Analysis Topic: Interest Rates and the Bond Market
The analysis published under this topic are as follows.
Sunday, September 11, 2011
QE3 and Toxic Assets: The Fed's "Monetary Ammunition" / Interest-Rates / Quantitative Easing
By: Bob_Chapman
Many people believe the Jackson Hole was a non-event, a failure and it was. QE 3 was not announced, as we predicted. We believe that was being saved for mid-September when the $300 billion rollover in Treasury securities is completed. Mr. Bernanke has failed in a number of respects, the most glaring being zero interest rates for 2-years and no housing recovery.
Read full article... Read full article...
Saturday, September 10, 2011
Fed 'Twisting' Will Stimulate Economic Activity for Bond Market Traders / Interest-Rates / US Bonds
By: Paul_L_Kasriel
The consensus view is that after adjourning from its September 20-21 meeting the FOMC will announce a plan to lengthen the maturity structure of its securities portfolio by increasing the proportion of longer-maturity securities in the portfolio. Importantly, the size of the overall securities portfolio is likely to be held constant. Thus, shorter-maturity securities will be sold and/or allowed to run-off and be replaced with a like dollar amount of longer-maturity securities. Presumably, the intended purpose of these securities transactions is to push down yields on longer-maturity securities. The FOMC most likely would prefer that the yields on shorter-term securities remain at their current very low level, but would not be terribly disturbed if these yields drifted up a bit as more of these shorter-maturity securities were dumped into the market from the Fed's portfolio. The presumed purpose of this "twisting" of the shape of the yield curve is to stimulate the demand for longer-lived real assets such as houses, durable consumer goods, business capital equipment and nonresidential real estate by lowering the interest rates on longer-term fixed rate loans and securities.
Friday, September 09, 2011
Germany Prepares for Eurozone Debt Default, ECB Resignation Hammers Stocks / Interest-Rates / Global Debt Crisis
By: Mike_Shedlock
Once again news from Europe resonates in the markets. The 2-day stock rally led by the German court ruling has been nearly wiped out.
Friday, September 09, 2011
European Debt Crisis Worse than 2008 / Interest-Rates / Credit Crisis 2011
By: Dr_Jeff_Lewis
While the US markets were closed on Monday in observance of Labor Day, it became grossly apparent that the European debt crisis would be far worse than the American financial crisis of 2008.
Astute investors will notice something vastly different from the European implosion. Whereas fixed-income securities, primarily US Treasuries, became more attractive to investors as the equity markets tanked in 2008 and 2009, the same isn’t happening in Europe.
Read full article... Read full article...
Thursday, September 08, 2011
PIMCO's Gross: QE1 and QE2 'Destroyed' Credit Creation / Interest-Rates / Credit Crisis 2011
By: Bloomberg
Bill Gross of PIMCO appeared on Bloomberg Television's "Surveillance Midday" with Tom Keene this afternoon to discuss the impact of the Fed's asset purchases and the outlook for market reaction to tonight's speech by President Obama.
Gross said that QE by the Fed "destroyed" credit creation, that he'd like to "see something bold" from Obama and that the markets will be "disappointed" if stimulus is below $300 billion.
Read full article... Read full article...
Wednesday, September 07, 2011
Awaiting Panic Low in U.S. Tresury Bond Yield / Interest-Rates / US Interest Rates
By: Mike_Paulenoff
Remarkably, 10-year yield has declined beneath its December 2008 "crisis" low of 2.04% to a new "generational low" of 1.94% so far, as global money continues to flow into U.S. Treasury paper (despite its suspect rating downgrade in August).
Purely from a technical perspective, all eyes now are on the behavior of weekly RSI (momentum), which so far has NOT confirmed recent yield weakness from 2.30% and which we should consider a potential warning signal that 10-year yield is in its price capitulation phase.
Read full article... Read full article...
Tuesday, September 06, 2011
Will Governments and Central Bankers Bail Out Bondholders and Banks Again? / Interest-Rates / Global Debt Crisis
By: Mike_Shedlock
As noted previously, it is crystal clear to everyone but bankers and brain-dead analysts that banks need to be recapitalized, in Europe and the US as well.
The crucial question is "how?".
Tuesday, September 06, 2011
Markets Have Lost Confidence in Italy / Interest-Rates / Global Debt Crisis
By: Mike_Shedlock
The warnings are flying today so let's take a look at a few of them, including a couple of my own.
Trichet Warns Heads of States
Tuesday, September 06, 2011
Many Banks Will Not Survive if Forced to Value Sovereign Debt at Market Prices / Interest-Rates / Credit Crisis 2011
By: Mike_Shedlock
Josef Ackermann, CEO of Deutsche Bank admitted the obvious today with statements recognizing that many organizations will fail at mark-to-market pricing. To show you the Fantasyland world these bankers live in, Ackermann also believes European banks are now much better capitalized and less dependent on short-term financing.
Monday, September 05, 2011
Falling Interest Rates and the Fallacy of Monetary Deflation at the Zero Bound / Interest-Rates / US Interest Rates
By: Jesse
Liquidity Trap, Straight Up, with a Twist
I think we are all familiar with the recently popular viewpoint that as the financial economy crashed, what people called 'money destruction' would follow. Well actually the destruction of credit which some considered the same as money, as money itself. There were many detailed and complex thought experiments to explain why this must happen, involving monetary theories.
