Analysis Topic: Interest Rates and the Bond Market
The analysis published under this topic are as follows.
Wednesday, June 05, 2019
Bond Market Shows Us The Power Of The Dark Side / Interest-Rates / US Bonds
By: Avi_Gilburt
First, I want to begin this article by thanking all those who read my articles for the amazing outpouring of support and prayers for my wife who is recovering from a freak accident. So, with her sleeping right now, I thought I would pen another article to at least keep myself somewhat busy.
Over the years, I have published many price trend change expectations which have hit quite well. Some examples include the top to gold in 2011 at 1915 (with gold topping at 1921), the bottom in the dollar in 2011 (with an expectation of a multi-year rally to within pennies of our target struck six years later), many major turning points in the S&P500, and many other calls throughout the last 8 years I have been publishing my market calls.
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Wednesday, June 05, 2019
Warning… Sub-Prime 2.0 Is About to Blow Up / Interest-Rates / Financial Crisis 2019
By: Graham_Summers
For those how pay attention, the Fed has already broadcast what the next crisis will be…
Corporate bonds…
When the Fed cut interest rates to zero in 2008… and held them there for even years straight… it gave the “green light” to corporations to go on massive borrowing spree.
After all… if you’re the CEO of a company… and taking on debt suddenly costs NOTHING… why wouldn’t you start borrowing?
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Tuesday, June 04, 2019
US Yield Curve Inverted Again. Will Gold Shine Now? / Interest-Rates / US Interest Rates
By: Arkadiusz_Sieron
The U.S. yield curve has inverted again, and it has done so to the widest level since 2007. How much of a reason to worry is that actually? A sky-is-falling moment lurking ahead? If so, what chance of saving us does gold have?
Another Yield Curve Inversion Occurs
It’s really getting more serious. Another yield curve inversion… And a much deeper one – that’s frightening!
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Sunday, June 02, 2019
Gold Standard, Federal Reserve, Economic Law / Interest-Rates / US Federal Reserve Bank
By: Kelsey_Williams
In a recent opinion by Sebastian Mallaby, published in the Washington Post, the author and columnist says the following:
“Money is an abstraction, a political confection, a set of castles built on air. No wonder it makes people feel queasy. Gold is tangible, immutable, somehow reliable and real; there will always be people who believe in it. But the truth is that modern central banking is one of those elite inventions that generally works. The gold standard has given way to the PhD standard, and we are all the better for it.”
In his article, Mr Mallaby presents his arguments as to the reason and logic that a gold standard will not work and that it is an idea which is out of date and inferior to the current system, i.e., “modern central banking”.
The opinions are a response to statements made by Judy Shelton, currently under consideration for appointment as one of the seven governors on the Federal Reserve Board.
Mr. Mallaby refers to former President Reagan’s “nostalgia” abut the gold standard as being “curious” and says that “survival of this sentiment in 2019 is even more baffling”.
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Saturday, June 01, 2019
Finding Record Investor Profits Hidden In The Fed Minutes / Interest-Rates / US Federal Reserve Bank
By: Dan_Amerman
Sifting through the minutes of the Federal Open Market Committee (FOMC) to look for signals of changes in policy is a fixation for the financial media and the investment industry. Because both the stock and bond markets can reverse directions based upon the Fed's intentions for the direction of Fed Funds rates, there is an intense focus on finding signals for those intentions and whether the signals are changing.
However, like generals preparing for the last war - there is a strong case to be made that most analysis of the FOMC minutes is focusing on the details, while missing the big picture for the next recession (which could be growing more imminent).
As explored herein, the Fed itself is as much focused on how to change the "SOMA" to enable the strongest form of "MEP" in the event of another recession, as it is on Fed Funds rates.
When we get past the jargon, what the Fed is debating in plain sight are the specifics for how to give as much money as possible to some investors in the event of another recession, in the shortest time possible.
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Saturday, June 01, 2019
US Bond Market You Have to Invite the Vampire Into Your House / Interest-Rates / US Bonds
By: Gary_Tanashian
A vampire needs to be invited in order to enter your house. So the story goes. But in this case, we are talking about the Macro house, with its nexus in the USA and its Central Bank.
You see, the Federal Reserve inflates money supplies as a matter of doing business, which is why I noted so strenuously in Q4 2018 that Jerome Powell’s then-hawkish stance in the face of a declining stock market made perfect sense… because the 30 year Treasury bond was not bullish; it was bearish and getting more so under the pressure of rising inflation expectations.
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Thursday, May 30, 2019
This Is Why US Monetary Policy Is So Ineffective / Interest-Rates / Economic Theory
By: John_Mauldin
Back in the 1980s and 1990s, many people thought excessive government spending and the resulting debt would bring inflation or even hyperinflation.
We wanted a hawkish Federal Reserve or, better yet, a gold standard to prevent it. Reality turned out differently.
