Analysis Topic: Interest Rates and the Bond Market
The analysis published under this topic are as follows.
Monday, August 08, 2011
When Risk-Free Becomes Risk-Certain, Repercussions of the S&P Announcement / Interest-Rates / Credit Crisis 2011
By: Jeff_Berwick
Late Friday evening, Standard and Poor's was the first US credit ratings agency to actually whisper that, possibly, the emperor has no clothes.
The emperor, in fact, has been standing there naked for years. All one has to do is look at the growth in US Government debt and that fact is clear.
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Monday, August 08, 2011
Bill Gross of PIMCO on U.S. Debt Downgrade / Interest-Rates / Credit Crisis 2011
By: Bloomberg
Bill Gross, who runs the world's biggest bond mutual fund at Pacific Investment Management Co., appeared on Bloomberg Television's "Downgrade: A Special Report" live Sunday night special with Bloomberg's Tom Keene. Gross said the U.S. has "enormous" problems and that the dollar is vulnerable. He also said “his hat is off” to S&P for “demonstrating some spin.”
Monday, August 08, 2011
U.S. Credit Rating Downgrade, We Are Not AAA / Interest-Rates / Credit Crisis 2011
By: Vitaliy_Katsenelson
I have received many emails and a few calls from friends, asking one question: What are the consequences of the downgrade? So I decided to put my thoughts on paper. I break up the consequences into three categories: fundamental (the impact on the economy), emotional (the short-term impact on the market), and political (will it change anything in Washington DC?).
Monday, August 08, 2011
The U.S. Should Downgrade S&P / Interest-Rates / Credit Crisis 2011
By: EconMatters
The biggest news last week (other than the $2.5-trillion that got wiped off global stock markets) is that Standard & Poor’s made good on its tough talk and downgraded the United States long-term credit rating one notch from AAA to AA+. S&P also has kept the outlook at “negative” meaning the U.S. has little chance of regaining the top rating in the near term.
Sunday, August 07, 2011
U.S. Downgrades S&P / Interest-Rates / Credit Crisis 2011
By: Brady_Willett
U.S. Treasury Securities are no longer risk-free. This news comes after Standard and Poor’s cut the triple-A rating it has awarded the U.S. since 1941 (Moody’s has been in the AAA camp since 1917). Given the U.S.’s status as the world’s reserve currency printer – not to mention the safe haven flows arriving in the U.S. due to the recent upheaval in Euroland - the immediate impact of the downgrade is highly uncertain. However, what can be said is that should Moody’s or Fitch also cut, capital may be required to exit U.S. debt due to restrictive ownership covenants. This ominous prospect could quickly come into play should another financial crisis arise and/or the U.S. economy slip back into recession. After all, Moody’s warned last week that it may cut if lawmakers do not enact larger debt reduction plans (an increasingly difficult undertaking with the markets and economy weakening), and Fitch is set to complete its U.S. ratings review by the end of August.
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Sunday, August 07, 2011
U.S. Debt downgrade doesn't mean what you think / Interest-Rates / US Debt
By: Submissions
Sam Houston writes: The U.S. Treasury borrows money by issuing bonds. Because it has a massive spending problem and can't live within its means it runs a perpetual and ever expanding deficit. The deficit is financed by issuing more bonds. This process is currently going parabolic as the U.S. debt load is expanding at an alarming rate. See the chart below.
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Saturday, August 06, 2011
Currency Wars and Quantitative Easing / Interest-Rates / Central Banks
By: CentralBankNews
The past week in monetary policy saw 12 central banks reviewing monetary policy settings, with 2 expanding asset buying programs, and just 3 adjusting interest rate levels. Those that adjusted interest rates were: Pakistan -50bps to 13.50%, Uganda +100bps to 14.00%, and Turkey -50bps to 5.75%; Switzerland also adjusted its interest rate target range downward to halt gains in the Swiss franc. Meanwhile those that held rates unchanged were: Botswana 9.50%, Uzbekistan 12.00%, Australia 4.75%, Japan 0.10%, Romania 6.25%, Russia 8.25%, EU 1.50%, UK 0.50%, and the Czech Republic 0.75%.
Friday, August 05, 2011
U.S. Debt: Has its Past Become its Future? / Interest-Rates / US Debt
By: Casey_Research
Frank Trotter, President, EverBank Direct writes: Friends who know that I speak frequently about global economics have been calling to see what I think about the smackdown arguments over spending in Washington. I have surprised them all by saying that it’s really an empty record. Well, I suppose there is some kind of odd entertainment factor in the recent public debates about the U.S. debt ceiling.
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Friday, August 05, 2011
Dark Window Debt Default / Interest-Rates / Global Debt Crisis
By: Andrew_McKillop
The US debt crisis, with its see-through debt ceiling and dark invisible floor, so far below, has very serious rivals in Europe. Relative to GDP, the USA's sovereign debt is either less extreme, comparable to, or not far ahead of sovereign debt load in not-so-small Italy, France, Germany, UK and Spain. Apart from Germany, the other four members of Europe's Big-5 are very close to recession, even using their own official and doctored economic data. But needless to say, these are not normal times and hope, or at least illusion is more important than ever, to keep the party going one more day.
