Category: US Interest Rates
The analysis published under this category are as follows.
Friday, August 30, 2024
The Post-2020 History of the 10-2 US Treasury Yield Curve / Interest-Rates / US Interest Rates
By: Gary_Tanashian
The 10yr-2yr Yield Curve is poised to un-invert under disinflationary, possibly coming deflationary pressure
We know the story. A disgusting virus spread across the world…
covid, yield curve
…terrorizing society into social and economic lockdown, causing crude oil to go to zero and many markets to begin a crash. The Fed sprang into action with Zero Interest Rate Policy (ZIRP), QE, MMT and whatever other TMM (total market manipulation) it could think of in order to create the inflationary pathway out of the disaster.
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Friday, June 07, 2024
The Fed Leads and the Market Follows? It's a Big Fat MYTH / Interest-Rates / US Interest Rates
By: EWI
By Murray Gunn | Head of Global Research, Elliott Wave International
We help investors by analyzing what really drives the markets. Along the way, we often uncover a market myth, something most investors believe moves the markets, but really doesn't.
I want to show you one of the biggest market myths in existence. It will help you understand what the Fed can and cannot do.
The one thing the Federal Reserve can do is control the money supply. The physical printing of dollars, or the digital creation of reserves, is in its gift. The natural state of affairs is for the money supply to grow at a rate of around 5% per annum.
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Friday, May 24, 2024
Why US Interest Rates are a Nothing Burger / Interest-Rates / US Interest Rates
By: Nadeem_Walayat
All eyes today will be on the Fed and it's interest rate decision, weren't we supposed be having a cut in March? That's gone! Kicked down the road. So no rate cut today or at the next meeting nor likely in June. And each time the Fed holds the MSM clowns cry stocks must fall due to failure for rate cuts to materialise all whilst the bull market continues to relentlessly grind higher.
Everybody is obsessed with when will the rates be cut without understanding why rates should be cut!
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Sunday, April 07, 2024
The Fed is becoming increasingly divided on interest rates / Interest-Rates / US Interest Rates
By: Submissions
Powell reaffirms multiple rate cuts are on the table, but his peers thinks we’ll be lucky to get one this year
The Fed's officials can’t seem to get their stories straight.
On April 3, Fed Chair Jerome Powell reaffirmed his expectations for multiple rate cuts this year, shrugging off the recent uptick in inflation.
Monday, March 25, 2024
The Federal Reserve Didn't Do Anything But It Had Plenty to Say / Interest-Rates / US Interest Rates
By: MoneyMetals
The Federal Reserve didn’t do anything at its March Federal Open Market Committee (FOMC) meeting, but Jerome Powell & Company had plenty to say.
The Fed’s dovish rhetoric sent a wave of relief through the markets and drove stocks to yet another all-time high.
People would probably be wise to remember that saying isn’t doing.
Monday, March 11, 2024
Fed’s Next Intertest Rate Move might not align with popular consensus / Interest-Rates / US Interest Rates
By: Richard_Mills
The Fed’s preferred measure of inflation is core PCE, which stands for Personal Consumption Expenditures index. This inflation gauge, published monthly by the Bureau of Economic Analysis (BEA), doesn’t include food and energy, because prices for these two categories tend to be volatile.
When the latest PCE numbers came out on Feb. 29, they showed January headline PCE was 2.4%, year on year, while core PCE was 2.8%.
Remember, the Fed’s targeted inflation rate is 2%. Inflation needs to be falling to somewhere close to 2%, for the Fed to consider lowering interest rates, having raised them 11 times since spring 2022.
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Monday, March 11, 2024
Two Reasons The Fed Manipulates Interest Rates / Interest-Rates / US Interest Rates
By: Kelsey_Williams
There are two reasons the Fed manipulates interest rates. Before we talk about those reasons, though,it is important to understand that the Fed does not actually control interest rates. Interest rates are set in the bond market. Buyers and sellers (traders) bid for and offer bonds for sale. When a buyer and seller agree on a price, the trade is finalized. The specific price, in conjunction with the face value of the bond (always $1000) and the stated coupon rate attached to the bond (and the length of time until the bond matures for yield to maturity) factor into the formula which determines the current yield, or what might be called the bond’s current interest rate.
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Friday, March 01, 2024
US Interest Rates - When WIll the Fed Pivot / Interest-Rates / US Interest Rates
By: Nadeem_Walayat
The current Fed Funds rate is 5.25% with he market expectations for the cuts to commence March 2023, though the market has been wrong for the whole of 2023 when Fed rate cuts were always seen as starting some 6 months into the future! In reality it does not matter when the Fed cuts rates because the Fed FOLLOWS the market rates not sets them. And the market rates as evidenced by bond yields has been falling for the past few months.
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Sunday, February 04, 2024
Watch Consumer Spending to Know When the Fed Will Cut Interest Rates / Interest-Rates / US Interest Rates
By: Richard_Mills
The probability of interest rate cuts has many market participants pondering whether 2024 will bring a bull market for precious metals.
Gold has held up quite well despite the Fed’s tightening cycle, gaining 13% in 2023.
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Sunday, June 18, 2023
Fed Claims It CAN Resume Rate Hikes While Doubts Grow / Interest-Rates / US Interest Rates
By: MoneyMetals
As the Federal Reserve begins to back off on tightening, the U.S. dollar is becoming increasingly vulnerable to selling.The Fed left its benchmark interest rate unchanged at just above 5% at this week's policy meeting. It was the first time in over a year that central bankers decided not to hike.
In his remarks, Fed chairman Jerome Powell tried to maintain a hawkish tone despite the dovish policy move. He vowed to deliver more rate hikes later this year.
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Friday, June 16, 2023
US Interest Rate A Pause Like Nonother / Interest-Rates / US Interest Rates
By: Michael_Pento
The Bank of Canada paused its rate hiking cycle in January but then hiked rates at its last meeting. The
Royal Bank of Australia paused in April but then had to start hiking again in June. The Fed also paused at
its June meeting or at least skipped a rate hike. This was the case even though core inflation rose 0.4%
month over month from April to May and was still up 5.3% from a year ago.
Friday, December 30, 2022
Major Fed Myth: Debunked - Fed is Reactive in Setting Rates – Not Proactive / Interest-Rates / US Interest Rates
By: EWI
The days of near-zero interest rates are long gone -- at least for now.
As we look back on 2022, we know that it's been a year of rising interest rates, and many observers say it's all due to the Fed.
But it's a flat-out myth that the Fed determines the trend of interest rates. The market does. The Fed merely.
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Saturday, December 24, 2022
Why the Fed Intertest Rates Pivot will Happen Faster than People Think / Interest-Rates / US Interest Rates
By: Richard_Mills
Most market participants see the Fed’s tightening policy as similar to what Paul Volcker’s Fed did in the late 1970s, when double-digit inflation necessitated a cycle of rate hikes that brought the federal funds rate to 20%. Volcker succeeded in taming inflation but the price was the 1982 recession, considered one of the longest and worst in economic history.
There is one crucial difference between 1982 and 2022, and that is the debt. According to the FRED chart below, the US debt to GDP ratio in 1982 was around 35%. Today it is more than three times higher, at 120%.
This severely limits how much and how quickly the Fed can raise interest rates, due to the amount of interest that the federal government must pay on its debt.
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Monday, November 07, 2022
Powell May Be Planning a Post-Election Fed Pivot / Interest-Rates / US Interest Rates
By: MoneyMetals
The U.S. Dollar Index (DXY) took a dive last Friday following a middling jobs report. Could the move be the start of a bigger breakdown?
The DXY, a measure of the dollar’s relative strength versus a basket of foreign currencies, peaked in late September. Since then it has fallen into a sideways trading range, failing to make new highs despite another jumbo rate hike by the Federal Reserve last week.
Currency traders may be looking ahead – specifically to the likelihood of a U.S. economic downturn in 2023. The potential of another housing-led Great Financial Crisis also looms.
Sunday, November 06, 2022
The 78 Year Interest Rate Cycle - Why Investors in U.S. Treasuries Face Major Risk / Interest-Rates / US Interest Rates
By: EWI
Rising rates will be "disastrous" for governments, other debtors and creditors
The market for U.S. Treasuries is the biggest bond market in the world, and it appears that potentially big trouble may be afoot.
Earlier this month, none other than the U.S. Treasury Secretary herself (Janet Yellen) acknowledged ...
... "a loss of adequate liquidity in the [U.S. government debt] market."
Then, in a statement last week, Bank of America strategists expressed concerns about ...
... "large scale forced selling [of U.S. Treasuries]."
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Thursday, November 03, 2022
Fed Hawkish Interest Rate Pivot / Interest-Rates / US Interest Rates
By: Michael_Pento
This latest bear-market bounce was predicated on good seasonality, the hopes for a typical mid-term election boost, and the rumors of a Fed pivot. Wall Street always finds a narrative for rallies in a bear market. But the negative economic and liquidity cycles remain unchanged: The Fed is hiking rates into a recession. Powell may have done his last 75bp rate hike on November 2nd. But another 50bp hike is likely coming in December, and then the regular 25bp variety is coming in February. Meanwhile, $95 billion per month of Quantitative Tightening is rapidly destroying the money supply.
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Wednesday, October 26, 2022
When Will the Fed Throw in the Towel on Rate Hikes? / Interest-Rates / US Interest Rates
By: MoneyMetals
The Federal Reserve finally stopped referring to inflation as “transitory” earlier this year and got serious about trying to control the painful rise in prices it has caused. Officials have jacked the Fed funds rate up by 3% since March.
Thus far they have been willing to inflict pain upon financial markets. The S&P 500 lost roughly 20% of its value since the end of March.
The aggressive tightening has also pushed the Federal Reserve note “dollar” higher relative to other major currencies.
Sunday, October 23, 2022
US interest Rates and Inflation / Interest-Rates / US Interest Rates
By: Nadeem_Walayat
US market interest rates LEAD the inflation rate. even more so than that which the below graph implies as there is a couple of weeks delay in release of inflation data. And then there is the smoke and mirrors inflation game that the Fed plays i.e. core inflation vs CPI, core is CPI less food and energy because obviously people can survive without food and energy so are excluded so that the Fed gets a more manageable inflation number so as to make their job easier than if they had to cope with a truer inflation rate.
