Analysis Topic: Interest Rates and the Bond Market
The analysis published under this topic are as follows.
Friday, December 14, 2007
Doomed to Fail - Central Banks Auctioning of Low Interest Rate Loans to holders of US Mortgaged-Backed Securities / Interest-Rates / Credit Crunch
By: Peter_Schiff
This week's announcement by the Fed that it will create a new mechanism to provide funding for credit challenged banks has been lauded by Wall Street as an innovative approach to solving the credit crisis. In truth, it is really just the same response the Fed has had for all problems great and small: crank up the printing presses, shower money on the problem, and hope that financial pain can be obscured by the balm of inflation. Both the Fed and Washington politicians are completely clueless regarding the ill effects of the plan, and are simply acting in desperation to keep a ticking time bomb from exploding before the next election.Read full article... Read full article...
Thursday, December 13, 2007
US Fed Term Auction Facilty to Drive Interbank Rates Lower / Interest-Rates / US Interest Rates
By: Paul_L_Kasriel
A lot of us were scratching our heads yesterday at 1:16 pm CST as to why the Fed did not reduce the spread between its discount rate and its federal funds rate target so as to alleviate pressures in the term Libor market that have developed since August (see Chart 1 below). Little did we know that the Fed had a little holiday stocking stuffer to give us today - Term Auction Facility.Read full article... Read full article...
Wednesday, December 12, 2007
Worlds Central Banks to the Rescue with $110 billions / Interest-Rates / Money Supply
By: Nadeem_Walayat
The Worlds Top 5 Central Banks in an unprecedented move joined forces at 2pm GMT to make $100 billions available to the retail banking market. The important point is that unlike previous liquidity boosts, the monies will be made available at favourable market rates which are much lower than the interbank rate.Read full article... Read full article...
Wednesday, December 12, 2007
Mortgage Bonds Crash in Value , Banking Sector Deception to Send Gold Soaring to $1000 / Interest-Rates / US Bonds
By: Jim_Willie_CB
An avalanche comes in 2008. Its wreckage will hit both the USEconomy and banking world. The greatest deception in the bank sector this year has been the misrepresentation of the mortgage debacle as a subprime problem. That is akin to calling an iceberg only a problem for what one can see, when 90% of its mass lies below water. Ice is lighter than water. Most mortgage bonds are like acidic stones weighing down bank and investor balance sheets. Wall Street and the USGovt con artists, using tools are fraud and distortion, prefer the public and investment community to think of the ‘Subprime Problem' as the source of distress.
On mortgage bonds, collateralized debt obligation derivatives, structured investment vehicles, all dominant in the news, reports constantly stress how the problem is traced to subprime mortgages to all those unworthy home loan borrowers who never should have been given such loans, even at higher mortgage rates. The systemic threat, both to the US banking system and USEconomy, has entered a new stage. The remedy addressed is sure to force the USDollar lower and the gold price higher, to occur in the next gear. Breakouts are coming which will seem to lose control, like what was seen in September and October.
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Wednesday, December 12, 2007
Merrill Lynch and Morgan Stanley Expect US Recession During 2008 / Interest-Rates / Money Supply
By: Gold_Investments
GoldGold was up $4.00 to $811.60 per ounce in New York yesterday and silver was up 3 cents to $14.67 per ounce. Subsequent to the Federal Reserve's 25 basis point interest rate cut gold fell in the less liquid New York Access market and erased the earlier gains. In volatile trade gold then fell as low as $796 but then rallied strongly and again erased the short term losses and in Asian and early European trading gold has been strong was at $807.50 at the today's London AM Fix. Gold was largely flat in pounds sterling and euros and at the London AM Fix gold was trading at £394.77 GBP (up from yesterday's London AM Fix at £393.79) and €549.21 EUR (up from yesterday's London AM Fix at €549.15). http://www.lbma.org.uk/statisti cs_current.htm Read full article... Read full article...
Tuesday, December 11, 2007
How Fund Managers and Investment Bankers Turn Toxic Waste Bonds Into Scam Profits / Interest-Rates / Scams
By: Paul_Tustain
"...If only I could make a thumping great profit before the year-end, says the fund manager to his investment banker, then my bonus would be secure..."
UNLESS YOU ARE well informed, you are going to pay for getting investment bankers and fund managers out of the very deep hole they have recently dumped us all in.