Federal debt rose steadily, inflation didn’t. Here’s a chart of the on-budget public debt since 1970:
Friday, May 24, 2019
The Fed Is Caught Behind The Curve / Interest-Rates / US Interest Rates
By: Avi_Gilburt
I have written many times about how the Fed follows the market and does not lead it. And, we are about to see yet another example of history’s lessons.
For those that followed our work over the years, you would know that we called for a top to the bond market on June 27, 2016, with the market striking its multi-year highs within a week of our call. Since that call, TLT dropped 22%, until we saw the bottoming structure develop in late 2018.
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Wednesday, May 22, 2019
Fed Encourages Runaway US Debt as “Minsky Moment” Approaches / Interest-Rates / US Debt
By: MoneyMetals
Federal Reserve officials like to pretend they can use interest rates like a motorcycle throttle on the U.S. economy. They can either rev things up by dropping interest rates or slow things down by moving rates higher.
The public has been led to believe the central planners can do whatever is needed with rates to keep things purring along.
The truth is the central planners at the Fed are meddling with forces beyond their control. They are encouraging consumers, companies, and government to take on debt. Soon, the nation will choke on it.
Wednesday, May 15, 2019
This Unprecedented Credit Crisis Will Redefine How We Invest / Interest-Rates / Financial Crisis 2019
By: John_Mauldin
In the past few years, I wrote a lot about the unprecedented credit crisis I foresee. I call it “The Great Reset.”
I have to add, it isn’t what I think the future should look like or what I want to see. But almost the entire developed world has painted itself into a corner.
It might not be terrible. I don’t expect another Great Depression or economic upheaval, but the change will be profound.
We will have to adapt our portfolios and lifestyles to this new reality. The good news is big changes happen slowly. We have time to adapt.
I don’t see any plausible path to stopping the world’s debt overload without a serious crisis, much less paying it off. So I foresee a tough decade ahead.
Tuesday, May 14, 2019
How US Debt Will Reach $40 Trillion by 2025 / Interest-Rates / US Debt
By: Harry_Dent
Smart people are worried about out deficit. They should be.Never mind the chaos around the world (like mass shootings, terrorist bombings, Armageddon marches, etc. ad infinitum), it was recently report that Christine Lagarde, the managing director of the IMF, is “doubly concerned” about the level of global debt. She was speaking at the Milken Institute Global Conference last week, where she explained why excessive debt is going to become a serious problem for developed and developing countries alike.
In case you’re wondering – I had to look it up – the Milken Institute is a research driven, non-partisan think tank that develops policy initiatives aimed at increasing economic growth to improve the standard of living for people across the globe.
I assure you. The levels of global and U.S. debt are way beyond concerning. They’re also way beyond being repayable.
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Wednesday, May 08, 2019
How Fed Interest Rate Cycles Exponentially Reduce Long Term Wealth Creation / Interest-Rates / Economic Theory
By: Dan_Amerman
The most historically reliable way to create long term wealth is the reinvestment of cash flows over time, as earnings are earned on earnings, which are earned on earnings.
Compound interest is the best known example, but the same principle of compounding cash flows is also the most powerful and stable source of wealth with the stocks and real estate over the long term as well.
Reinvested (and increasing) dividends are a more important and stable source of stock market wealth than price gains. Reinvested (and increasing) net cash flows are the most stable and important source of wealth with real estate and REIT investments as well.
However, what was taken for granted for many decades - is no longer available. As a result of Federal Reserve policies, only a small fraction of the historically average power of this wealth building engine still remains. In this analysis we will examine the mathematical implications of publicly stated Fed intentions if there is another recession, and look at the extraordinary implications for investors.
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Tuesday, May 07, 2019
US Federal Reserve Bank Vetoes Cain and Moore / Interest-Rates / US Federal Reserve Bank
By: BATR
If you ever had doubts just who is squarely in charge of the finances for the debt created U.S. Dollar currency, the nixing of Herman Cain and Stephen Moore for the Federal Reserve Board confirms that the Banksters are the real power. The Shadow Government is truly the elitists behind monetary hegemony that rules over government and economic policies. The institutions that shape and direct the financial dynasty of the reserve currency is outside the realm of Presidential compliance. Donald Trump has just experienced the push back from the Jackals of Jekyll Island.
Clearly the Federal Reserve 100 Years of Failure has been the single most destructive financial factor in history. Over the last century the Merchantry economy has been systematically dismantled in favor of the Corporatocracy. The Wall Street establishment has always opposed entrepreneurs unless they go public with shares that the Masters of the Universe can manipulate. Both Cain and Moore have a long record of media appearances that often vary from the establishment viewpoint.
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Friday, May 03, 2019
The May FOMC Meeting Is Over. They Say Every Cloud Has a Silver Lining... / Interest-Rates / US Interest Rates
By: Arkadiusz_Sieron
The May FOMC statement didn’t bring much of a surprise. Fed Chair Powell remained upbeat in his assessment of the U.S. economy while dismissing low inflation as transitory. Gold has initially jumped, only to keep declining later. What has actually happened yesterday, then?
