Analysis Topic: Interest Rates and the Bond Market
The analysis published under this topic are as follows.
Tuesday, April 12, 2011
The End of QE2: Fed Major Policy Shift Ahead, How to Invest Accordingly / Interest-Rates / Quantitative Easing
By: John_Mauldin
This week’s Outside the Box is from my friend David Galland, an interview he did for The Casey Report, and it represents a philosophical train of thought more in line with Austrian economics and libertarianism than my own. But if we only read what we already think, then how do we learn? It is only when your ideas are challenged and you must determine why the other guys are wrong and you are right, that you can either become more firm in your beliefs, or change. And much of what David says in this interview resonates. (I wrote about the end of QE2 a few weeks ago.)
Monday, April 11, 2011
U.S. Downward Debt Spiral Into the Abyss / Interest-Rates / US Debt
By: Jesse
As we can see, the 'crisis' of the US budget impasse was averted, and the theater came to an end. Now the real work of creating a sustainable budget can begin.
The pigmen are going to be unrelenting in their attacks on the middle class and the poor. The attacks are threefold:
Thursday, April 07, 2011
ECB Takes Away Low Interest Rate Punch Bowl / Interest-Rates / ECB Interest Rates
By: Axel_Merk
Today, the European Central Bank (ECB) raised its main refinancing rate by 0.25% to 1.25%.
ECB President Trichet has long argued that its monetary policy is independent of the "extraordinary measures" put in place to support the financial system. However, it was only earlier this year that the market took Trichet's suggestions that he may raise rates seriously, even as the sovereign debt crisis remains unresolved.
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Wednesday, April 06, 2011
Fed FOMC Minutes Show Divisions Over Inflation, QE and Interest Rates / Interest-Rates / US Interest Rates
By: Asha_Bangalore
The main message from the minutes of the March 15 FOMC meeting is that policy making will be contentious as the members of the FOMC hold different opinions about inflation and the need to continue the exceptional financial accommodation that is underway. Although all members agree that the recovery is on a "firmer footing" and the housing sector remains in a slump, their views about inflation were significantly different.
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Tuesday, April 05, 2011
The Low Interest Rate Economic Cure is the Disease / Interest-Rates / Economic Theory
By: Thorsten_Polleit
As a reaction to the global financial and economic crisis, central banks around the world have cut their interest rates to the point of disappearing, because they see low interest rates as being conducive to making economies return to growth and prosperity.
According to the Austrian School of economics, however, the latest crisis has been brought about by a monetary policy of artificially suppressing the interest rate; and pushing interest rates down even further will only make matters worse.
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Tuesday, April 05, 2011
Bernanke’s Speech Should Help to Clarify the Likely Direction of the Fed / Interest-Rates / US Interest Rates
By: Asha_Bangalore
The March employment report included several noteworthy aspects of strength in hiring. The March 15 FOMC policy statement upgraded the Fed's assessment of the economy from the January evaluation. At the same time, the housing market remains in a slump, there is severe financial stress at state and local governments, and there is considerable global economic uncertainty. Chairman Bernanke is scheduled to speak this evening at a financial conference at the Federal Reserve Bank of Atlanta. .Recent Fed rhetoric suggests that voting and non-voting members hold different opinions. Chairman Bernanke may not have FOMC members voting in the same direction at the April 26-27 meeting. In the interim, his speech today should suggest where he stands. These are the latest comments of voting and non-voting members of the FOMC.
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Monday, April 04, 2011
U.S. Will Default on Its Debt / Interest-Rates / US Debt
By: DailyWealth
Dr. Steve Sjuggerud writes: "I am confident that this country will default on its debt," Bill Gross wrote this week.
Bill Gross is not some anti-American crackpot... quite the contrary.
Monday, April 04, 2011
Will Portugal Send European Debt Crisis Out of Control? / Interest-Rates / Global Debt Crisis
By: Pravda
Most Americans have no idea just how bad the financial problems over in Europe are right now. The truth is that the entire European financial system is teetering on the brink of disaster. Ireland and Greece have already received bailouts and Portugal, Spain, Italy, France and Belgium are all drowning in an ocean of unsustainable debt. Sovereign credit ratings all over Europe have being slashed in recent months. For example, a while back Moody's Investors Service cut Ireland's bond rating by five levels. Up until now Europe has weathered all of this financial instability fairly well, but now huge new financial problems in Portugal threaten to send the European debt crisis spinning out of control.
Saturday, April 02, 2011
Picture Yourself as a Loan Officer, and Uncle Sam Wants a Loan / Interest-Rates / US Debt
By: Richard_Shaw
Picture yourself as a loan officer for a moment.
Then imagine a very nice and sincere, but obviously clueless, person comes to you and says, my husband and I earn $100,000 per year, and we have found the home of our dreams with everything we have always wanted. It's price is $3.5 million, and I am here to request a mortgage in that amount from you.
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Friday, April 01, 2011
The Monetary Implications of Japan's Nuclear Catastrophe / Interest-Rates / Japanese Interest Rates
By: Ellen_Brown
WHY THE JAPANESE GOVERNMENT CAN AFFORD TO REBUILD: IT OWNS THE LARGEST DEPOSITORY BANK IN THE WORLD
The Japanese government can afford its enormous debt because it owns the bank that is its principal creditor. But competitors are attempting to force the bank’s privatization. If they succeed, they could propel the country into debt servitude along with other credit-strapped nations.
Friday, April 01, 2011
The Credit Cycle / Interest-Rates / Credit Crisis 2011
By: Puru_Saxena
Let’s face it; the availability and cost of credit determine the value of every asset on the planet.
