Analysis Topic: Interest Rates and the Bond Market
The analysis published under this topic are as follows.
Sunday, June 17, 2012
U.S. Government Debt Goes From Frying Pan to Fire / Interest-Rates / US Debt
By: Andy_Sutton
This morning, the Treasury Department almost gleefully and proudly announced that foreign holdings of US Debt had hit a record high during the month of April and that bond heavyweight China had upped its holdings after trimming for two straight months. This dovetails nicely with a story that was published earlier this week about the federal reserve and its own holdings of US Debt, which have increased over 450% in the past three years. And no, that is not a typo. The federal reserve now holds over $1.6 Trillion in USGovt debt. Obviously the establishment is thrilled with these developments because it helps maintain the status quo of the dollar standard era. However, there are some serious ramifications that few are paying attention to and are getting almost zero coverage from traditional media outlets. From the AP this morning:
Friday, June 15, 2012
Bank of England Panic's, Funnels £140 Billion to Bankrupt Banks Ahead of Eurogeddon / Interest-Rates / Global Debt Crisis 2012
By: Nadeem_Walayat
Banking stocks soared today on news that the George Osbourne and Mervyn King policy for the Bank of England to give cheap money to the banks to enable them to provide credit to the wider economy. Off course the reason offered is just smoke and mirrors propaganda, the real reason why the Bank of England is yet again stuffing every orifice of the UK Banks with tax payer cash (where ultimate liability lies) is ahead of the high risk of Eurogeddon on Monday following outcome of Sundays Greek election.
Friday, June 15, 2012
Anti-Fragile Banking / Interest-Rates / Global Financial System
By: William_Bancroft
We’ve been big fans of the author and academic, Nasim Nicholas Taleb, for some time. We have enjoyed his best-selling book, ‘The Black Swan’, his media appearances and have used his work to find other interesting works by the likes of Benoit Mandelbrot.
A central theme in Taleb’s writing is that systems should be built not just to withstand 99% of scenarios, but all scenarios. A bit like saying we should build a house that stands for 365 days a year, not one that stands for 364 days only to be toppled by the perfect storm.
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Friday, June 15, 2012
U.S. Bond Market, The Greatest Hoax Ever Perpetrated on Mankind / Interest-Rates / US Bonds
By: Rob_Kirby
A few years ago, when J.P. Morgan grew their derivatives book by 12 Trillion in one quarter [Q3/07] – I did some back of the napkin math – and figured out how many 5 and 10 year bonds the Morgue would have necessarily had to transact on their swaps alone – if they are hedged. The bonds required to hedge the growth in Morgan’s Swap book were 1.4 billion more in one day than what was mathematically available to the entire domestic bond market for a whole quarter?
Thursday, June 14, 2012
How to Protect yourself from Spailout Euro Collapse / Interest-Rates / Eurozone Debt Crisis
By: Money_Morning
Keith Fitz-Gerald writes:
It's unlikely the euro will survive what I'm calling the Spailout... meaning, the bailout of Spain, and the contagion to Italy, etc. Believe me, you're going to be seeing and hearing this non-stop in the media for quite some time. And fear will be running rampant as a result.
I'm going to explain everything about the Spanish situation in a moment - probably more than most people care to know - but first, let me share something with you that's worth your attention.
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Wednesday, June 13, 2012
Spain Bank Bailout isn’t Euro-zone Debt Crisis Solution / Interest-Rates / Eurozone Debt Crisis
By: Michael_Pento
It was announced this weekend that Spain will receive $125 billion (100 billion Euros) to recapitalize their banking system. The money for the bailout will be channeled through the Fund for Orderly Bank Restructuring (FROB), whose funds count towards public debt.Read full article... Read full article...
Wednesday, June 13, 2012
Why the Spain Bailout Package Won't Work / Interest-Rates / Eurozone Debt Crisis
By: Money_Morning
Diane Alter writes:
The pricey Spain bailout package convinced markets it could fix the Eurozone debt crisis for only a moment Monday, before reality set in that the plan was far from ideal.
Following the announcement of a $126 billion (100 billion euro) bank rescue package, markets rose briefly. But the relief was short-lived as investors hastily refocused and remembered that the struggling Eurozone still faces a number of key obstacles.