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Saturday, August 20, 2022
Mixed Messaging from the Fed Causing Confusion in Markets / Interest-Rates / US Interest Rates
By: MoneyMetals
Precious metals markets are giving up ground this week as investors react to the latest musings from the Federal Reserve.
On Wednesday, the Fed released the minutes from its latest policy meeting. Officials acknowledged some of the warning signs of a weakening economy. That suggests they are likely to scale back future rate increases rather than implement additional 75 basis-point hikes.
But policymakers also admitted that inflation is still running uncomfortably high and seem poised to continue tightening to some extent.
Mixed messaging from the Fed caused confusion among investors. Some interpreted the Fed's comments as hawkish while others saw them as more dovish than expected. Perhaps central bankers themselves are confused and don't really know what they should be doing next.
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Thursday, August 04, 2022
Should We Be Prepared For An Aggressive U.S. Fed In The Future? / Interest-Rates / US Interest Rates
By: Chris_Vermeulen
Traders expect the U.S. Fed to soften as Chairman Powell suggested they have reached a neutral rate with the last rate increase. The US stock markets started an upward trend after the last 75bp rate increase – expecting the U.S. Fed to move toward a more data-driven rate adjustment.
My research suggests the U.S. Federal Reserve has a much more difficult battle ahead related to inflation, global market concerns, and underlying global monetary function. Simply put, global central banks have printed too much money over the past 7+ years, and the eventual unwinding of this excess capital may take aggressive controls to tame.
Wednesday, August 03, 2022
The ‘Wishful Thinking’ Fed Is Anything But ‘Neutral’ / Interest-Rates / US Interest Rates
By: MoneyMetals
With last week’s second 75 basis-point rate hike, the Federal Reserve now claims it has achieved a “neutral” monetary policy stance. That would mean, in theory, that interest rates are neither stimulating nor restraining the economy.
"Now that we're at neutral, as the process goes on, at some point, it will be appropriate to slow down,” Fed Chairman Jerome Powell said.
Powell was effectively telling markets he intends to pivot away from inflation fighting.
Yet inflation, even when measured by the Fed's own preferred gauge, continues to run hot.
Friday, July 08, 2022
The Fed Is Afraid of Inflation and Tightens Its Hawkish Stance / Interest-Rates / US Interest Rates
By: Arkadiusz_Sieron
The Fed gives no illusions: it will maintain its hawkish stance. Meanwhile, gold plunged decisively below $1,800, which has bearish implications.Yesterday (July 6, 2022), the FOMC published the minutes from its last meeting, held in mid-June. Although the publication reveals no major surprises about US monetary policy, it shows rising worries within the Fed and also strengthens its hawkish rhetoric.
Why? First, the Committee’s members acknowledged that “the near-term inflation outlook had deteriorated since the time of the May meeting.” They also agreed that risks to inflation were skewed to the upside and that persistently high inflation could de-anchor inflation expectations:
Many participants judged that a significant risk now facing the Committee was that elevated inflation could become entrenched if the public began to question the resolve of the Committee to adjust the stance of policy as warranted. On this matter, participants stressed that appropriate firming of monetary policy, together with clear and effective communication, would be essential in restoring price stability.
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Sunday, April 24, 2022
Will the Fed Raising interest Rates Cause a Recession? / Interest-Rates / US Interest Rates
By: Richard_Mills
A recession is what results when an economy stops growing. The National Bureau of Economic Research, the group entrusted to call the beginning and end dates of a recession, defines it as “a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sales.”
Economists define a recession as two consecutive quarters of decline in GDP, which is the total value of all goods and services a country produces.
We aren’t there yet, but the war between Russia and Ukraine has prompted a re-evaluation of the growth prospects for the world economy and some of the major players in it. According to CBC News, the International Monetary Fund is blaming the war for disrupting global commerce, pushing up oil prices, threatening food supplies and increasing uncertainty already heightened by the coronavirus.
The 190-country lender therefore slashed its global growth forecast to 3.6% this year and next.
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Monday, February 14, 2022
What Fed Jawbones Mean for Business / Interest-Rates / US Interest Rates
By: Gary_Tanashian
And the Fed is listening.
[edit] After this post was published another Hawkish jawbone came in the form of James Bullard and a call for a larger rate hike in March. CME Group Fed Futures traders quickly adjusted their expectations to a .5% March hike at the behest of the Bullard jawbone. The point of my post is intact, and this heavy dose of expectations management may indeed result in .5% in March or it could be a shock absorber for the post’s original thesis, which is that a .25% hike could come sooner. The point I made at the end of the post still holds: “If the Fed is caught this far off guard, anything is possible”.
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Monday, February 07, 2022
Powell the Pivoter Cannot Now Pivot Back to a Dove / Interest-Rates / US Interest Rates
By: Michael_Pento
The current Fed Chair is perhaps best known for his quick pivots from hawkish back to dovish and vice versa. Maybe he is just too dependent on the prevailing winds of the current economic data. Or, perhaps more accurately, he is most swayed by the performance of the stock market. In either case, Jerome Powell received more reasons to become hawkish just one day following his already hawkish FOMC press conference.
The Bureau of Economic Analysis reported Q4 2021 GDP growth at a 6.9% SAAR. This is a big problem for the Fed, since it falsely believes inflation comes from an economy that is growing too fast. Add in the 7% CPI print for December, and you have a Fed that now understands it is far behind the inflation curve and it's time to pivot towards an even tighter monetary policy stance. Nevertheless, the FOMC fails to grasp the rapid growth and inflation was engendered by unprecedented fiscal and monetary stimulus, which has now gone in reverse.
Monday, December 27, 2021
Will Santa Give Us Interest Rate Hikes for 2022? / Interest-Rates / US Interest Rates
By: P_Radomski_CFA
If the Fed normalizes its balance sheet and markets freak-out, it will be a bridge too far. But interest rate hikes won’t crash a strong US economy.
With Fed officials increasingly hawked up, the narrative shifted from a tapering of asset purchases to potential interest rate hikes. And now, with whispers of the Fed plotting to normalize its balance sheet, questions have arisen over the potential impact on the PMs.
To explain, I wrote on Dec. 20:
After admitting that inflation “is alarmingly high, persistent, and has broadened to affect more categories of goods and services,” Waller implored the Fed to sell some of its bond holdings.
For context, tapering means that bonds are purchased at a slower pace or not at all. However, even zero purchases result in the Fed’s nearly $8.76 trillion in bond holdings remaining constant. Conversely, if the Fed reduces its balance sheet by selling bonds to private investors, it’s akin to a taper on steroids. Waller said:
“If we start doing some balance sheet runoff by summer, that’ll take some pressure off, you don’t have to raise rates quite as much. My view is we should start doing that by summer.”
Monday, December 20, 2021
Fed WAY behind Curve, Real Rates to Remain Deeply Negative / Interest-Rates / US Interest Rates
By: MoneyMetals
As the Federal Reserve prepares to taper its asset purchases, investors are preparing to adjust their portfolios.
Some are dumping gold. They could be making a big mistake.
Sentiment toward precious metals turned negative as prices fell over the past few weeks. Gold and silver markets continued to slide ahead of the Federal Reserve’s policy meeting on Wednesday.
However, they got a bounce following the Fed’s announcement that it would double the pace of tapering in 2022 and raise interest rates up to three times.
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Wednesday, December 15, 2021
US Fed Interest Rate Actions 1999 to Present – What’s Next? / Interest-Rates / US Interest Rates
By: Chris_Vermeulen
I find it interesting that so much speculation related to the US Federal Reserve drives investor concern and trends. In my opinion, the US Federal Reserve has been much more accommodating for the global economy after the 2008-09 US Housing Market crash. The new US Bank Stress Tests and Capital Requirements have allowed the US to move away from risk factors that may currently plague the global markets. What do I mean by this statement?
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Thursday, November 11, 2021
Interest Rate Normalization is Impossible / Interest-Rates / US Interest Rates
By: Michael_Pento
Stagflation is undermining the U.S. economy, and that poses a huge problem for Mr. Powell and his merry band of money printers.Inflation is running at a pace that is just about 3x faster than real GDP growth--a figure the Fed can no longer ignore. This is why Mr. Powell had no choice but to announce at November's FOMC press conference that the Fed would reduce its purchases of MBS and Treasuries by $15 billion each month starting this month. Therefore, officially pushing the economy further towards the edge of the monetary cliff. Meaning, the amount of new monetary creation will go from a record $120 billion per month to zero by the middle of 2022.
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Saturday, October 09, 2021
When Will the Fed Taper? / Interest-Rates / US Interest Rates
By: The_Gold_Report
In this review of the quarter, Adrian Day, founder of Adrian Day Asset Management, discusses the Federal Reserve's asset purchases, its talk of tapering them, and what that could mean for the broader markets.
To taper or not to taper, that is the question. So far, the Federal Reserve’s constant talk and threats of an impending taper have performed the job better than actually doing anything. Stocks are flat, gold is down, as are bonds. But markets are beginning to grow weary of the constant threats with no action. When the Fed actually starts to taper, we may see markets turn. It was a poor quarter in most major markets and assets.
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Thursday, October 07, 2021
Here's What Really Sets Interest Rates (Not Central Banks) / Interest-Rates / US Interest Rates
By: EWI
See "powerful evidence that the Fed is not in control of interest rates"
Most everyone is familiar with the phrase: "Keep your eye on the ball," which of course means -- focus on what really matters.
Those who seek clues about the direction of interest rates believe the "ball" is their nation's central bank.
For example, in the U.S., Federal Reserve announcements are the subject of countless financial headlines, like this one from Sept. 22 (Reuters):
Fed signals bond-buying taper coming 'soon,' rate hike next year
The assumption in most of these headlines is that the central bank determines the direction of rates.
