Analysis Topic: Interest Rates and the Bond Market
The analysis published under this topic are as follows.
Saturday, March 28, 2009
The SEVEN "Values" of Toxic Assets FAQ / Interest-Rates / Credit Crisis 2009
By: Andrew_Butter
The Hiesenburg Uncertainty Principle says the more you know about the weight of something the less you know about how fast it's moving. A toxic asset follows the same principle, which is presumably why investment banks used to hire rocket scientists. Read full article... Read full article...
Saturday, March 28, 2009
Do Bonds Beat Stocks Over the Long Run? / Interest-Rates / US Bonds
By: John_Mauldin
Why Bother With Bonds?
So Then, Bonds for the Long Run?
P/E Ratios at 200? Really?
Mark-to-Market Slip Slides Away
Housing Sales Improve? Not Hardly
Investors, we are told, demand a risk premium for investing in stocks rather than bonds. Without that extra return, why invest in risky stocks if you can get guaranteed returns in bonds? This week we look at a brilliantly done paper examining whether or not investors have gotten better returns from stocks over the really long run and not just the last ten years, when stocks have wandered in the wilderness. This will not sit well with the buy and hope crowd, but the data is what the data is. Then we look at how bulls are spinning bad news into good and, if we have time, look at how you should analyze GDP numbers. Are we really down 6%? (Short answer: no.) It should make for a very interesting letter.
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Saturday, March 28, 2009
How the Free Market Mortgage Bond Scam Works / Interest-Rates / Credit Crisis Bailouts
By: Submissions
Michael Hudson writes: Newspaper reports seem surprised at how high banks are bidding for the junk mortgages that Treasury Secretary Geithner is now bidding for, having mobilized the FDIC and Fed to transfer yet more public funds to the banks. Bank stocks are soaring – thereby bidding up the Dow Jones Industrial Average, as if the “financial industry” really were part of the industrial economy. Read full article... Read full article...
Friday, March 27, 2009
U.S. Treasury Bonds Heading for Day of Reckoning / Interest-Rates / US Bonds
By: Money_and_Markets
Mike Larson writes: The U.K. Treasury held a bond auction on Wednesday morning. On the offer were 1.75 billion pounds ($2.55 billion ) worth of 40-year “Gilts” — the U.K. equivalent of U.S. Treasuries. There was just one problem …
Buyers went on strike! They offered to purchase just 1.63 billion pounds ($2.37 billion) of debt.
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Thursday, March 26, 2009
Quantitative Easing Begins; "Operation Twist" Revisited / Interest-Rates / Quantitative Easing
By: Mike_Shedlock
Quantitative easing in the US has begun. The Fed Buys $7.5 Billion of Debt to Cut Borrowing Costs . The Federal Reserve bought $7.5 billion of Treasuries in the first outright purchase of U.S. government debt by the central bank to keep consumer borrowing costs low since the 1960s. It is the first step in a six-month program to buy up to $300 billion in Treasuries.
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Wednesday, March 25, 2009
U.S. Treasury Bond Yields: Government Intervention Breeds Uncertainty / Interest-Rates / US Bonds
By: Guy_Lerner
For many months, I have been tracking US Government 10 year Treasury bonds essentially stating that they have topped out. In my most recent article on Treasury bonds, I stated: "the upside for Treasury bonds is limited, and there is a high degree of certainty that a new secular trend is developing that favors higher yield pressures. " Read full article... Read full article...
Wednesday, March 25, 2009
How China Will Deal with the Growing U.S. Debt Mountain / Interest-Rates / US Bonds
By: Money_Morning
William Patalon III writes: Although there's a veritable laundry list of obstacles that could blunt the U.S. government's ongoing economic turnaround efforts, its single-biggest challenge may come from its single-biggest creditor - China.
When China announced a new array of stimulus measures earlier this month , this very important plan was overshadowed by China Premier Wen Jiabao's concerns about the United States' quickly growing debt load.
