Analysis Topic: Interest Rates and the Bond Market
The analysis published under this topic are as follows.
Thursday, March 26, 2015
The Monetary Approach Reigns Supreme / Interest-Rates / Money Supply
By: Steve_H_Hanke
We are still in the grip of the Great Recession. Economic growth remains anemic and below its trend rate in most parts of the world. And what’s more, this state of subdued economic activity has been with us for over seven years.In the U.S. (and elsewhere) the central bank created a classic aggregate demand bubble that became visible in 2004. The Fed’s actions also facilitated the creation of many market-specific bubbles in the housing, equity, and commodity markets. These bubbles all dramatically burst, with the bankruptcy of Lehman Brothers in September 2008.
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Tuesday, March 24, 2015
Janet Yellen Give'em the Old Razzle Dazzle / Interest-Rates / US Federal Reserve Bank
By: Peter_Schiff
Janet Yellen channels Billy Flynn? Last week the Fed Chairwoman treated us to a master class of rhetorical misdirection which produced some memorable examples of doublespeak, including the soon to be classic "Just because we removed the word 'patient' does not mean we're going to be 'impatient."' But perhaps more surprising than her new heights of verbal dexterity was the market's euphoria at being so blatantly manipulated. Never has the financial world enjoyed a lie so thoroughly.
Monday, March 23, 2015
The Negative Interest Rates in Europe / Interest-Rates / ECB Interest Rates
By: Arkadiusz_Sieron
We wrote in one of our daily articles that Sweden had cut its main interest rate into negative territory (-0.10 percent). That way the Riksbank followed other European central banks. Currently, except Sweden, the negative interest rates are set by the Central Bank of Denmark, the European Central Bank and the Swiss National Bank. What does such a historically unusual monetary policy mean for the financial markets?
Monday, March 23, 2015
Yellen Runs Out Of Patience, But Not Excuses / Interest-Rates / US Federal Reserve Bank
By: Michael_Pento
The Fed removed the word Patience from its statement made following the FOMC meeting that concluded on Wednesday. But, taking out that one word proved to be mostly irrelevant. The removal of the patient language was more than offset by the Fed's lowering of its GDP growth estimates and its projection for when and how high it will raise rates based on its previously incorrect assessments of inflation and growth. Ms. Yellen said in the FOMC press conference that removing "Patient" did not mean she would become impatient with raising rates. It is clear that the dollar's strength and the cascading economic data reported since the start of 2015 caused the Fed to push out its timing for its first rate hike and the overall level for which it will finally reach equilibrium.
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Sunday, March 22, 2015
The "Natural Interest Rate" Is Always Positive and Cannot Be Negative / Interest-Rates / Economic Theory
By: Thorsten_Polleit
Some economists have been arguing that the “equilibrium real interest rate” (that is the “natural interest rate” or the “originary interest rate”) has become negative, as a “secular stagnation” has allegedly caused a “savings glut.”1
The idea is that savings exceed investment, and that a negative real interest rate is required for bringing savings in line with investment. From the viewpoint of the Austrian school, the notion of a “negative equilibrium real interest rate” doesn’t make sense at all.2
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Saturday, March 21, 2015
Yield Curve, Futures, Suggest No U.S. Interest Rate Hike Until December / Interest-Rates / US Interest Rates
By: Mike_Shedlock
Curve Watcher's Anonymous is investigating the yield curve following Janet Yellen's exceptionally dovish FOMC announcement on Wednesday.
Friday, March 20, 2015
Yellen's Tiger Riding Dilemma Keeps Interest Rates Near Zero / Interest-Rates / US Interest Rates
By: Dan_Amerman
Riding a tiger is one thing. But getting off the tiger, without that tiger then whirling around and consuming you – now that is another thing altogether.
A short non-econospeak translation of the results of the March 17-18 Federal Reserve meeting is that Fed chairwoman Janet Yellen still maintains that she is getting off that tiger – someday – but not at this moment because she doesn't know how to keep the US economy and markets from being eaten in the process.
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Friday, March 20, 2015
Janet Yellen Needs a Lesson in Culture / Interest-Rates / Eurozone Debt Crisis
By: Money_Morning
Shah Gilani writes: The interesting news coming out of Federal Reserve Chairwoman Janet Yellen’s Q&A yesterday was her response to a question about bad bank “culture.”
Apparently, it’s not the Fed’s concern.
Yellen said, “While changing the culture of organizations is not something that we can achieve through supervision, we will make sure that the banks that we supervise have appropriate compliance regimes in place.”
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Thursday, March 19, 2015
There Will Be No U.S. Interest Rate Hike in June / Interest-Rates / US Interest Rates
By: Casey_Research
Jared Dillian writes: You might have heard that the FOMC removed the word “patient” from its directive yesterday, in that it would no longer be “patient” in waiting to remove monetary policy accommodation.
Lots of people were betting—have been betting for weeks—that this would be the meeting where Janet Yellen would lay out the path for a rate hike in June. The dollar has gone straight up against just about every G10 currency.
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Tuesday, March 17, 2015
ECB's QE / Interest-Rates / Quantitative Easing
By: Arkadiusz_Sieron
Just one week after the surprising Swiss decoupling from the euro peg, the ECB unleashed its quantitative easing program. On January 22, the President of the ECB, Mario Draghi, announced a €1.1 trillion monetary injection plan, which would start in March 2015 and last until the end of September 2016, or "until we see a sustained adjustment in the path of inflation". What does this €60bn monthly bond-buying program imply for the economy and gold market?