Friday, August 05, 2011
German Central Bank Goes to War with ECB Over Resumption of Bond Purchases / Interest-Rates / Global Debt Crisis
By: Mike_Shedlock
ECB Resumes Bond Buys; Open Feud Between German Central Bank and the ECB; Implications of "Trichet Out, Draghi In"
Yet Another Open Feud Between German Central Bank and the ECB on Bond Purchases;
Thursday, August 04, 2011
U.S. National Debt Heading for $23 Trillion by 2021 / Interest-Rates / US Debt
By: Money_Morning
Martin Hutchinson writes:
There was a lot of back-patting in Washington this week after U.S. President Barack Obama signed a debt-ceiling deal that he and members of Congress claim will reduce the national debt.
But here's the truth: This deal does nothing to reduce America's debt burden. In fact, the $14 trillion we owe now could every easily exceed $23 trillion by 2021.
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Thursday, August 04, 2011
Debt Ceiling or QE3 in Disguise? Gold Smells the Rats / Interest-Rates / Quantitative Easing
By: Andy_Sutton
With the debt deal now signed and the crisis proclaimed to be over by the government and the mainstream lapdog media, it is time to take a serious look at the debauchery that was just perpetrated on the American people – again. The names have barely changed from 2008. The tactics certainly haven’t. The magic of government accounting has had another chapter added to it as something that actually adds to the deficit and requires money be borrowed on its behalf is now a ‘cut'. Isn’t that just special? There are several big myths about the past few weeks that we need to uncover before anyone is really going to understand what is really going on here.
Thursday, August 04, 2011
Is it a Sea Change if Rating Agencies Stick a Lower Rating for U.S. Sovereign Debt? / Interest-Rates / US Debt
By: Asha_Bangalore
The debt ceiling has been raised through 2012 and political drama related to the debt ceiling is unlikely to be repeated soon. Fitch and Moody’s indicated that the coveted AAA status of U.S. debt remains in place with a possibility of downgrades tied to the nature of fiscal consolidation Congress may deliver. As of this writing, S&P has not made public its opinion, but the new law does not meet its requirement of a $4 trillion reduction of the projected deficits indicated last month. Federal government debt (gross) of the United States stood at 93% of GDP in 2010 (see Chart 1). The Congressional Budget Office’s (CBO) projections show this number at 105% by 2021.
Thursday, August 04, 2011
QE3 Coming Soon? Treasury TIPS Say No / Interest-Rates / US Bonds
By: Tony_Pallotta
Using the Treasury TIPS (Treasury Inflation Protected Securities) one can determine inflation expectation simply by subtracting the treasury yield for the same maturity. As an example.
10 Year TIPS currently yields 0.29% (inflation adjusted yield)
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Thursday, August 04, 2011
Italy Bond Market Failure to Trigger Bailout as ECB to Become Buyer of "Only" Resort / Interest-Rates / Global Debt Crisis
By: Mike_Shedlock
A critical Italian government bond auction is coming up Thursday, August 4. That bond auction is highly likely to fail. However, if it does fail, don't expect results to be reported that way.
Wednesday, August 03, 2011
The New World Order of Global Sovereigns / Interest-Rates / Global Debt Crisis
By: EconMatters
The U.S. debt ceiling political soap has finally come to an end. With the debt deal done, the U.S. has dodged a major bullet of a debt default, but may not be out of the woods yet for a sovereign credit downgrade. Nevertheless, regardless whether one or more of the Big 3 agencies (S&P, Moody's and Fitch) would really deal a downgrade to the U.S., it is the markets that holds the key to a sovereign's credit worthiness based on its ability to manage a balanced budget, implementing proper monetary and fiscal policies. From that perspective, the markets probably have already spoken.
Tuesday, August 02, 2011
U.S. Debt Cut Deal is Just Smoke & Mirrors / Interest-Rates / US Debt
By: Jeff_Berwick
That's it? This is the deal? This is what they've been supposedly fighting over for months?
We'll get to the exact details in a moment but let's start by doing a fantasy comparison of the same "cuts" being made in a format that the regular man on the street can understand.
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Tuesday, August 02, 2011
What’s not for the WSJ to Like about the Debt-Ceiling Legislation? / Interest-Rates / US Debt
By: Paul_L_Kasriel
Milton Friedman taught us that the real economic cost of government is not how it raises its funds – taxes or borrowing -- but how many funds in toto it raises. That is, according to Friedman, the real economic cost of government is how much it spends. The pending legislation on the increase in the U.S. public debt ceiling dictates that federal outlays be reduced in the coming 10 fiscal years. So, the editorial board of the WSJ should be ecstatic about the outcome of this debate about the debt-ceiling increase, right? Federal spending will be decreased. But I suspect that very shortly the op-ed page of the WSJ will be complaining about this pending debt-ceiling legislation.
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Sunday, July 31, 2011
A U.S. Sovereign Debt Downgrade Is No Laughing Matter for China or Anybody Else / Interest-Rates / Global Debt Crisis
By: EconMatters
With a stalemate heading into the weekend, the debt drama of the United States is going down to the wire, and when the clock strikes twelve midnight on August 2 (countdown clock at our homepage), the world's largest economy could be looking at an unprecedented technical default. The current consensus suggests that although a total default is nothing but a remote possibility, the damage is already done to the dollar, and a sovereign debt downgrade could be inevitable even after the debt ceiling deadlock is resolved.
Saturday, July 30, 2011
United States Defaulted Long Ago, Approaching Final Collapse of our Credit Expansion Boom / Interest-Rates / US Debt
By: James_Quinn
“There is no means of avoiding a final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as a result of a voluntary abandonment of further credit expansion or later as a final and total catastrophe of the currency system involved.” – Ludwig von Mises