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Tuesday, December 11, 2007
Subprimes Hit Dervatives Shadow Banking System / Interest-Rates / Global Financial System
By: John_Mauldin
This week in Outside the Box we will look at Bill Gross of Pimco's latest essay, addressing the ever expanding economic repercussions of the poorly understood CDO/CLO market, the off balance sheet structured investment vehicles (SIVs) and the economic abyss Bernanke and Company are attempting to lead the market out of with neither light nor guide. Bill sits on the top of the largest bond firm in the world, so they have some very unique insights into what is happening. I always pay attention to what Bill says, and you should too.Read full article... Read full article...
Tuesday, December 11, 2007
The Final Interest Rate Cut of 2007 / Interest-Rates / Global Stock Markets
By: Regent_Markets
Housing news and interest rate decisions dominated headlines and market sentiment yet again last week. Its easy to forget that there were times when this wasn't the case.Read full article... Read full article...
Tuesday, December 11, 2007
US Interest Rate Cuts and Mortgage Bailout Will Avert US Recession in 2008 / Interest-Rates / US Economy
By: Nadeem_Walayat
The US Fed's reaction to date to the housing bust and US subprime mortgage credit crisis is by making deep cuts in US interest rates that today will see at least a further 0.25% cut bringing the rate down to 4.25%, off 1% from the 5.25% high just 3 months ago.
The US Fed is clearly in full blown panic mode, with the aim of the cuts to avert a potentially deep US recession.
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Monday, December 10, 2007
Nuclear Bond Implosion Ahead As Long-term Inflationary Expectations Rise / Interest-Rates / US Bonds
By: Alex_Wallenwein
The US Fed's measure for long term inflationary expectations may keep it from dropping rates much further, potentially setting off a 'nuclear' bond-price implosion. An only hours-old Bloomberg article details why "Chopper-Bernie" may have to ground his inflation-helicopter much earlier than anyone expects.In essence, an inflation indicator used by the Fed, and literally signed off on by Alan Greenspan, indicates that bond investors' long-term inflationary expectations are on the rise - and significantly so.
Bond investors have recently been lulled into a false sense of security by the alleged 'fact' that inflation remained so low.
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Monday, December 10, 2007
Bank of England Worried as Interbank Interest Rates Fail to Fall / Interest-Rates / UK Interest Rates
By: Nadeem_Walayat
The Bank of England responded last week with a panic interest rate cut to 5.5% on the latest signs of the UK housing market entering a bear market with the release of Halifax November House price data showing a sharp fall in house prices of 1.1%, and the liquidity squeeze that had raised the interbank rate substantially above the base rate.Read full article... Read full article...
Sunday, December 09, 2007
ECB Breaks US Dollar's Neck on Euro-zone Interest Rates Statements / Interest-Rates / Euro-Zone
By: Alex_Wallenwein
Yesterday, December 6, 2007, the ECB's Trichet announced that, while currently holding steady at 4.00 percent, he is willing to raise the euro's equivalent of the US federal funds rate in a heartbeat if euro-zone price inflation continues to rise next year.
EU zone inflation is widely expected to reach 2.5 percent next year, well above the ECB's tolerance level of around 2.00 percent.
Friday, December 07, 2007
Impending Global Financial Crisis As Credit Markets Grind to a Halt / Interest-Rates / Credit Crunch
By: Mike_Whitney
The wreckage in the housing market just keeps piling up. Sales of existing homes in October dipped 23.5% from last year. Prices on new homes dropped 13% year over year. Third quarter foreclosures skyrocketed to 635,000, a 94% increase over last October and an all-time high on the Misery-Meter. The real estate market is in free-fall and the real trouble hasn't even begun yet.
California, Nevada, Arizona and Florida are mired in a full-blown housing depression. Inventory is off-the-chart. Presently, there's a 10.8 month backlog and the numbers are steadily rising. If foreclosures continue at the current pace, by the end of 2008, there'll be a 14 month inventory. That means that every builder in the country could take off his tool-belt right now and stop working FOR MORE THAN A YEAR before the market would clear. Contractors would be filling out job-applications at Red Lobster or looking for an empty street-corner with a tin cup.