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Sunday, August 29, 2021
Jackson Hole Ahead! What Should We Expect? / Interest-Rates / US Interest Rates
By: Arkadiusz_Sieron
Gold prices fluctuate around $1,800, waiting for signals from the Fed at Jackson Hole. Which way will we go after the conference?Finally! The price of gold returned above $1,800 this week, as the chart below shows. It’s a nice change after the slide in early August. Although gold has rebounded somewhat, bulls shouldn’t open the champagne yet. A small beer would be enough for now, as the yellow metal already retreated from $1,800 on Wednesday (the fact that gold was unable to stay above this level is rather disappointing).
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Wednesday, August 25, 2021
Why Expectations for Fed Tightening Are Misplaced / Interest-Rates / US Interest Rates
By: MoneyMetals
Stimulus addicted markets ran into headwinds last week. Fed watchers found some hints about interest-rate tightening in the just-released FOMC’s July meeting minutes. That was all it took to rattle Wall Street.
Stocks have since recovered some of the initial losses, but it looks like history is about to repeat.
The U.S. economy is largely a mirage based on stimulus. Without artificially low interest rates, bond purchases (aka debt monetization), repo market support, and other extraordinary measures the central planners put in place, stock prices would fall.
There was a stock market correction in the fall of 2018 after which the Fed reversed course on tightening. And when COVID struck in March of 2020, the Fed quickly surrendered – cutting the funds rate all the way back to zero.
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Thursday, January 28, 2021
US Interest Rate Threshold Keeps Dropping / Interest-Rates / US Interest Rates
By: Michael_Pento
Initial Jobless claims totaled 900,000 for the week ending January 16th, after shedding 965,000 in the week prior. These numbers are over four times greater than they were a year ago. I find this to be not only sad but also remarkable in that we are still losing close to one million jobs per week a year after the Wuhan virus first broke out. More signs of economic stress were found in the December Retail Sales report. Sales dropped 0.7% last month, and the data for November was revised down to show a decline of 1.4%, instead of the 1.1% previously reported. Figures such as these illustrate just how fragile the economy still is, which will automatically put upward pressure on the level of outstanding debt. And, gives the new Administration impetus to pass more and bigger fiscal stimulus packages. That's really bad news for any of us left that still care about debt and deficits.Read full article... Read full article...
Tuesday, June 30, 2020
Fed Trampoline Cliff Diving / Interest-Rates / US Interest Rates
By: Michael_Pento
We start this week's commentary with some rather depressing news from Reuters:
The ratio of downgrades to upgrades in the credit ratings of leveraged loans has spiked to a record level, five times above that hit during the last global financial crisis, reflecting the unprecedented stress in risky assets due to the coronavirus pandemic. Leveraged loans, which are loans taken out by companies that have very high levels of debt, usually with non-investment grade credit ratings--tend to be used by private equity firms as a way to fund acquisitions of such companies. The U.S. leveraged lending market has grown to more than $2 trillion, up 80% since the early 2010s, according to credit rating agency Moody's Investors Service.
Saturday, March 07, 2020
Think the Fed's Emergency Interest Rate Cut is Proactive? Think Again / Interest-Rates / US Interest Rates
By: EWI
You might think that the Fed's recent, unscheduled 50 basis-point cut in the federal funds rate is a proactive move that places the central bank at the vanguard of revolutionary uses of monetary policy. But that could hardly be further from the truth.
For decades at Elliott Wave International, we've observed that the Fed simply follows the yield on short-term government debt. We say that "the Fed follows the market" because the freely traded bond market determines the yield on government debt. The yield on short-term U.S. Treasuries started falling in earnest in February, and in March the Fed aligned its target rate with the trend of the market. There's nothing radical or revolutionary about it. The Fed merely followed the market yet again. This chart shows the recent history.
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Thursday, January 30, 2020
Fed Keeps Federal Funds Rate Unchanged Again / Interest-Rates / US Interest Rates
By: Arkadiusz_Sieron
The FOMC held its first meeting in both the new year and the decade, keeping interest rates unchanged. But why did the yellow metal move up regardless? Let’s examine the implications for the king of metals.
Yesterday, the FOMC published the monetary policy statement from its latest meeting that took place on January 28-29th. In line with expectations, the US central bank kept the federal funds rate unchanged at 1.50 to 1.75 percent:
Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. The Committee decided to maintain the target range for the federal funds rate at 1 1/2 to 1-3/4 percent. The Committee judges that the current stance of monetary policy is appropriate to support sustained expansion of economic activity, strong labor market conditions, and inflation returning to the Committee's symmetric 2 percent objective.
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Friday, November 22, 2019
FOMC Minutes Reveal an Important Shift That’s Key for Gold, Too / Interest-Rates / US Interest Rates
By: Arkadiusz_Sieron
Yesterday, the Fed released minutes from its last meeting. They show an important shift among the meeting participants. In September, the FOMC turned more worried about the state of the U.S. economy, while just six weeks later in October, the Committee felt more optimistic again. Indeed, the central bankers noted that certain downside risks had softened:
Uncertainties associated with trade tensions as well as geopolitical risks had eased somewhat, though they remained elevated (…) Some risks were seen to have eased a bit, although they remained elevated. There were some tentative signs that trade tensions were easing, the probability of a no-deal Brexit was judged to have lessened, and some other geopolitical tensions had diminished.
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Monday, November 04, 2019
The Fed’s Policy Is Like Swatting Flies with Nuclear Weapons / Interest-Rates / US Interest Rates
By: John_Mauldin
The Federal Open Market Committee had an unscheduled meeting on October 4. That happens occasionally and they often don’t reveal it occurred until the next regular meeting. That would mean Oct. 30, in this case.
But for some reason (and you can bet they had a reason) they decided to announce this one on Oct. 11.
In between, Fed Chair Jerome Powell said in an Oct. 8 speech that the Fed would soon start growing its balance sheet again.
Thursday, October 31, 2019
What Has Freaked Out The US Fed? / Interest-Rates / US Interest Rates
By: Chris_Vermeulen
The US Fed cut rates again by 25 basis points, the third time this year. Prior to the start of 2019, the US Fed gave guidance that 3 to 4 more rate increases were planned for 2019. What the heck happened to the US Fed and what has them so freaked out that they completely changed direction on their expectations for the US and Global economy so quickly? Source: Yahoo Finance
It is painfully obvious to anyone paying attention that the US Fed expected the many years of near-zero interest rates between 2009 and 2015 to act as a fuel for future growth. The problem was that no real growth materialized until just before the 2016 US Presidential elections – and even that was relatively muted. The US Dollar had continued to rally from July 2011 lows well into the 2016 election date. The expectations for the US economy hinged on who won the election. After President Trump won, the markets started an immediate rally expecting business-friendly policies and government.
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Monday, October 28, 2019
What if the Fed Stops Cutting Interest Rates? / Interest-Rates / US Interest Rates
By: Jordan_Roy_Byrne
Fed rate cuts have been the driving force of the recent gains in precious metals.
This is not a surprise to our readers as since 2018 we argued that a shift in Fed policy from rate hikes to rate cuts would springboard the next big move. History argued the same.
The market is showing a roughly 90% chance the Fed will cut rates this week which indicates the market has essentially already priced in the rate cut.
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Tuesday, October 15, 2019
Will Interest Rate Cuts Be Enough? / Interest-Rates / US Interest Rates
By: Michael_Pento
The main stream financial media is absolutely ebullient about global central banks’ renewed enthusiasm to cut interest rates to a level that is even lower than they already are. And, most importantly, Wall Street is completely confident that theses marginally-lower borrowing costs will not only be enough to pull the global economy out of its malaise; but will also be sufficient to provide enough monetary thrust to blow asset bubbles into the thermosphere.
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Monday, September 30, 2019
Watching Paint Dry in the Repo Market Part 2 / Interest-Rates / US Interest Rates
By: Michael_Pento
The Fed has now begun to pave the way for a return to Quantitative Easing. The reason for this was the recent spike in borrowing rates in the Repo market. At his latest press, Chair Powell said this about the spike in the Effective Fed Funds and Repo rates:“Going forward, we’re going to be very closely monitoring market developments and assessing their implications for the appropriate level of reserves. And we’re going to be assessing the question of when it will be appropriate to resume the organic growth of our balance sheet… It is certainly possible that we’ll need to resume the organic growth of the balance sheet sooner than we thought.”
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Tuesday, September 24, 2019
Watching Paint Dry in the Repo Market / Interest-Rates / US Interest Rates
By: Michael_Pento
The world of fixed income trading has been extremely volatile lately. Rates have not only spiked in the Treasury market but borrowing costs in money markets have also become extremely disconcerting. The residual effects from Quantitative Tightening, which ended just this past July, are wreaking havoc on the liquidity in bond markets. Ironically, the Fed’s erstwhile rate hikes and its QT program--what Fed Chairs described as running in the background and like watching paint dry—turned out to be the catalyst for a freeze in the junk-bond market in December of 2018 and is now causing major disruption in the Repo market.
This illustrates clearly the tenuous nature of the bond bubble and that it will someday implode like a supernova---sending yields skyrocketing on a long-term basis. However, it most likely does not yet mark the start of the epoch debt bubble debacle that is in store. We will need a surge of inflation expectations, or the credit markets to shut down on a protracted basis for that to occur. We are moving closer to that eventuality every day.
Thursday, August 22, 2019
Economist Lays Out the Next Step to Wonderland for the Fed / Interest-Rates / US Interest Rates
By: Gary_Tanashian
Mr. Steven Ricchiuto, he of a Masters in Economics from Columbia, has laid out the proper plan for the Federal Reserve in this oh so noisy environment in which an unassuming and fairly quiet man is trying to tune out a personal bully on Twitter, tune out the stock market’s daily whipsaw and do what he perceives to be the right thing.
Today, the academic named above throws in with Trump and politely harangues Chairman Powell thusly in an open letter. You can read it by hitting the graphic…
https://www.marketwatch.com/story/the....
Stagflation this, Volcker that, deflation the other thing… blah blah blah. But then he gets to the interesting parts, the money parts. Of the post-Volcker era he states…
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Friday, July 05, 2019
The Fed May Give Trump His Interest Rate Cut, but It Won’t Help / Interest-Rates / US Interest Rates
By: Patrick_Watson
Investors are in a buying mood despite many economic warning signs. Why?For some, it’s because they expect the Federal Reserve to cut interest rates and otherwise “stimulate” the economy. They believe (correctly) it would drive stock and real estate prices higher.
