's one-yard line. In reality, Bernanke has merely completed a five-yard pass from his own end zone, and has left Janet Yellen to come off the bench down by three touchdowns, with no credible deep threats, and very little time left on the clock.
The praise heaped on Bernanke's swan song stems from the Fed's success in initiating the long-anticipated (and highly feared) tapering campaign without sparking widespread anxiety. So deftly did the outgoing chairman thread the needle that the market actually powered to fresh all-time highs on the news.
Monday, December 23, 2013
QE Tapering vs. Tightening Issue Continued / Interest-Rates / Quantitative Easing
By: Matt_Machaj
Last week all (investors') eyes were on the Fed, and the Fed delivered. A small (if you can call $10 billion "small", but it is on a relative basis) form of tapering of the Quantitative Easing program was announced and markets reacted to it. It turned out that our assumptions about investors' expectations were correct - they were expecting to see no tapering and they were surprised by it.
As mentioned previously, even though tapering and tightening are often viewed as synonyms, they are exactly the same thing. Let's discuss this more thoroughly.
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Monday, December 23, 2013
Small Pullback in Money Printing = Big Spike in Interest Rates? / Interest-Rates / US Interest Rates
By: Profit_Confidential
Michael Lombardi writes:
Quietly, without much fanfare or news, the bellwether 10-year U.S. Treasury hit a yield of 2.9% this past Friday—double what it yielded in June of 2012. (Source: Treasury.gov, last accessed December 20, 2013.)
Yes, the Federal Reserve only slightly pulled back on its money printing program and interest rates are already spiking.
Monday, December 23, 2013
The Ben Bernanke Economic and U.S. Debt Balance Sheet / Interest-Rates / US Debt
By: Raul_I_Meijer
Ben Bernanke announced a cut in QE by $10 billion a month this week, the financial press can’t stop talking about it and – what they call – “analyzing” it, and I still, after 8 years of Ben in the chair don’t know what puzzles me most: the quantity of attention paid to all things Bernanke, or the quality of it. I mean, I know why the press do it, but I have trouble understanding why they can’t constrain themselves.
If a financial system is as dependent on public money injections as today’s one, there is a very real risk that this market has in fact stopped functioning, and that what we’re watching are zombified movements that can continue only thanks to those money injections, which are in their manipulative character, frankly, more reminiscent of what one would expect to see in communist nations than anything else.
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Saturday, December 21, 2013
The Fed Will Still Provide Massive QE in 2014 - But / Interest-Rates / Quantitative Easing
By: Sy_Harding
The Federal Reserve announced this week that it will provide $75 billion of quantitative easing (QE) in January, a massive amount, and will provide large though diminishing amounts of additional stimulus for months thereafter.
Yes, that is what it said, even though the headline news was that it will begin tapering back QE in January, by providing $75 billion rather than the $85 billion it has been providing monthly this year. If it continues to taper at the same pace it will provide an additional $65 billion of stimulus in February, $55 billion in March, and so on.
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