Tuesday, August 30, 2011
Central Bankers' Next Panic Move / Interest-Rates / Central Banks
By: Money_Morning
Sean Hyman writes:
It may seem like panic in the stock markets just started this month, but the truth is governments and central bankers have been in "panic mode" since March. We just didn't see it in the markets until a few weeks ago. But if you look back, you can tell central bankers were panicking because they kept intervening to manipulate their stock or currency markets. Here's a quick play-by-play of those panic attacks and the real messages behind them:
Tuesday, August 30, 2011
U.S. Treasury Market Calling Bernanke's Bluff / Interest-Rates / US Bonds
By: Tony_Pallotta
The repurchase agreement or "repo" market is where primary dealers finance their inventory of US Treasuries, where companies find short term financing and where money market funds invest much of their capital. With daily "repo" transactions estimated at $2-4 trillion USD it is truly amazing how few understand the grease that keeps the US economy functioning.
Monday, August 29, 2011
How to Protect and Profit From U.s. Treasury Bond Market Crash / Interest-Rates / US Bonds
By: Money_Morning
Martin Hutchinson writes:
By now, you've probably taken note of the growing bubble in Treasury bonds.
The yield on the 10-year Treasury bond fell below 2% for the first time in 50 years in the wake of the U.S. credit rating downgrade.
Read full article... Read full article...
Monday, August 29, 2011
PIMCO Missed the Trade of the Year in the U.S. Treasury Bond Market / Interest-Rates / US Bonds
By: EconMatters
PIMCO who specializes in Bonds, having the largest bond fund in the world could not have been more wrong about an asset class, which is surprising considering their experience in this sector. Bill Gross`s official declaration that his firm was shorting the US Treasury Market on April 11th of this year to the day marked the literal double bottom in price/high in yield for the year, and it has been one heck of a one-way trade in the opposite direction ever since.
Monday, August 29, 2011
What happens when the U.S. Bond Market Loses its Patience? / Interest-Rates / US Bonds
By: Aftab_Singh
The concomitant surges in the dollar prices of gold and the US treasury note seem to have got many market participants scratching their heads. For isn’t gold an ‘inflation asset’ and the treasury note a ‘deflation asset’? Aren’t they supposed to be antagonistic to one another? We square this price action by noting that the means of the currency skeptic are distinctly peculiar in this post-Bretton Woods experiment — it matters that the Federal Reserve note is by and large ‘backed’ by US government securities and gold. That being said, our hunch is that this price action is a relatively temporary phenomenon; for whereas gold remains intact regardless of an increasingly precarious stock of irredeemable claims upon it, US government securities do not. We believe that the current tolerance of the US bond market should be regarded as the last gift from above. Here I outline why a world with an intolerant bond market might not be that pleasant.
Sunday, August 28, 2011
China's Debt Problems Rival the West / Interest-Rates / China Economy
By: Justice_Litle
Though the focus has been on the U.S. and Europe, China too has debt problems to contend with.
"If you look at the accounting, I don't see how anyone could put a penny there."
Read full article... Read full article...
Friday, August 26, 2011
Has the Fed Already Started QE3? / Interest-Rates / Quantitative Easing
By: Casey_Research
Bud Conrad, Casey Research Writes: The Fed surprised the market by extending its policy of 0 to 0.25% Fed funds rate to mid-2013. The way the Fed manages to drive rates lower is to buy Treasuries with newly created money – driving the price up and the rates down. The big question is whether the policy will have a sizeable effect on markets. The chart below shows the historical jump in the Fed’s combined policy tools that were used to lower rates and bail out financial institutions through a variety of programs. These include the big purchase of mortgage-backed securities (MBS) called QE1 and the large purchase of Treasuries called QE2.
Read full article... Read full article...
Friday, August 26, 2011
Bernanke's Invisible Bazooka Ploy / Interest-Rates / US Interest Rates
By: Mike_Shedlock
Bernanke is out of tools that make any sense even to him.
Seriously, what can he do he has not already done? Given that $1.6 trillion in excess reserves did not do a damn thing to spur lending or job creation, what possible good can another $1 trillion do?
Friday, August 19, 2011
U.S. Treasury 10 Year Bonds Bubble At 2% Yield, US Nominal GDP Growth Heading Down Towards 0% / Interest-Rates / US Bonds
By: Andrew_Butter
I’m a little slow, but perhaps someone can tell me what happened to the crowd who were jumping up and down screaming that US Treasuries were a bubble when the yield was 3.7%? If that was a bubble in 2009 and 2010 then 2.0% has to be an UBER-BUBBLE so you would think those guys would be having foaming-at-the mouth fits by now, I don’t know what happened to them, perhaps they all got sore throats?
Friday, August 19, 2011
U.S. Treasury Hidden Trickery in Mortgage Backed Security Recoveries / Interest-Rates / Credit Crisis Bailouts
By: Aftab_Singh
Right on schedule, the US Treasury received around $11 billion from the proceeds of Mortgage-backed Securities sales last Thursday. Moreover, the US Treasury released an update on the MBS portfolio wind down titled; ‘Taxpayers Recoveries Reach 70 Percent Milestone‘. The title left us thinking; hmmm… sort of… Here, I highlight the hidden confiscation involved with this particular piece of trickery and present the usual daily treasury statement charts.