At the risk of stating the obvious… higher asset prices mainly benefit those who own the assets. Which, in the stock market’s case, is not most Americans.
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Wednesday, June 26, 2019
Elliott Wave: Market Signaling Fed to Cut Interest Rates Soon / Interest-Rates / US Interest Rates
By: EWI
We have tracked the U.S. Federal Reserve's interest rates decisions for years. This week, the Fed once again decided to keep the funds rate unchanged. We expect the Fed to change course soon.
We have tracked the U.S. Federal Reserve's interest rates decisions for years.
In December, we wrote an article titled "Interest Rates Win Again as Fed Follows the Market," where we observed that although most pundits believe that central banks set interest rates, central banks actually follow the freely traded bond market in their rates decisions.
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Tuesday, June 11, 2019
Fed Running Out of Time and Conventional Weapons / Interest-Rates / US Interest Rates
By: Michael_Pento
The buy and hold mantra from Wall Street Carnival Barkers should have died decades ago. After all, just buying stocks has gotten you absolutely crushed in China for more than a decade. And in Japan, you have been buried under an avalanche of losses for the last three decades. And even in the good old USA, you wouldn’t want to just own stocks if the economy was about to enter another deflationary recession/depression like 2008. Likewise, you wouldn’t want to own any bonds at all in a high-inflation environment as we had during the ’70s.
The truth is that the mainstream financial media is, for the most part, clueless and our Fed is blatantly feckless.
The Fed has gone from claiming in late 2018 that it would hike rates another four times, to now saying that it is open to actually start cutting rates very soon.
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Sunday, June 09, 2019
The Fed Stops Pretending / Interest-Rates / US Interest Rates
By: Peter_Schiff
Well, it didn't take much and it didn't take long. After years of delays, a tentative start, many cautious pauses along the way, and a top speed that never really hit cruising velocity, the Fed has taken the first available off-ramp on the road towards policy "normalization." In a speech on Tuesday this week in Chicago, Fed Chairman Jerome Powell delighted Wall Street by signaling that the Fed may soon deliver the gift that investors had been hoping for...the first interest rate cut in almost a decade.
While many savvy economists should have seen this coming, as late as October of last year, almost no one in the financial world thought that the Fed would so easily abandon its long-held bias without a gale force recession blowing them off course. But, in reality, all it took was a light breeze to force a 180-degree turnaround.
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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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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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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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Wednesday, March 27, 2019
Has The Fed Finally Lost Control Of US Interest Rates? / Interest-Rates / US Interest Rates
By: Avi_Gilburt
Back in the 1940’s, Ralph Nelson Elliott once noted:
At best, news is the tardy recognition of forces that have already been at work for some time and is startling only to those unaware of the trend.
So, rather than be startled by the news of the past week, I have been trying to warn anyone who was willing to listen that if you want to know what the Fed is going to do, simply read the bond charts. You see, the Fed does not lead the market. Rather, the Fed follows the market. And, the market told me back in late 2018 that the Fed is about to fall behind the market.
Yet, almost every single person who reads this article will think I am crazy for saying something so ridiculous. Right? But, that is why I was prepared for the action seen in the bond market this past week, and not shocked as most participants seemed to be. In fact, one of my subscribers laughingly posted an article in our chatroom entitled "Riding the Bond Rally No One Saw Coming," while noting how our members were certainly quite prepared for this rally in the bond market.
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Sunday, March 24, 2019
The Fed Follows Trump's Tweets, And Does The Right Thing / Interest-Rates / US Interest Rates
By: Steve_H_Hanke
Earlier this week, the Fed left its target Fed funds rate unchanged at 2.25-2.50%. In addition, the Fed indicated that it had turned dovish. Rather than two Fed funds rate hikes in 2019, the Fed has now signaled that there will be none. And that’s not all. Starting in May, the Fed will reduce its balance sheet unwind of its Treasury holdings to $15 billion per month from $30 billion, and that it will end the unwind in September.
All this dovishness must have warmed the cockles of President Trump’s heart. For some time, Trump has been targeting the Fed with Twitter storms that have complained that the Fed has been too hawkish.
Well, the Fed apparently saw what the President saw. Or, maybe not. After all, one line of argument used to support the Fed’s new dovish stance is that the stance is necessary given the uncertainties that abound—both at home and abroad (read: regime uncertainties being created by President Trump himself).
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Friday, March 22, 2019
Elliott Wave: Fed Follows Market Yet Again / Interest-Rates / US Interest Rates
By: EWI
By Steve Hochberg and Pete Kendall
Back in December, we wrote an article titled "Interest Rates Win Again as Fed Follows Market."
In the piece, we noted that while most experts believe that central banks set interest rates, it's actually the other way around—the market leads, and the Fed follows.
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Thursday, February 28, 2019
Next Recession: Turning Zero Percent Interest Rates Into A 21% Yield / Interest-Rates / US Interest Rates
By: Dan_Amerman
If there is a new recession in the next few years, then it is highly likely that the Federal Reserve will take extreme measures in response, with the primary response being to swiftly knock short term interest rates back down to zero percent.
For many investors - the combination of recession, heavy-handed Fed interventions, and the return of zero percent interest rate policies (ZIRP) is likely to produce devastating results for their portfolios, and possibly their standard of living in retirement.
At the same time - some quite attractive profit opportunities will also exist, once we learn how to see them. This analysis explores one reasonably simple and practical alternative for turning zero percent interest rates into a 21% annual return.
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Monday, February 25, 2019
Fed Repo Man’s Valentine’s Day Present / Interest-Rates / US Interest Rates
By: Michael_Pento
The New York Federal Reserve recently sent out an early Valentine’s Day present to a certain group of individuals. However, this gift wasn’t to overleveraged American consumers; but rather to those who are employed repossessing one of those goodies they can’t afford. On February 12th the NY Fed made the announcement that a record number of consumers are falling behind on their car payments. There are now over 7 million car loans past due by at least 90 days as of Q4 2018, along with a record 89 million loans that are outstanding. For Subprime Auto borrowers with credit scores below 620, the delinquency rate spiked to over 16% and the number of subprime borrowers jumped to 20% of loans outstanding. The amount of overdue loans has spiked by 1.3 million since its previous high set in 2011, when the unemployment rate was at 9%.
Friday, February 01, 2019
Fed Statement Commentary / Interest-Rates / US Interest Rates
By: Peter_Schiff
While some may have been confused by Fed Chairman Powell's circular statements in yesterday's press conference, the takeaway should be abundantly clear: the period of Fed tightening, is over. The Fed will now hold steady on interest rates, and when they move again, they are more likely to lower rates than to raise them. And while the Fed's program of balance sheet reductions is technically still underway, Powell made it clear that the program is no longer on "automatic pilot" and that the $50 billion per month of bond sales will likely diminish, and ultimately, conclude much earlier than anyone had predicted just a few weeks ago.
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Wednesday, January 30, 2019
Fed Fold Under Pressure, Telegraphs Looser Money Ahead / Interest-Rates / US Interest Rates
By: MoneyMetals
Two big questions have been front and center for Fed watchers in recent months...
The first is just how high rates could go before stimulus-addicted markets would falter. The second is whether our central bankers would bow to pressure once markets faltered and politicians began calling for the Fed to resume easy money policies.
Both questions now seem to have an answer.
They began to wonder in earnest if sky-high stock market valuations could be supported in an environment where Fed officials promised to keep rates moving even higher for the foreseeable future.
Monday, January 28, 2019
Will 35th Recession Bring A Swift Return To Zero Percent Interest Rates? / Interest-Rates / US Interest Rates
By: Dan_Amerman
Many people view the seven years of zero percent interest rates experienced in the United States between 2008 and 2015 as being safely in the past, with normal times having returned.
As explored in this analysis, so long as the business cycle of expansions and recessions has not been repealed - then we are highly likely to see a swift return to a potentially protracted bout of zero percent interest rates with the next major downturn in the economy.
Indeed, even the staff of the Federal Reserve itself expects more frequent episodes of zero percent interest rates in the future, and for those episodes to be on a more protracted basis.
This just may change everything when it comes to the financial plans of retirement and other long term investors. Zero percent interest rates don't just eviscerate the ability of retirees to earn interest income, but they also fundamentally change stock, bond, housing and precious metals prices, moving them to places that are outside of the historical averages.
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Sunday, January 27, 2019
Fed Doves Take Flight (But We Are Not in Kansas Anymore) / Interest-Rates / US Interest Rates
By: Gary_Tanashian
Wise guys trading Fed Funds futures see no more rate hikes in 2019, and a few even imagine a rate cut before year-end. Here are the projections for the next 3 meetings, showing an overwhelming view that the Fed will hold the current 225-250 target rate. Graphics: CME Group
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Tuesday, January 22, 2019
The US Interest Rate Hawks Surrender / Interest-Rates / US Interest Rates
By: Peter_Schiff
They say that there are no atheists in fox holes. Recently it has also become clear there are no monetary hawks in bear markets.
For much of the last decade many conservative market analysts have decried our reliance on monetary stimulus to prop up the economy and the stock market. But in the final months of 2018, in the face of the worst stock market declines in a decade, many of these supposedly pragmatic figures quickly abandoned their convictions. As the markets briefly crossed into bear territory, monetary hawks joined with the doves and President Trump in issuing a full-throated call for the Fed to cancel their planned rate hikes and balance sheet reductions. It appears as if the Fed got the message. Almost overnight, the tone from the Fed softened considerably, causing Wall Street to sound the "all clear."