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Tuesday, March 24, 2009
Fed Debt Monetization- Creating Credit Out of Thin Air / Interest-Rates / Quantitative Easing
By: Paul_L_Kasriel
Last week the Fed announced that it would purchase $300 billion of longer-maturity Treasury securities. The mainstream media got all excited, talking about the Fed "printing money." But the Fed figuratively "prints money" or creates credit whenever it acquires assets - loans or investments. For example, when the Fed purchases a mortgage-backed security, it pays for the security simply by crediting the deposit (reserve) account of the security seller's bank. Read full article... Read full article...
Monday, March 23, 2009
U.S. Treasury Bond Market Jolted by Panic Mode Quantitative Easing / Interest-Rates / US Bonds
By: Levente_Mady
The bond market was jolted up by the “surprise” (not entirely for the readers of this column) announcement that the Fed will be buying not only additional boatloads of Mortgage Backed Securities and Agency bonds, but also up to $300 Billion Treasury paper during the next 6 months in order to keep a lid on interest rates for the foreseeable future. As previously discussed, the Fed has already taken the Fed Funds Rate down to zero, so they are “all in” on that front. Now they opened a new kettle of fish by joining the Bank of England and the Bank of Japan in what is called Quantitative Easing – i.e. purchasing Treasury bonds in the Fed's case. Read full article... Read full article...
Sunday, March 22, 2009
Fed illusion as Rising U.S. Bond Prices Cancelled Out by Plunging Dollar / Interest-Rates / US Bonds
By: Clive_Maund
Last week a very dangerous precedent was set when the Fed announced that it is going to start overtly intervening to backstop the ailing Treasury market. The market's verdict on this announcement was immediate and unequivocal. While Treasuries rallied sharply as one might expect, the dollar cratered and gold staged a dramatic turnaround to close sharply higher. The reason that this precedent is so dangerous is that once they start monetising this debt, which means creating money to buy that portion of newly created Treasury debt that cannot be sold off, there will be no end to it - they will eventually find themselves buying more and more of it, as foreign buyers continue to withdraw, deterred by a combination of pitifully low yields and any prospective capital gain being wiped out by the continued decline in the dollar that must transpire as a result of diluting the currency by creating money to absorb unsold Treasury paper. Read full article... Read full article...
Sunday, March 22, 2009
U.S. Treasury Bond Yields Reach the Bottom, Upward Pressure Starts / Interest-Rates / US Bonds
By: Donald_W_Dony
The Fed has done everything possible to stimulate the economy by slashed interest rates to record lows, injecting billions of dollars into the financial system and even recently saying it will begin a program to buy up to $300 billion in government treasuries. All of these efforts have driven bond yields down to record lows. Models are now indicating that yields are on the rise.Read full article... Read full article...
Sunday, March 22, 2009
Fed Hits Panic Button and Signals Trillions of Dollars Will be Printed to Buy Bonds / Interest-Rates / Quantitative Easing
By: Prieur_du_Plessis
Phew - what a week! What an announcement!
The Federal Open Market Committee (FOMC) on Wednesday left the Fed funds range unchanged at zero to 0.25%, but stunned the financial markets with an announcement that it would purchase up to $300 billion in longer-term Treasuries over the next six months.
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Sunday, March 22, 2009
Fed Delivers a Gift to Bond Bulls with More to Come / Interest-Rates / US Bonds
By: Professor_Emeritus
On Wednesday, March 18, another handsome gift was delivered by the Fed to the bond bulls. It was the announcement that the Open Market Committee has made a unanimous decision for the central bank to buy $300 billion in long-term Treasury bonds and notes over the next six-month period. The yield on the 30-year Treasury bond immediately fell from 3.8% to 3.5%, while the yield on the benchmark 10-year Treasury note fell more: from 3% to 2.53%, increasing the price of the note by 42/32 from 9726/32 to 10128/32, the biggest one-day rise in years. The gift of risk-free profits is granted to the bond bulls through courtesy of the Fed, in telling them in advance about its intention of buying long-dated government debt. Read full article... Read full article...