FOMC Statement Acknowledges Lower Inflation
Yesterday, the FOMC published the monetary policy statement from its latest meeting that took place on April 30-May 1. In line with expectations, the US central bank unanimously kept its policy rate unchanged. As previously, the inaction reflected the new patient approach adopted by the Fed in January. So, the federal funds rate remained at the target range of 2.25 to 2.50 percent:
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Thursday, May 02, 2019
The Fed Can’t Ease Interest Rates Until Stocks Collapse… / Interest-Rates / US Interest Rates
By: Graham_Summers
Yesterday’s Fed meeting had one clear message:
The Fed needs a reason to cut rates.
The Fed has obviously laid the ground work for a rate cut by hinting at easing… but with the “official” GDP numbers at 3.2% and inflation under 2%… the Fed doesn’t have a clear reason to ease just yet.
It will soon… and that reason is going to be a stock market collapse.
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Tuesday, April 30, 2019
A Look Inside the Scheme to Eliminate Cash and Impose Negative Interest / Interest-Rates / War on Cash
By: MoneyMetals
Central bankers and politicians love inflation, but they need “bag holders” to have faith in the value of the fiat currency IOUs they hold. The trick is to avoid suddenly destroying the ephemeral confidence in currencies by printing too much too fast.
Central bankers may also need to limit the options inflation wary citizens have for escaping.
They are both shifty and innovative when it comes to making sure the ill effects of perpetually devaluing currency are primarily borne by the citizenry.
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Monday, April 22, 2019
Global Bond Market Bubble’s Ultimate Culmination / Interest-Rates / International Bond Market
By: Michael_Pento
Historically speaking, a normal Fed tightening cycles consist of raising the Fed Funds Rate (FFR) by 350-425bps. It is at that point that the yield curve usually inverts--thus, disincentivizing future lending and closing down the credit conduit. At that point the Fed backs off from future rate hikes. Then, about a year later, a stock market meltdown begins; and six months after that a recession ensues. During this current cycle, the Fed Open Market Committee (FOMC) has raised rates by just 250bps before turning dovish. Therefore, Wall Street takes solace in the view that this time around the Fed stopped in time before it killed the business cycle.
However, that 250bps of hiking is before you factor in the end of Quantitative Easing (QE) and the current Quantitative Tightening Program (QT), which is still an ongoing process and won't end until September. When you factor in the tightening that occurred when the Fed ended QE in October of 2014, which amounted to $85b per month of newly printed money at its peak and added a total of $3.7 trillion to the Fed’s balance sheet, the actual amount of tightening from ending QE is probably close to 300bps. And, the QT from the Fed will end up draining nearly $1 trillion from its balance sheet and reached $40-$50 billion per month at its peak. A reduction in the Fed’s balance sheet of anything close to $1 trillion is completely unprecedented and amounted to a tremendous drain on liquidity. Nobody knows exactly the amount of rate hikes this equates to, but it most likely added another 75bps of monetary tightening.
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Thursday, April 18, 2019
Low New Zealand Inflation Rate Increases Chance of a Rate Cut / Interest-Rates / Global Financial System
By: ElliottWaveForecast
New Zealand CPI (Consumer Price Index) only grew by 0.1% in the three months to March with annual increase of 1.5%. This is well below the 0.3% rate expected by the market. The RBNZ (Reserve Bank of New Zealand) annual inflation target is between 1%-3%. The latest result falls at the lower end of the range. This has raised speculation that the RBNZ may cut official interest rate as early as next month.
Friday, April 12, 2019
Trump Calls for New Quantitative Easing to Prop Up U.S. Economy / Interest-Rates / Quantitative Easing
By: MoneyMetals
As gold and silver markets continue in choppy trading this spring, bulls are hoping a dovish Fed will sink the dollar and lift the metals.
Now that the Federal Reserve is on “pause” – presumably for the rest of 2019 – perhaps investors can stop obsessing over interest rate decisions by central planners. Perhaps markets can finally trade based on actual market signals and underlying fundamentals.
Perhaps ... not.
With 2020 election campaigns already underway, interest rate policy will be a political football in the months ahead. Incumbent administrations almost always favor lower interest rates heading into their re-election bids, and this one is no exception.
Wednesday, April 10, 2019
Is The Federal Reserve ‘Too Big To Fail’? / Interest-Rates / US Federal Reserve Bank
By: Kelsey_Williams
The term “too big to fail” refers to certain businesses whose viability is considered critical to the survival and effective operation of our economic system. These very large businesses are designated as too big to fail because their failure or bankruptcy would have disastrous consequences on the overall economy.
The potential effects are considered to be severe enough, and the costs so unbelievably large, that these businesses are afforded special attention and consideration in the form of bailouts and protection from creditors.
The expenses necessary in order to save a large institution from bankruptcy are considered less than the costs that would be incurred if the institution were allowed to fail. Active application and implementation of both alternatives were prominently featured in the financial crisis of 2008.
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