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Monday, January 14, 2019
Has the Fed Already Gone Too Far? / Interest-Rates / US Interest Rates
By: Michael_Pento
It is crucial for investors to understand that the Federal Reserve has not yet turned dovish and the Fed “Put” it not yet in place. Wall Street sometimes hears what it desperately needs, but that does not make it fact. While Jerome Powell has moved incrementally towards the dovish side of the ledger in the past few weeks, the Fed is still firmly in hawkish territory. If, however, Mr. Powell was actively reducing the Fed Funds Rate (FFR) and expanding the balance sheet, then we would have a dovish Fed. However, by just indicating that the FOMC might be close to finishing its rate hiking campaign, while still selling nearly $50 billion of bonds every month from its balance sheet, the Fed is still tightening monetary policy--and in a big way.
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Sunday, December 23, 2018
The Fed Tightens the Monetary Noose / Interest-Rates / US Interest Rates
By: Steve_H_Hanke
The Fed defied President Trump’s irreverent Tweets. Indeed, the Fed did what it signaled it was going to do long before Trump pushed the “Tweet” button. Yes, the Fed—with all 10 members of the Federal Open Market Committee (FOMC) voting “yes”—increased the federal funds interest rate by 25 basis points to the 2.25-2.50% range. And, as night follows day, the U.S. equity markets, currency markets, and precious metals markets took a hit.
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Monday, November 19, 2018
Calls Intensify for Halting Interest Rate Hikes / Interest-Rates / US Interest Rates
By: MoneyMetals
President Donald Trump isn’t thrilled about Jerome Powell’s stewardship of the dollar and interest rates. He would like the central bank’s help in keeping the economic party going, but so far the Fed Chair just won’t play ball. Now the Wall Street Journal has joined the President’s call for some renewed stimulus.
If officials at the Fed want to pause or even reverse course on raising interest rates, they have cover to do so. As yet, however, the consensus remains unshaken. The markets are counting on another rate hike following next month’s FOMC meeting.
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Thursday, November 08, 2018
Future US Interest Rates, Financial Markets, and the FED / Interest-Rates / US Interest Rates
By: Raymond_Matison
Don’t fight the FED, is a long-established, oft-confirmed market proverb. The FED is indeed an incredibly powerful institution; in fact, it is perhaps the most powerful institution on the planet. It is arguably more powerful than our combined air, sea, and land military forces. These forces can reduce individual military targets to dust, they can flatten cities or even small countries killing thousands of people, but still it is no competition to the FED! The FED with its power over interest rates and money creation, its expansion or contraction, its Petrodollar and global trading currency, its open market operations, and its foreign currency exchange markets can destroy the value of foreign currencies, and start revolutions. It can injure or even destroy economies of single countries or even whole regions of the developing world, in turn crippling the lives of tens or even hundreds millions of people. It can finance wars, determining who will be victorious.
Monday, October 29, 2018
The Great Interest Rate Caper / Interest-Rates / US Interest Rates
By: Andy_Sutton
It began as any other bull market. An early burst followed by climbing a wall of worry, then bursting out (or down in this case) beyond the wall of worry, its trajectory headed for the great ethereal unknown. And just like every similar time in history, market analysts, policy makers, and the general public assumed it would go on like this forever. And it did. Until it didn’t. By the title you might have already guessed the topic of this essay but think for a minute about this first paragraph and what we’re discussing in generic terms. Of course! We’re talking about the traits of a financial bubble.
By way of introduction, this essay will not contain any images. We have found that many times graphs and charts confuse the issues rather than helping to elucidate them.
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Thursday, October 11, 2018
Loss Of Yield Curve "Shock Absorber" Could Mean A Rough Ride Ahead For Markets & Housing / Interest-Rates / US Interest Rates
By: Dan_Amerman
Two important financial cycles are currently converging for the first time in more than ten years, and how they work in combination can provide key information about the future value of our retirement portfolios, the future prices of our homes, and even when the next recession may hit.
A continuing cycle of interest rate increases by the Federal Reserve has pushed Fed Funds rates up 2% from their floor. This same cycle has contributed to rapidly rising long term interest rates, with 10 year Treasury yields rising to 3.22% by the market close on October 5th, 2018.
This sharp surge in interest rates has led not only to falling bond prices, but to tumbling stock prices as well.
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Saturday, September 01, 2018
US Interest Rates - A Pound of Cure / Interest-Rates / US Interest Rates
By: Peter_Schiff
This week, as investors and economists fixate on record highs set by major stock market indices, they have ignored much more significant developments that emerged from the Federal Reserve's annual meeting in Jackson Hole, Wyoming. Fed Chairman Jerome Powell delivered a speech that somehow was almost universally interpreted as a reiteration of his commitment to continue to raise rates throughout the next few years. "Steady as she goes" was the takeaway from just about any news outlet. But the Chairman's actual message was essentially the opposite of what the media reported. From my perspective, it provided evidence that President Trump has succeeded in getting Powell's mind right on the need for the Fed to continue to stimulate the economy, no matter how much evidence emerges that it is already over-stimulated.
Monday, August 06, 2018
Technical Analysis and Interest Rates Unchanged – Here We Go / Interest-Rates / US Interest Rates
By: Chris_Vermeulen
The US Federal Reserve is one of the only central banks to attempt to raise rates consistently over the past few years, has possibly learned a very valuable lesson – no good comes from raising rates to the point of causing another market collapse. The news that the US Fed will leave interest rates where they are, temporarily, is good news for a number of reasons.
First, this allows the markets to shake out weaker players and weaker components of the corporate world. Where corporate debt levels are concerned, interest rates are tied to debt repayment liabilities and refinancing costs. Firms that are unable to manage at current interest rates certainly would not be happy about rising rates. This allows these corporations to either struggle to resolve their debt issues or collapse under the weight of their own debt. This will also play out in the foreign markets as well.
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Tuesday, July 03, 2018
Is this the Most Hawkish Fed Ever? / Interest-Rates / US Interest Rates
By: Michael_Pento
My research shows that this is one of the most hawkish Fed rate-hiking regimes ever. It has raised rates seven times during this current cycle and is on pace to raise the Fed Funds Rate(FFR) four times this year and three times in 2019.But what makes its monetary policy extraordinarily restrictive is that for the first time in history the Fed is also selling $40 billion per month of Mortgage Backed Securities (MBS) and Treasuries starting in Q3 and $600 billion per year come October. Because the Fed is destroying money at a record pace while the rest of the world’s major central banks are still engaged in money printing (QE) and zero interest rate policies (ZIRP), Jerome Powell’s trenchant and unilateral tightening policy is now causing chaos in emerging markets.
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Tuesday, June 26, 2018
The Fed Just Made Its Most Hawkish Turn in 30+ Years (Did Anyone Notice?) / Interest-Rates / US Interest Rates
By: F_F_Wiley
I realize it’s getting late to discuss the June 12–13 FOMC meeting, but I think the Fed’s biggest news from that meeting may have slipped under the radar. To confirm the relevance of what I thought I heard during the post-meeting press conference, I spent some time last week reviewing old speeches, transcripts and other materials produced by Fed officials. I’m now convinced that Chairman Jerome Powell delivered an important message that went largely unreported, and I expect him to keep at it until people take notice.
Powell’s message is that he intends to pop bubbles—both asset-price and credit bubbles. He didn’t communicate a precise threshold for bubble popping, but I believe he meant not just big bubbles but potentially little bubbles and possibly even pre-bubbles if that becomes necessary to contain the risks of financial instability. If we take him at his word, we should expect him to respond much more aggressively than his predecessors did to financial excesses, and those aggressive responses will occur even without an inflation threat. In other words, policy adjustments designed to maintain financial stability could disconnect from the FOMC’s inflation target.
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Monday, May 21, 2018
Inverted Yield Curve: It’s Definitely Not Different This Time / Interest-Rates / US Interest Rates
By: Michael_Pento
An inverted yield curve occurs when the yield on shorter-dated securities is above that on longer-term bonds; and it has predicted all nine U.S. recessions since 1955, according to Bloomberg. Of course, now that the yield curve is the flattest since 2007—with the 2-10 spread falling to just 45 basis points, from 260bps in 2014--right on cue the carnival barkers on Wall Street have been deployed in full force claiming this key financial barometer is now broken.
Friday, May 18, 2018
Flattening Yield Curve is Good / Interest-Rates / US Interest Rates
By: Axel_Merk
In recent months, pundits have cautioned about a flattening yield curve, suggesting it may signal the end of the economic expansion, the end of the bull market, possibly even the end of the world as we know it. There's plenty to worry about in the markets, but in the spirit that knowledge is the enemy of ignorance, let's clear up some myths.
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Monday, April 30, 2018
A Contrarian Take on the Great Yield Curve Scare / Interest-Rates / US Interest Rates
By: F_F_Wiley
Media coverage of most business-cycle indicators waxes and wanes with changes in the economy, but so far in 2018, the yield curve indicator is all wax. It seems like everyone has something to say about the yield curve slope, and many commentators are jumping from a flatter curve to a growing risk of recession.
Even central bankers have joined in, with a recent article from the San Francisco Fed declaring that “the term spread is by far the most reliable predictor of recessions.”
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Monday, April 23, 2018
Fox in the Henhouse: Why Interest Rates Are Rising / Interest-Rates / US Interest Rates
By: Ellen_Brown
The Federal Reserve calls itself independent, but it is independent only of government. It marches to the drums of the banks that are its private owners. To prevent another Great Recession or Great Depression, Congress needs to amend the Federal Reserve Act, nationalize the Fed and turn it into a public utility, one that is responsive to the needs of the public and the economy.
On March 31 the Federal Reserve raised its benchmark interest rate for the sixth time in three years and signaled its intention to raise rates twice more in 2018, aiming for a Fed funds target of 3.5 percent by 2020. LIBOR (the London Interbank Offered Rate) has risen even faster than the Fed funds rate, up to 2.3 percent from just 0.3 percent 2 1/2 years ago. LIBOR is set in London by private agreement of the biggest banks, and the interest on $3.5 trillion globally is linked to it, including $1.2 trillion in consumer mortgages.
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Wednesday, March 21, 2018
Chaos is the Only Way Out of Interest Rates Normalisation / Interest-Rates / US Interest Rates
By: Michael_Pento
The prevailing fiction pervading Wall Street right now is that economic growth is picking up in a sustainable fashion and that interest rates will merely rise slowly. Then, soon level off at historically low levels. In other words, they are selling a fairytale; and a dangerous one at that.