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Tuesday, June 12, 2012
Spain €100 billion Bank Bailout Necessary But Not Sufficient, Italy Federalism, Debt Traps and Competition / Interest-Rates / Eurozone Debt Crisis
By: John_Mauldin
We woke up this weekend to a €100 billion "rescue" of Spanish banks, and the initial reaction of the market was relief. But did we not just see this movie, but with Greek subtitles rather than Spanish? Was this another of those "necessary but not sufficient" plot lines that Europe is so good at? Kick the can down the road and hope for a happy ending?
Pardon my skepticism, but I see numerous problems. In the first place, €100 billion will not be enough. While the current estimates are closer to €40 billion (if you ask the Spaniards), JP Morgan estimates it will be more like €350 billion. Others estimate more or less, but €100 billion is decidedly optimistic. Even the Spanish authorities are acknowledging that there is another 35% downside for the housing market, which is the main source of the losses. It appears that has NOT been included in the guesstimates.
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Tuesday, June 12, 2012
Keep Debt Crisis Eyes on Italy and India / Interest-Rates / Global Debt Crisis 2012
By: Ashvin_Pandurangi
When we talk about economies that are looking horrendous these days, it is important to remember that there are other economies out there looking just as bad or worse, either right now or in the near future. The reason is because the global economy is so damn inter-connected that no large national economy can sustain any modicum of growth on its own. This fact is obviously the most apparent in a region such as the Eurozone, which forms a common market and shares a common currency.
Monday, June 11, 2012
Student Loans and the Redistribution Of Wealth / Interest-Rates / Student Finances
By: Dan_Amerman
With more than $1 trillion outstanding and growing at a rate of over $100 billion a year, student loans have leaped past the credit card and auto loan markets in size. The students will not be the only ones paying, however, for the exploding volume of student loans may contribute to a reduction in the future standard of living for tens of millions of retirees and retirement investors.
On a fundamental level, the student loan crisis is about two major redistributions of wealth - one of which is occurring now, with the other taking place over the decades to come. And each redistribution of wealth could not occur in a free market, but is dependent upon federal government intervention.
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Monday, June 11, 2012
Spain and The Runaway Euro Bailout Train / Interest-Rates / Credit Crisis Bailouts
By: EconMatters
Spain finally bowed to the rising interest rates and the billions of euros worth of bad loans at Spain's regional governments to ask for a loan. After emergency talks between Euro Zone finance ministers on Saturday, Spain will get up to $125 billion from the European Union (EU) to bail out out its banking system.
Sunday, June 10, 2012
Top Ten Questions To Ask About Spain's Bailout / Interest-Rates / Spain
By: DK_Matai
1. Recapitalisation of Banks: Will the commissioned bank auditors and global markets conclude that €100bn is enough to recapitalise Spanish banks?
2. Access to Sovereign Debt Markets: Will Spain continue to have access to markets to be able to sell its government bonds post its first banking bailout?
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Sunday, June 10, 2012
Spain No Such Thing as Bailout Lite, €30 Billion Needed? Now €100 Billion; Contagion of Economic Idiocy / Interest-Rates / Eurozone Debt Crisis
By: Mike_Shedlock
A few days ago Spain was purportedly going to need another €30 billion to €70 billion to recapitalize Spanish banks. I suggested the amount would be at least triple that and it did not take long to do so.
Yahoo! Finance reports Spanish bailout could reach 100 billion euros
Read full article... Read full article...A bailout for Spain's teetering banks, once requested by Madrid, could amount to as much as 100 billion euros, two senior EU sources told Reuters on Saturday.
Sunday, June 10, 2012
Greece is A Dysfunctional Nation, A Quadrillion Here, A Quadrillion There / Interest-Rates / Eurozone Debt Crisis
By: John_Mauldin
dysfunctional [dɪsˈfʌŋkʃənəl] adj
1. (Medicine) Med (of an organ or part) not functioning normally
2. (especially of a family) characterized by a breakdown of normal or beneficial relationships between members of the group
European leaders launched the euro project in the last century as an experiment to see whether political hope could become economic reality. What they have done is create one of the most dysfunctional economic systems in history. And the distortions inherent in that system are now playing out in an increasingly dysfunctional social order. Today we look at some rather disturbing recent events and wonder about the actual costs of that experiment. What type of "therapy" will be needed to treat the dysfunctional family that Europe has become? And maybe I'll throw in a "fun" item to finish with, so let's get started.