When credit is cheap and plentiful, all assets (with the exception of government bonds) inflate or appreciate in value. Conversely, when credit becomes scarce and expensive, all assets (with the exception of government bonds) deflate or decline in value.
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Wednesday, March 30, 2011
Europe Whispers “Crisis” While the Market Continues Screaming / Interest-Rates / Global Debt Crisis
By: Jason_Kaspar
Last year the Europe Union (and the euro) teetered on the verge of collapse when the Greek financial crisis strained the viability of the EU construct. This year, as other EU countries domino in similar fashion, no one seems to care – certainly not the markets. Portugal’s government collapsed last Friday, and Standard and Poor has downgraded Portugal twice in the last week from A- to BBB-. S&P then proceeded to cut Greece’s rating further from BB+ to BB-. Yet, defying all reason, the markets have gone up.
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Wednesday, March 30, 2011
Quantitative Easing QE3 is on Its Way, Inflation Will Go Through the Roof / Interest-Rates / Quantitative Easing
By: Bob_Chapman
QE3 is on the way accompanied by almost zero official interest rates. QE1 was to bail out the financial sectors in the US and Europe and QE2 was to bail out US government debt. That is why the Fed has purchased 70% to 80% of Treasuries. Previous debt and the $1.6 trillion of new debt created this year means someone has to buy that debt and there are very few buyers. That means the Fed has to buy most of paper with funds created out of thin air in this monetization process.
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Wednesday, March 30, 2011
Federal Reserve Report: Central Bank's Record $82 Billion "Profit" is a Red Flag Warning / Interest-Rates / Central Banks
By: Money_Morning
Martin Hutchinson writes:
If the record $81.7 billion in profit that the U.S. Federal Reserve reported for 2010 was turned over to taxpayers directly, there's no doubt it would have some "stimulus" benefit - after all, a $270 check for every man, women and child in the United States ain't chicken-feed.
But since that money actually just "disappears" into the coffers of the U.S. Treasury, it does very little good for anybody.
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Wednesday, March 30, 2011
European Stability Mechanism Helps Push Portugal To The Brink / Interest-Rates / Euro-Zone
By: Paul_L_Kasriel
Richard Thies writes: Just days after cutting the rating on Portuguese government bonds from A- to BBB, S&P took the unusual action of further reducing its rating to BBB- today. The explicit cause for the additional downgrade was the recently announced terms of the European Stability Mechanism (ESM), the structure that will permanently replace the temporary European Financial Stability Facility in 2013. Greece's rating was also cut further into junk territory from BB+ to BB-. There now exists a three-notch spread between Portugal's S&P and Moody's sovereign ratings, with the Moody's rating at A3 following a March 16th downgrade.
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Tuesday, March 29, 2011
To QE or Not to QE? That is the Question / Interest-Rates / Quantitative Easing
By: Paul_L_Kasriel
At its March 15 meeting, the FOMC decided to continue with its program of quantitative easing, which would result in a net increase of $600 billion of Federal Reserve holdings of securities by the end of June. Of course, the FOMC issued a proviso with its decision. To wit, "The Committee will regularly review the pace of its securities purchases and the overall size of the asset-purchase program in light of incoming information and will adjust the program as needed to best foster maximum employment and price stability." Upon what "incoming information" should the Committee base its decision to modify its quantitative easing policy between now and June or, as important, beyond June?
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Monday, March 28, 2011
Where Is QE2 Taking Us? / Interest-Rates / Quantitative Easing
By: Robert_Murphy
Five months into the second round of quantitative easing — "QE2" — it is useful to take stock of what it has, and has not, accomplished. In short, the monetary base is way, way up, price inflation is up, long-term interest rates are up, and bank lending is down. QE2 has thus begun to deliver on all the dangers of which the critics warned, but not the alleged benefits.
Friday, March 25, 2011
Why Quantitative Easing Has NOT Brought Back Inflation / Interest-Rates / Quantitative Easing
By: EWI
Below is an excerpt from the newest free Club EWI investor education resource, The Independent Investor eBook 2011. Inside are some of the most eye-opening research findings by EWI's president Robert Prechter, as published in the recent issues of his monthly Elliott Wave Theorist.
Thursday, March 24, 2011
What Should the Federal Reserve Do Next? / Interest-Rates / US Interest Rates
By: MISES
James Grant writes: "What Should the Federal Reserve Do Next?" was the headline over the roundup of expert monetary opinion on the op-ed page of the September 9 Wall Street Journal. The experts couldn't seem to agree. Buy Treasuries by the boatload, one counseled. Do nothing of the sort, urged another. Hew fast to the Taylor rule, John B. Taylor, himself the author of the very rule, modestly proposed (i.e., fix the federal-funds rate at one and a half times the inflation rate, plus one-half times the shortfall of GDP from potential, plus one). The half-dozen authorities shared not much common ground except to ignore the principles on which the dollar was defined in 1792 and those on which the Federal Reserve was enacted in 1913. The burden of this essay is that they thereby missed the point.
Thursday, March 24, 2011
Why Interest Rates Will Rise / Interest-Rates / US Interest Rates
By: Gary_North
The world is on a Keynesian spending spree. Western central banks are inflating as never before in peacetime. Western governments are running massive budget deficits.
The European Union in 1997 established a Stability and Growth Pact, which set guidelines for fiscal policy: an annual deficit of no more than 3% of GDP and a total government-debt-to-GDP ratio of no more than 60%.
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