This premise is blatantly false. The Fed’s reverse QE program, Government debt levels and Nominal Gross Domestic Product, all dictate that the 10-year Note Yield should be now swiftly on its way to at least 4.5%, from the artificial level of 1.4% found in July of 2016.
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Tuesday, March 13, 2018
Gerald Celente "If Rates go up too High, the Economy goes Down, End of Story" / Interest-Rates / US Interest Rates
By: MoneyMetals
Mike Gleason: It is my privilege now to welcome in Gerald Celente, publisher of the renowned Trends Journal. Mr. Celente is perhaps the most well-known trends forecaster in the world and it's always great to have him on with us.
Mr. Celente, thanks again for the time today and welcome back.
Gerald Celente: Oh, it's always great being on. Thank you.
Mike Gleason: Well, Gerald, it's never a dull moment in Washington, D.C., these days. President Trump always keeps it lively. We have the never-ending Russia controversy, of course, the war of words with North Korea, and the intervention in Syria have both been regulars in the headlines over the past year. Now Trump is talking about tariffs and people are worried about a trade war. Volatility is coming back to the stock markets and some investors are getting nervous about rising interest rates. When it comes to Russia interfering in U.S. elections, it seems more or less like a smoke screen. We have very little doubt there is plenty of collusion and a fair bit of it involved Hillary shepherding the Uranium One deal over the finish line.
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Tuesday, March 13, 2018
US Interest Rate Tsunami Waves Spotted Just Offshore / Interest-Rates / US Interest Rates
By: Michael_Pento
We should all be familiar with the aphorism, “as real estate goes so goes the economy.” Anyone ignoring that economic axiom was completely blindsided by the Great Recession of 2008. Well, the collapse of the Everything Bubble most certainly includes the real estate market…and this time around will definitely not be different.
The plain and simple fact is that home ownership is getting further out of reach for the average consumer as mortgage rates rise. This is especially true for the first-time home buyer. The 30-year fixed rate mortgage is now the highest level since January 2014, 4.64%
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Thursday, March 01, 2018
US Interest Rates - Should You "Fret" Over the New Fed Chair's Possible Actions? / Interest-Rates / US Interest Rates
By: EWI
Learn what really governs the trend of interest rates
Is new Fed Chair Jerome Powell a hawk -- meaning, will he aggressively raise rates to curb inflation?
That's what investors are asking as Powell makes his first appearance before Congress in his new role. The belief that Powell will be hawkish has already rattled markets, according to some observers (Reuters, Feb. 23):
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Sunday, February 11, 2018
The Fed’s Impossible Choice, In Three Charts / Interest-Rates / US Interest Rates
By: John_Rubino
Critics of “New Age” monetary policy have been predicting that central banks would eventually run out of ways to trick people into borrowing money. There are at least three reasons to wonder if that time has finally come:
Wage inflation is accelerating
Normally, towards the end of a cycle companies have trouble finding enough workers to keep up with their rising sales. So they start paying new hires more generously. This ignites “wage inflation,” which is one of the signals central banks use to decide when to start raising interest rates. The following chart shows a big jump in wages in the second half of 2017. And that’s before all those $1,000 bonuses that companies have lately been handing out in response to lower corporate taxes. So it’s a safe bet that wage inflation will accelerate during the first half of 2018.
Tuesday, January 09, 2018
US Interest Rates Walking on Narrow Ledge / Interest-Rates / US Interest Rates
By: Michael_Pento
There is a huge shock in store for those who have been lulled to sleep by a stock market that has become accustomed to no volatility and only an upward direction. And that alarm bell can be found in the price action of Bitcoin, which recently tumbled over 40% is less than a week. For the implosion within the cryptocurrency world foreshadows what will happen with the major averages as the Federal Reserve futilely attempts to stop monetizing the exploding mountain of U.S. debt.
Friday, December 15, 2017
Trends in the U.S. Unemployment rate and the U.S. Yield curve / Interest-Rates / US Interest Rates
By: Donald_W_Dony
The trends in both the U.S. Unemployment rate and the U.S. Yield curve are linked to similar economic pressures.
The Unemployment rate rises and falls due to a number of key reasons and reflects the changes in the economy.
The U.S. Yield curve acts as a tool for the Fed to conduct its monetary policy in its goal for the long-term health (ie stable prices and sustainable employment) of the economy.
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Saturday, October 28, 2017
Markets Big Macro Play Ahead / Interest-Rates / US Interest Rates
By: Gary_Tanashian
At NFTRH, we are about major macro turning points above all else. Of course, it is often years between these turning points or points of significant change so we are also about the here and now, and managing the trends, Old Turkey style.*
Since we are all learning all the time, I have no problem admitting to you that while right and bullish on commodities and stocks in 2009, after becoming bullish on the precious metals in Q4 2008, I completely ignored Old Turkey due to my inner biases. The result has been that after taking excellent profits from the precious metals bull, personally, I have greatly under performed the stock market bull despite holding a bullish analytical view for the majority of the post-2012 period.
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Saturday, September 23, 2017
How Will We Be Affected by a Series of Rate Hikes? / Interest-Rates / US Interest Rates
By: Boris_Dzhingarov
The current federal funds rate is 1.00% – 1.25%. The Fed started raising interest rates in December 2015, when they were at a historic low of 0.25%. Since then, 4 rate hikes have been implemented, each valued at 25-basis points. Today, the federal funds rate (FFR) is inching towards the 1.25% – 1.50% level. The average interest rate in the US between 1971 and 2017 was 5.77%. It peaked at 20% in 1980 and dropped to an all-time low of 0.25% after the global financial crisis of 2008. Interest rates are especially important when it comes to monetary policy.
Wednesday, August 30, 2017
President Trump and ... the Interest Rate Yield Curve? Video / Interest-Rates / US Interest Rates
By: EWI
This chart offers a completely different take on the question of why President Trump's approval is falling.
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Saturday, August 19, 2017
4 Insights for Adjusting Your Portfolio in a Rate-hike Environment / Stock-Markets / US Interest Rates
By: Boris_Dzhingarov
The U.S. Federal Reserve has raised interest rates twice this year already and it plans to increase interest rates five or six more times next year. An environment in which interest rates are rising steadily could be a double-edged sword for different classes of investors. For older investors, a rate hike could provide another chance to book decent returns from conservative assets such as money-market funds and CDs. For 'younger' investors the rate hike could slice through retirement accounts like hot knife through butter.
Thursday, August 03, 2017
The Fed’s Manipulations Have Rendered The Yield Curve Useless As a Recession Indicator / Interest-Rates / US Interest Rates
By: John_Mauldin
The yield curve has always had an excellent forecasting record.
The Fed’s own wacky policies may have skewed this early-warning system’s reliability, but an interpretive adjustment can restore its usefulness.
This indicator has allowed me to predict the last two recessions.
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Tuesday, August 01, 2017
Here’s The Real Reason The Fed Is Making Absurd Monetary Decisions / Interest-Rates / US Interest Rates
By: John_Mauldin
I have often written about the Fed's abysmal track record in managing the economy. Here Lacy Hunt and Van Hoisington of Hoisington Investment Management explain the reasons for the Fed's consistently poor track record.
They start by considering the Fed’s “dual mandate,” which sets “the goals of maximum employment, stable prices and moderate long-term interest rates.” (And yes, that is actually three goals, not two.)
But a problem arises, the authors note, “because considerable time elapses between the implementation of the monetary actions designed to follow the mandate and when the impact of those actions take effect on broader business conditions.”
The time lag can easily be three years or longer, with the result that policy changes often end up being pro-rather than countercyclical. To make matters even worse, “the economic risks from adherence to this dual mandate are now much greater than historically due to the economy’s extreme over-indebtedness, poor demographics and a fragile global economy.”
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Sunday, July 30, 2017
368 TRILLION Reasons the Fed Won’t “Normalize” Rates / Interest-Rates / US Interest Rates
By: Graham_Summers
Many commentators are baffled as to why the Fed has suddenly reversed course. Throughout 2017 the Fed has talked repeatedly about raising rates several times as well as shrinking its balance sheet.
Then in the span of a single month, the Fed just about dropped all of this. Fed Chair Janet Yellen, speaking to Congress, confessed that the Fed is just about done with rate hikes and that any balance sheet reduction will NOT be used to drain liquidity from the system.
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Thursday, July 20, 2017
The Fed May Show Trump No Love / Interest-Rates / US Interest Rates
By: Peter_Schiff
Typically, U.S. Presidents are wary of claiming stock market performance as a referendum on their success. Most have seemed to understand that taking credit also means accepting blame, and no one would want to make the tortured argument that the positive moves reflect well on their presidency but that the negative moves do not. But Donald Trump has shown no reluctance to make any argument that suits his political purpose of the day, no matter its absurdity, and no matter if he has to contradict the arguments he made last year, or last week. Perhaps he assumes, as most investors seem to, that the risks are minimal because the Federal Reserve will jump in to save the markets if things turn bad. But in binding his performance so closely to the markets he overlooks the possibility that the Fed will be far less charitable to him than it was to Obama.
Wednesday, July 05, 2017
Fed Officials Say More Hikes Are on The Way, Markets Disagree / Interest-Rates / US Interest Rates
By: MoneyMetals
By Clint Siegner : Federal Reserve Chairwoman Janet Yellen says she is planning more hikes in the Fed funds rate, but you wouldn’t know it by watching the markets. So far, the response in foreign exchange, bonds, and equities isn’t what people expected.
Markets have always been notorious for behaving unpredictably.
But in an age when central bankers micromanage virtually all markets, the behavior could be the result of careful planning. Maybe the recent market action was only unpredictable for those of us outside of the FOMC conference room.
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Sunday, July 02, 2017
Janet Yellen Just Said The Most Ridiculous Thing We’ve Heard All Year! / Interest-Rates / US Interest Rates
By: Jeff_Berwick
Of all people, the last person you should ever ask about what is going to happen in the economy is a central banker or a Keynesian economist.
They are, after all, communists trying to centrally plan the economy. Commies are always clueless about economics.