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Sunday, June 10, 2012
The Bond Market Boom / Interest-Rates / US Bonds
By: Fred_Sheehan
Upon turning to this page, the speaker noted the 5-year returns show "an absolute flooding of the market and system with capital by central banks [QE, ESFS, LTRO...]. This has been an incredibly distortionary period." (The quotation is from notes, so is not exact.)
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Friday, June 08, 2012
Bankruptia Spain To Seek Imminent German Bailout to Limit Greece Election Contagion / Interest-Rates / Eurozone Debt Crisis
By: Nadeem_Walayat
Reuters has let the cat out of the bag Friday concerning secret panic driven talks concerning an imminent bailout of Spain's bankrupt banks, possibly as early as Saturday afternoon. Which follows fast on the heels of the credit ratings agency Fitch downgrading of Spanish Government bonds to just above junk status less than 2 weeks away from the contagion inducing Greek elections. All of which were contributing to what amounts to a state of Financial Armageddon in progress as a chain reaction of detonations takes place across the Euro-zone.
Friday, June 08, 2012
Financial Collapse At Hand: When is "Sooner or Later"? / Interest-Rates / Eurozone Debt Crisis
By: Paul_Craig_Roberts
Ever since the beginning of the financial crisis and Quantitative Easing, the question has been before us: How can the Federal Reserve maintain zero interest rates for banks and negative real interest rates for savers and bond holders when the US government is adding $1.5 trillion to the national debt every year via its budget deficits? Not long ago the Fed announced that it was going to continue this policy for another 2 or 3 years. Indeed, the Fed is locked into the policy. Without the artificially low interest rates, the debt service on the national debt would be so large that it would raise questions about the US Treasury’s credit rating and the viability of the dollar, and the trillions of dollars in Interest Rate Swaps and other derivatives would come unglued.
Thursday, June 07, 2012
Will the Fed Provide New Financial Accommodation Soon? / Interest-Rates / US Interest Rates
By: Asha_Bangalore
The economic scene has changed in many ways since the April 24-25 FOMC meeting. Labor market data for May have been disappointing with a paltry 69,000 increase in payrolls and an 8.2% unemployment rate in May. Auto sales slowed slightly to an annual rate of 13.8 million units during May from a 14.4 million sales pace in April, real GDP eked out only a 1.9% increase in first quarter, and the financial crisis of the eurozone presents a significant downside risk not only to the US but also to the entire global economy. Market participants will be watching closely Chairman Bernanke’s testimony tomorrow at the Joint Economic Committee and Vice-Chair Janet Yellen’s remarks tonight.
Thursday, June 07, 2012
U.S. Treasury Bond Markets Black Hole Dynamics / Interest-Rates / US Bonds
By: Jim_Willie_CB
Man-made financial phenomena imitate nature, but more importantly they are subject to the powerful laws of economic nature. The Wall Street financial engineers have built vast structures, which tragically are crumbling and soon will fall to the ground. Vast illusory wealth will be lost, never truly garnered. The fiat currency system has required tremendous efforts not only to build the financial skyscrapers ever higher each year, but also to provide support structures that prevent their topple. With the aid of the subservient press, an illusion of wealth, prosperity, and stability has been fashioned and defended. It is all being blown away by the powerful storms known as the global financial crisis. The term has even earned an acronym for the popular lexicon GFC. My alternative view is that the global monetary war is in full swing, World War III with the USDollar at the epicenter of the conflict and pecuniary violence. A few years ago in June 2005, the Jackass penned an obscure article entitled "Financial Market Physics" just for amusement. Thanks to Vronsky and his intrepid work, the Gold-Eagle archive still lives (for old article CLICK HERE). In it was described momentum, pendulums, traction, leverage, resistance, support, inertia, coiled springs, meltdowns, high versus low pressure differentials, flow dynamics, imbalances, and the infamous black hole. The final concept is of extreme relevance today.
Thursday, June 07, 2012
Playing QE III Game of Chicken / Interest-Rates / Quantitative Easing
By: Michael_Pento
Most investors and market pundits continue to misdiagnose the reason behind the worldwide economic malaise. The underlying problem isn't "uncertainty" or any other platitudes Wall Street and politicians like to offer. The truth is that massive sovereign debt defaults (if central banks allow them to be written down honestly) are very deflationary in nature.
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