Sunday, March 22, 2009
Fed’s $1 Trillion Debt-Buying Plan Loosens Lending and Drains the Dollar / Interest-Rates / Quantitative Easing
By: Money_Morning
Jason Simpkins writes: While the U.S. Federal Reserve's plan to buy more than $1 trillion in debt has helped unfreeze the credit markets, it has also effectively capped U.S. Treasury yields and undermined the dollar. And that's caused commodities to soar as currency speculators and safe-haven investors head for higher ground. Read full article... Read full article...
Sunday, March 22, 2009
Fed Launching Trillion Dollar Bond Market Lifeboat Before the Ship Sinks / Interest-Rates / US Bonds
By: Paul_Craig_Roberts
On March 19 the New York Times reported : "The Fed said it would purchase an additional $750 billion worth of government-guaranteed mortgage-backed securities, on top of the $500 billion that it is currently in the process of buying. In addition, the Fed said it would buy up to $300 billion worth of longer-term Treasury securities over the next six months." Read full article... Read full article...
Saturday, March 21, 2009
The Federal Reserve: The Greatest Scam in History / Interest-Rates / Central Banks
By: Bob_Kirtley
We first posted this article on 13th August 2007 when it appeared to us that the US Dollar along with the economy was heading into such dangerous waters that gold would be the beneficiary. At the time gold was trading at around $670/oz and it closed yesterday at $960 for a gain of $290 or 43.2%. Yesterday was the first time that we have seen the ‘ C ‘ word used as the Federal Reserve announced that it would be buying back $300 billion in longer-term Treasuries in order to assist the economic recovery. This move to buy these Treasuries is regarded by many as a last resort or a sign of panic as the turmoil in the financial markets reaches a crisis point.Read full article... Read full article...
Friday, March 20, 2009
Fed Rings the Mother of all Inflationary Bells / Interest-Rates / Inflation
By: Peter_Schiff
There is an old adage on Wall Street that no one rings a bell at major market tops or bottoms. That may be true in normal times, but as many have noticed, we are now completely through the looking glass. In this parallel reality, Ben Bernanke has just rung the loudest bell ever heard in the foreign exchange and government debt markets. Investors who ignore the clanging do so at their own peril. The bell's reverberations will be felt by everyday Americans, whose lives are about to change in ways few can imagine.Read full article... Read full article...
Friday, March 20, 2009
Fed Debt Monetization Moves Spark Refi Madness / Interest-Rates / Quantitative Easing
By: Money_and_Markets
Mike Larson writes: The Federal Reserve has done it now. In poker terms, it's gone “all in.” Specifically, the Fed said this week that it will ramp up its purchases of Fannie Mae and Freddie Mac Mortgage Backed Securities (MBS) from $500 billion to a whopping $1.25 TRILLION in the coming months. The Fed is also going to double its purchases of Fannie Mae, Freddie Mac, and Federal Home Loan Bank bonds to $200 billion from $100 billion. Read full article... Read full article...
Thursday, March 19, 2009
Central Banks Detonate the Quantitative Easing Monetary Nuclear Option / Interest-Rates / Quantitative Easing
By: Gary_Dorsch
Desperate times call for desperate measures. As the global “credit crunch” has grown increasingly severe, central bankers are examining the Great Depression of the 1930's for possible parallels that are relevant to today's situation. Most worrisome, is the synchronized meltdown of the global stock markets, which had wiped-out $32-trillion of wealth, on top of another $10-trillion in losses in real estate. Read full article... Read full article...
Thursday, March 19, 2009
The US Fed To Print Money / Interest-Rates / Quantitative Easing
By: PaddyPowerTrader
Shock and awe is back in vogue. Yesterday was a landmark day in this crisis with the Fed going all-in (see below) after flip flopping about on the merits of quantitative easing (QE). But now it's all hands to the eletronic printing presses as they clearly don't believe that Geithner's TALF could do the heavy lifting required. Stock rallied as VIX declined back to 40 (the floor of its recent range). But is QE a sign of desperation? It is a serious negative for the EUR/USD , which kissed 1.3536 overnight. Gold of course bounced as the textbooks say this will ultimately be inflationary. But it beats living in caves. Read full article... Read full article...