And, their track record of predicting the economic future is almost perfect in that they almost always say “this time things are different” just moments before another crash happens.
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Thursday, June 29, 2017
The Fed Is Pursuing An After-Me-The-Deluge Monetary Policy / Interest-Rates / US Interest Rates
By: John_Mauldin
I think there is a mixture of political bias and legacy-building that is driving Federal Reserve policy. The simple fact is that the Fed should have been normalizing interest rates starting in 2013.
Fifty basis points a year, and we would be at 2% now. That is not exactly a torrid rate-hike path. It cannot be seen as putting your foot on the brakes. It’s simply moving to normalize a situation that everybody realizes is abnormal.
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Tuesday, June 20, 2017
We’ve Entered A Period Of Maximum Monetary Uncertainty / Interest-Rates / US Interest Rates
By: John_Mauldin
BY PATRICK WATSON : America is fully employed, or so say the statistics.
Federal Reserve officials think the job market is strong enough to justify higher interest rates. They’re afraid inflation will get out of control.
But if inflation is a problem, it’s not yet apparent in the average worker’s paycheck. “Just wait,” the inflation hawks say.
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Saturday, June 17, 2017
Here Comes Quantitative Tightening / Interest-Rates / US Interest Rates
By: Peter_Schiff
All of a sudden the Fed got a little tougher. Perhaps the success of the hit movie Wonder Woman has inspired Fed Chairwoman Janet Yellen to discard her prior timidity to show us how much monetary muscle she can flex when the time comes for action.
Although the Fed's decision this week to raise interest rates by 25 basis points was widely expected, the surprise came in how the medicine was administered. Most observers had expected a "dovish" hike in which a slight tightening would be accompanied by an abundance of caution, exhaustive analysis of downside risks, and assurances that the Fed would think twice before proceeding any farther. But that's not what happened. Instead Yellen adopted what should be viewed as the most hawkish policy stance of her chairmanship.
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Tuesday, June 06, 2017
US Interest Rate Curve Inversion and Chaos to Begin by December 2017 / Interest-Rates / US Interest Rates
By: Michael_Pento
The bounce in Treasury yields witnessed after the election of Donald Trump is now decaying in the D.C. swamp. If the Fed continues to ignore this slow growth and deflationary signal from the bond market and continues along its current rate hiking path, the yield curve will invert by the end of this year and an equity market plunge and a recession is sure to follow.
An inverted yield curve, which has correctly predicted the last seven recessions going back to the late 1960’s, occurs when short-term interest rates yield more than longer-term rates. Why is an inverted yield curve so crucial in determining the direction of markets and the economy? Because when bank assets (longer-duration loans) generate less income than bank liabilities (short-term deposits), the incentive to make new loans dries up along with the money supply. And when asset bubbles are starved of that monetary fuel they burst. The severity of the recession depends on the intensity of the asset bubbles in existence prior to the inversion.
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Monday, June 05, 2017
From the Era of Fed Interest Rates Easing to the Era of Tightening / Interest-Rates / US Interest Rates
By: Dan_Steinbock
After half a decade of ultra-low rates in the United States, the Fed is hiking rates and moving ahead to reduce its massive $4.5 trillion balance sheet. The consequences will reverberate across the world, including Asia.Before the Trump era, the Federal Reserve hoped to tighten monetary policy more often and aggressively than markets anticipated. But since November, US economic prospects have fluctuated dramatically, from the Trump trade to new volatility.
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Tuesday, April 11, 2017
Who’s Liking the US Interest Rate Hike Most? / Interest-Rates / US Interest Rates
By: Nicholas_Kitonyi
As investors prepare for what looks like a potentially second rate hike within the first half of 2017, there are those who are still questioning the overall impact of increased interest rates on the economy.By trade, stock market investors gain more when interest rates are higher. This is simply because capital risk assets will reflect the interest rate hike. However, as per the most recent rate hike, things seem to be a little different.
The stock market rallied from late January when a rate hike during the first quarter of the calendar year became more feasible with every Federal Reserve minutes pointing towards an increment.
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Wednesday, March 15, 2017
Fed Rate Hikes, Fiscal vs. Monetary Policy and Why Again the Case for Gold? / Interest-Rates / US Interest Rates
By: Gary_Tanashian
I’ve been thinking about the current Fed Funds rate hike cycle, which is logically gaining forward momentum now that the Fed can stand down from its 8-year, ultra-lenient monetary policy cycle. That is because the Obama administration’s goals required a compliant Federal Reserve to continually re-liquefy the economy as its fiscal policies drained it.
Friday, March 03, 2017
How Trump Versus Fed Adds to Uncertainty / Interest-Rates / US Interest Rates
By: Dan_Steinbock
To implement his $1 trillion dollar infrastructure plan, President Trump needs low rates, even though the Fed’s rate hikes will strengthen dollar. That means new uncertainty worldwide.In his Crippled America (2015), Trump argued that “our airports, bridges, water tunnels, power grids, rail systems—our nation's entire infrastructure is crumbling, and we aren't doing anything about it."
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Wednesday, February 15, 2017
This Chart Shows an Economic Anomaly That Investors Can’t Explain / Interest-Rates / US Interest Rates
By: John_Mauldin
BY PATRICK WATSON : Nineteenth-century writer Frédéric Bastiat, in his classic “Broken Window” parable, warned that economic thinking requires us to see what isn’t happening as well as what is.
This yield curve chart from Macquarie Research provides a good example.
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Sunday, December 25, 2016
I Bet We’ll Get Four or More Interest Rate Hikes Next Year / Interest-Rates / US Interest Rates
By: John_Mauldin
BY JARED DILLIAN : The fed funds target is now 0.50%–0.75%.1 Hooray!
The Fed is finally, after eight years, normalizing interest rates.
The timing is awfully interesting, though—what a coincidence that the rate hike comes right after the election!
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Thursday, December 15, 2016
FOMC Raises US Interest Rates, Market Reacts in Mood Swings / Interest-Rates / US Interest Rates
By: Harry_Boxer
The stock market indices had a topsy-turvy day with the FOMC meeting taking place as they raised interest rates. The day started out with a move to the upside, they met resistance, backed off to test support, held, and although the S&P 500 made lower lows, the Nasdaq 100 did not. They then ran up into the FOMC. At that point, they made a little bit of a pop, and then went down in a steep slide, a big rally ensued, they went down in another steep slide, held support on the Nasdaq 100, but not on the S&P 500. A very sharp rally took them back almost near the rally highs, and then in the last 20-25 minutes they took a plunge into the close, and finished very ugly on the day.
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Friday, December 09, 2016
US Interest Rates and the Toughest Man Who Ever Lived / Interest-Rates / US Interest Rates
By: David_Galland
Dear Paraders,
I begin this week sitting at our dining room table here in Cafayate, Argentina. Out the window, the vista is brimming with sunshine, vineyards, lovely houses, and lovelier mountains across the valley.
My wife is off working out at the Athletic Club & Spa. I would be too, were I not laid up by my recent hernia operation.
Later today, I’ll be playing a demonstration game of the ancient Chinese game of Go with a fellow resident and master of the game from California. Then we’ll dine at Bad Brothers Wine Experience with freshly returned owners from South Africa and my friend, former partner, and now closest neighbor Doug Casey.
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Thursday, December 08, 2016
How Trump Can Bring Outside-the-Box Thinking to Bear on the Fed / Interest-Rates / US Interest Rates
By: MoneyMetals
President-elect Donald Trump will soon have the opportunity to put his stamp on the Federal Reserve. And that is making the elite body of central bankers nervous.
On the campaign trail, Trump harangued Fed chair Janet Yellen for pumping up financial markets with cheap money – accusing the Obama appointee of being politically motivated.
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Wednesday, November 30, 2016
The Federal Reserve And Interest Rates: Definitely NOT What You Think / Interest-Rates / US Interest Rates
By: Kelsey_Williams
Where we are today is the culmination of decades of irresponsible financial/fiscal policies and a complete abdication of fundamental economics. But that should not be a surprise. The self-proclaimed purpose of the Federal Reserve Bank is to manage the economic cycles; an impossibly presumptive task and a violation of fundamental economic theory.
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Tuesday, November 22, 2016
Reversal Interest Rates Are the Next Big Challenge for Central Banks / Interest-Rates / US Interest Rates
By: John_Mauldin
BY SAMUEL RINES : Negative and ultra-low interest rates have become the norm for the developed world. The phrases “lower for longer” and “new normal” are now accepted as facts rather than predictions. But, how low is too low?
For many developed world economies, rates remain low in order to combat stagnation as growth slows. Negative rates are a side effect of these deep, fundamental economic issues.
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Monday, October 03, 2016
Out-of-Touch Fed Is Hurting the Average American / Interest-Rates / US Interest Rates
By: John_Mauldin
BY PATRICK WATSON : For the world’s top central banks, “the blind leading the blind” isn’t just a proverb. It’s reality.
A European Central Bank official recently said the ECB wants our Federal Reserve to hike interest rates in December. Why is that? In their twisted minds, it will confirm that years of monetary insanity actually worked.
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Thursday, September 22, 2016
Gutless Fed Bails On A Rate Hike Yet Again.... / Interest-Rates / US Interest Rates
By: Jack_Steiman
Fed Yellen is gutless and very transparent. She does the same nonsense over and over. She talks about the need to normalize rates and tells us that things are improving economically. We all know that she's not telling the truth and we all know by now that she's a phony. She never had any intention of raising rates, and found the usual excuses she knows will be there for her. Poor numbers as the year moves along on the economic front. She smiled from ear-to-ear when manufacturing stunk. She smiled more when services nosedived, and celebrated when retail sales were a major disappointment. Three beautiful excuses not to raise rates in September.
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Monday, September 19, 2016
Yellen’s Footnote 8 Would Put Interest Rates on Autopilot / Interest-Rates / US Interest Rates
By: John_Mauldin
Yellen’s Jackson Hole speech was widely reported, so I’ll spare you the summary.
What wasn’t widely reported was her Footnote 8. Yellen cited approving a mathematical formula that could put interest rates on autopilot. The Fed hasn’t yet followed the rule, but its presence in Yellen’s paper suggests its use is on the table.