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Friday, December 07, 2007
Analysis of Interbank and Base Interest Rate Spread / Interest-Rates / UK Interest Rates
By: Nadeem_Walayat
The Bank of England cut UK interest rates on Thursday. One of the primary reasons for the cut was the credit crunch, and specifically its impact on the interbank money markets, which has seen the interbank rates soar since the credit crunch exploded on the scene during August 07, due to the fact there is an increased risk of default and lack of liquidity despite subsequent liberal amounts of liquidity released by the US Fed and the European Central bank. Therefore this article analyses the spread between the base interest rate as set by the Bank of England and the money markets 3 month inter-bank lending rate.Read full article... Read full article...
Thursday, December 06, 2007
Credit 'Crunch' or Credit Collapse? / Interest-Rates / Credit Crunch
By: Alex_Wallenwein
How can you protect yourself during the worsening credit crunch?
To figure that out, we first need to understand what this 'credit crunch' really is, from the most fundamental perspective possible. For, it's root cause is not the sub-prime mortgage default crisis as financial pundits like to claim. It goes far, far deeper than that.
We all know by now that the entire world financial structure is dependent on one thing, and one thing only. That one thing is the very brick from which the splendid looking but dangerously tilting edifice is constructed:
Monday, December 03, 2007
Popeye Paulson To Bailout SIV's and Subprime Mortgages But Without Constructive Workable Policies / Interest-Rates / Subprime Mortgage Risks
By: Brady_Willett
Treasury Secretary Henry Paulson was trying to strong-arm the supposedly free markets again last week, this time catching headlines for his fronting of the government's proposal to temporarily freeze interest rates on some troubled subprime mortgages. You have to give Mr. Paulson credit for having the bluster to constantly make media appearances – first to dispel contagion fears, then to announce that he was helping banks set-up an SIV bailout, and now to provide an update on his subprime bailout plans. At the same time, you have to give the media very little credit* for questioning both his tactics and his apparent lack of results. Of course juggling two Treasury coordinated bailouts at the same time is no simple task. Most immediately there are the tactical concerns associated with directing Citigroup representatives to the right conference room – we can only imagine the reception desk querying new arrivals as if they were diners at a low-end stake-house: ‘are you here for the SIV or subprime bailout?'Read full article... Read full article...
Monday, December 03, 2007
US Interest Rate Cuts To Not Show In Economic Data Until Late 2008 / Interest-Rates / US Economy
By: Paul_J_Nolte
The last three weeks really just didn't count as far as the markets were concerned. Never mind the multiple 200+ down days for the Dow, the multiple 200+ up days or the many “key” 9 to 1 volume days on both up and down days, as the markets are right where they were on November 7 th , before all the bad (and good) stuff happened. The housing and sub-prime issues continue to pervade trader's thoughts and actions and until an infusion of cash to Citigroup, investors felt we were on the cusp of a financial meltdown. Comments from Fed officials in advance of their meeting on the 11 th also indicated they stood at the ready to cut rates further to avoid further erosion in the economy.Read full article... Read full article...
Monday, December 03, 2007
Catch-22 for US Fed and Global Economy On Interest Rates / Interest-Rates / Global Financial System
By: Captain_Hook
What can I tell you, but I told you so. Finally, Europeans are waking up to the fact cake eaters on Wall Street intend to devalue their way out of their problems, as forecast here on these pages recently. This is because it's really beginning to hurt, and it now appears the US intends to make the currency trade a one way event in postponing any pain like the stock market.
The only problem with this brand of thinking, if you can call what price managers are doing these days thinking, is a good old-fashioned currency crisis , which should go a long ways in waking up slumbering societies around the world in turn, along with keeping gold in the forefront. This should become even more apparent today with Bernanke speaking, where already yesterday a panicky Fed was pandering the mob by hinting at lower rates.
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Friday, November 30, 2007
The Bernanke Interest Rate Cycle, Age of Turbulence and Pavlov's Dog / Interest-Rates / US Economy
By: Tim_Iacono
Well, the big news yesterday was that Federal Reserve Vice Chairman Donald Kohn "opened the door" to more interest rate cuts by the Fed and, as a result, equities rallied.
Like Pavlov's dogs it seems.
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Thursday, November 29, 2007
The Fed Fails to Comprehend the Problems Facing US Economy and Dollar / Interest-Rates / US Economy
By: Alex_Wallenwein
US Fed vice-chairman Donald Kohn is in a quandary.
I'm sure he's not alone. It's just that he happened to be tasked with making a set of statements that would have been far too embarrassing for Bernanke to make. That is especially so after Ron Paul publicly slapped him with his own ledger book, so to speak.
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