Tuesday, March 17, 2015
The Fed Will Likely Remove 'Patient' from its Statement, But Not from its Actions / Interest-Rates / US Federal Reserve Bank
By: Ashraf_Laidi
Although oil prices rallied more than 20% following the January Fed decision, their swift decline to fresh six-year lows raises questions about whether the Fed will underestimate threat of deflation as it did with GDP growth over the last three years. A June rate hike would be a policy mistake, especially as the US dollar index is heading for its biggest quarterly gain since Q4 1992. Adding Q3 & Q4, the USD index is up 23%. And yields remain muted as bond traders do not buy into a summer rate hike.
Tuesday, March 17, 2015
Government Bonds - The Most Crowded Trades on Wall Street / Interest-Rates / International Bond Market
By: EconMatters
The most crowded trade on Wall Street, the globe, or a beach in Brazil is the Bond Yield Chasing/Price Appreciation trade. This sector or asset class is an absolute bubble, the magnitude of which has never been seen in a mainstream asset class, and one that is deemed conservative and safe by investors which makes the tail risk for these assets off the charts. We literally are looking at an 8 sigma event down the road in this asset class.
Monday, March 16, 2015
Beware of The Inverted Yield Curve! / Interest-Rates / US Interest Rates
By: Michael_Pento
In the movies, an edgy musical score is an effective tool that warns the audience something really bad is about to happen. Like the shrill screech in Psycho, certain sound effects forebode impending doom. In like manner, economics also has a similar warning sign of imminent market chaos. This omen is called the inverted yield curve. And it's no coincidence that the last seven recessions have been preceded by this ominous predictor of economic and stock market disaster.
Monday, March 16, 2015
The ECB Should End QE Next Month / Interest-Rates / Quantitative Easing
By: EconMatters
Mario Draghi backed into Unenviable Corner
This was an instance where the markets pushed Mario Draghi in a direction that really wasn`t necessary, an area he knew deep down was fruitless, and in the end will be proven to be a complete waste of time, forestalling the inevitable structural changes required for Europe to grow in a competitive fashion over the next decade.
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Friday, March 13, 2015
Rising Interest Rates are a “wild card.” Here’s how to play it… / Interest-Rates / US Interest Rates
By: Money_Morning
Keith Fitz-Gerald writes: This week's trading featured a three-day losing streak for U.S. markets on fears that the Fed may hike interest rates earlier than expected, with the Dow, S&P 500, and Nasdaq shedding around 1.24%, 1.50%, and 1.57% respectively.
Bring it on!
I've pointed out repeatedly since the financial crisis began that the "good is bad" meme followed by traders – which triggers market dips with every piece of significant good news, thanks to paranoia that the Fed will seize on that news to raise rates – only creates buying opportunities for investors with the right tactics.
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Friday, March 13, 2015
Watch As All the Bond Market Rats Jump Ship before FOMC Meeting / Interest-Rates / US Bonds
By: EconMatters
Short-Term Market Flipping
Markets are just hilarious these days, there is no meaningful investments in the era of High Frequency Trading, Spoofing Algos, Pump & Dump IPO Schemes and ZIRP free money to borrow at the drop of a hat.
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Friday, March 13, 2015
The Crazy Man's Guide to the U.S.Bond Market / Interest-Rates / US Bonds
By: John_Mauldin
I invite you to inspect the following chart of 10-year interest rates in the US.
If you don’t have a lot of experience with these things, let me clue you in: This is a very scary-looking chart. It’s a classic head-and-shoulders bottom in yields.
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Thursday, March 12, 2015
Sub-Zero Interest Rates as an Endless Daylight Saving Time / Interest-Rates / Economic Theory
By: MISES
Brendan Brown writes: We all know about Milton Friedman’s money helicopter idiom and how President Obama’s architect in chief of Quantitative Easing used it to justify his “Great Monetary Experiment.” Less well known is Friedman’s idiom about daylight saving time, how he used this to illustrate the case for flexible exchange rates, and how it is now apparently justifying the plunge of money market rates in Europe to sub-zero levels.
Wednesday, March 11, 2015
Six Days Until U.S. Bond Market Crash Begins / Interest-Rates / US Bonds
By: EconMatters
Run for the Exits
Early on Tuesday morning, realizing this was going to be a robust selloff in equities, the ‘smart money’, i.e., the big banks, investments banks, hedge funds and the like, ran to the old staple of buying bonds hand over fist with little regard for the yield they are getting paid for stepping in front of the freight train of rate rises coming down the tracks.
Tuesday, March 10, 2015
A Patient Fed Considers Losing Patience / Interest-Rates / US Interest Rates
By: Peter_Schiff
The below is an abridged version of a longer article that appears in the Winter 2015 Euro Pacific Global Investor Newsletter
I have always argued that quantitative easing and zero percent interest rates were misguided policies to combat economic weakness. But as the years went on, misguided turned into irresponsible, which led to ridiculous, and then turned into dangerous. But lately, the only word that comes to mind is "surreal." How should we react when central bankers begin to speak like Willie Wonka?
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