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Wednesday, August 31, 2016
Why the Convoluted Message From Yellen? / Interest-Rates / US Interest Rates
By: Gary_Tanashian
Why the tough talk out of one side of her mouth and ‘other policy tools’ language out of the other (ref. Yellen Lays Out Tools… )? Oh, I don’t know. Maybe it has something to do with this…
The stock market has merrily followed money supply aggregates upward since 2009. When money supply decelerates the market corrects. When money supply ramps upward the market ramps upward. Money supply has been rolling over since 2014, which was not coincidentally when the first tremors began for the stock market in its recently completed top (that wasn’t). From SlopeCharts…
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Tuesday, August 02, 2016
The Yield Curve - 3 Big Stories Not Being Covered With Graham Mehl / Interest-Rates / US Interest Rates
By: Andy_Sutton
It occurred to us as we were laying out the contents of this article that we should probably not assume certain things. This publication has a wide readership, from corporate CEOs to high school students. The former are looking for analysis, the latter to become educated. The topic we are going to tackle in this second installment is a complex one, so some introduction is in order. Therefore, this piece will consist of two parts: an opening introduction, a primer if you will, then the analysis will follow. If you are well-versed in interest rates, bonds, bond yields, and debt, you can probably skip the primer, although we’ve been surprised at the number of people who have subscribed to the misconceptions stated therein.
Thursday, July 28, 2016
FOMC Interest Rates and Their Impact on the US Economy / Interest-Rates / US Interest Rates
By: Charles_Carnevale
To me, interest rates and their future direction seems to be obsessively discussed and debated by many investors. So much so, that I often get the impression that many investors believe that interest rates coupled with Federal Reserve policy are the primary drivers of our economy. From my perspective, interest rates and Federal Reserve monetary policy are contributing factors to economic growth and stability. However, I would stop short of considering them of primary importance.
Friday, July 22, 2016
What Will Happen To the Stock Market When Interest Rates Rise? / Stock-Markets / US Interest Rates
By: Charles_Carnevale
Interest rates have been in a freefall for the better part of the past two decades. Moreover, the yield on the 10-year US Treasury, which is the flagship interest rate benchmark, has mostly been below 2% since the beginning of 2012. The 10-year Treasury note did reach 3% by the end of 2013 but has promptly fallen ever since to its current level of 1.59 percent.
In contrast, the stock market as measured by the S&P 500 hovers at an all-time high. Moreover, after the stock market bottomed in February 2009 as a result of the Great Recession, stock market investors have enjoyed a strong bull market that is now almost halfway into its 8th year running. Interestingly, as it relates to the thesis of this article, the stock market had one of its best performances in 2013 in spite of the 10-year Treasury note rising from 1.78% to 3.04% by the end of the year. To be clear, in direct conflict with conventional wisdom, both the stock market and interest rates rose dramatically in 2013.
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Friday, June 10, 2016
U.S. 30-year Bond Yield Breaks Down / Interest-Rates / US Interest Rates
By: Anthony_Cherniawski
Not only has the 10-year, but also the 30-year Treasury bond rate fallen beneath its Triangle trendline and challenging new lows not seen since the February market lows. It, and TNX are due for a Master Cycle low in the next three weeks. There may be a brief bounce in the next 24 hours, but the decline should resume shortly after.
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Tuesday, June 07, 2016
Fed Interest Rate Hikes Lather. Rinse. Repeat / Interest-Rates / US Interest Rates
By: Peter_Schiff
Stop me if you've heard this one before: A Fed official walks into a bar and says the economy is improving and rate hikes are appropriate. The patrons order another round to celebrate. Then disappointing data comes out, the high fives stop, and the Fed official ducks out the back...only to come back the next day saying the same thing. Anyone who pays even the smallest attention to the financial media has experienced versions of this joke dozens of times. Yet every time the gag gets underway, we raise our glasses and expect the punch line to be different. But it never is. Last week was just the latest re-telling.
Tuesday, June 07, 2016
Fed's Interest Rate Normalization Will Be Far From Normal / Interest-Rates / US Interest Rates
By: Michael_Pento
The Fed traditionally embarks on an interest rate tightening cycle when inflation has started to run hot. This decline in the purchasing power of the dollar will nearly always manifest itself in: above trend nominal GDP, rising long-term interest rates and a positively sloping yield curve. These prevailing conditions are all indications of a market that is battling inflation; and thus prompts the Fed to start playing catch up with the inflation curve.
Monday, June 06, 2016
U.S. Jobs Report Means Don’t Bank On Interest Rate Hikes! / Interest-Rates / US Interest Rates
By: Chris_Vermeulen
This past Friday, June 3rd, 2016, The Bureau of Labor Statistics released their most recent report regarding new employment data and nonfarm payroll employment which indicates that during May of 2016, it was the smallest increase seen in 28 months.
During May of 2016, there were 144,592,000 payroll jobs within the US, which was up by 1.6 percent, or equivalent to 2.3 million jobs, from May of 2015 (These are all not-seasonally-adjusted numbers).
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Thursday, May 19, 2016
The Federal Reserve is Not Going To Raise Interest Rates and Destroy Gold / Interest-Rates / US Interest Rates
By: Michael_Swanson
Yesterday the stock market and gold prices fell into their closing bells after the release of minutes of the Federal Reserve’s April meeting.
The Federal Reserve did not raise interest rates at that meeting, but the minutes showed that some Federal Reserve Board members hope to raise interest rates in June.
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Friday, April 29, 2016
Fed's Kaplan: Brexit to Factor in US June Interest Rate Decision / Interest-Rates / US Interest Rates
By: Bloomberg
Federal Reserve Bank of Dallas President Robert Kaplan spoke with Bloomberg Television's Betty Liu, Mark Barton, and Michael McKee today. He discussed his expectations for a consumer rebound, his support of a rate hike if GDP and jobs data come together, and how the U.K. Brexit debate will factor into the Fed's next interest rate decision.
On how much Brexit will influence the Fed, Kaplan said: "It'll be a factor...Our meeting is the 15th and 8 days later is the vote. I'm going to have to make an assessment on June 15 what the likelihood is, and right now, it's a little bit unclear -- or it's unclear. Forget a little bit, it's unclear. And if it's still unclear on June 15, that's going to be a factor."
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Wednesday, April 27, 2016
BlackRock’s Fink: Fed to Raise Interest Rates by Quarter Point ‘at Best’ / Interest-Rates / US Interest Rates
By: Bloomberg
Larry Fink, Chairman and CEO at BlackRock, spoke with Erik Schatzker on 'Bloomberg <GO>' this morning.
Fink said governments need to embark on fiscal stimulus to boost the economy: "If we continue to have what I would call a dependency on monetary policy worldwide, I think it is very grim. We are harming savers worldwide with low and negative interest rates." He said monetary policy has "run out of runway" and called the Bank of Japan's negative rate policy an "outright mistake."
He said the Fed will raise interest rates "at best" by another quarter point this year because of weak corporate earnings and uncertainty about the global economy: "I would probably lean more towards a 25 basis point increase. Let's see what happens with the Spanish elections in June, the Brexit elections in June, how the U.S. economy performs in the second quarter. And importantly, what is the consumer's mood into the primaries and after the primaries?"
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Thursday, April 07, 2016
Bullard - Fed Reserves the Right to Change U.S. Interest Rate Policy at Any Time / Interest-Rates / US Interest Rates
By: Bloomberg
St. Louis Federal Reserve President James Bullard spoke with Bloomberg Radio's Kathleen Hays today on Bloomberg Radio & Television. While Bullard said he "didn't want to prejudge" whether the committee could act in April, the St. Louis Fed official said last month's employment report showed "continuing improvement" in the labor market.
Bullard said the Fed reserves the right to change policy at any time: "Not only have we moved at all kinds of different meetings, we've actually had inter-meeting meetings, special meetings, and moved at those meetings. So you can do a lot of things. You know, I'm not saying we're I'm planning on that or anything, but the Committee certainly reserves the right to make a move at any time... We debate at all meetings. I think all meetings are live meetings. There's no other way to think about it."
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Wednesday, March 16, 2016
FOMC Statement - Backing Off On the Rate Increases, Lowering Forecasts / Interest-Rates / US Interest Rates
By: Jesse
The Fed recognized that growth is slow, and that inflation remains subdued.
I include a chart of the real median household income to demonstrate why the recovery is so wobbly. Demand and investment are weak because people have less money to spend. Wow, what a surprise.
Monday, March 14, 2016
Bail-Ins And Negative Interest Rates, The Ultimate Admission Of Failure.... / Interest-Rates / US Interest Rates
By: Submissions
Mike Hoy writes: ... Cash and Physical Gold, Standing in The Way of a Lifetime of Financial Servitude and Slavery!
For the last several decades, the out-of-control growth of US Government spending when combined with the unlimited printing policies of "The Fed" has set the stage for "The Perfect Storm!"
Anyone with a simple calculator can easily understand how it is virtually impossible for 320,000,000 people to retire a current and rapidly growing debt of $19,000,000,000,000. This is a sum which equates into $60,000 worth of debt per man, woman and child in the US today. Please ignore the fact that half of the population pays no income tax at all. Forget about the $100,000,000,000,000-$200,000,000,000,000 in future entitlement obligations as only a dreamer could believe this debt has any chance of ever being funded with anything other than more worthless paper!!
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Saturday, March 05, 2016
More and More Fed Officials Calling For NIRP / Interest-Rates / US Interest Rates
By: Graham_Summers
The Fed Vice-Chair has begun laying the groundwork for NIRP.
The US Federal Reserve is obsessed with market reactions to its policies. Because of this, anytime the Fed plans to announce a major change in policy, it preps the markets via numerous leaks and hints… oftentimes for months in advance.
An excellent example of this concerns the Fed’s decision to taper QE back in 2013.
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Thursday, March 03, 2016
Fed Stuck Between Hard Place and a Grenade / Interest-Rates / US Interest Rates
By: Sol_Palha
He who trims himself to suit everyone will soon whittle himself away. Raymond HullThe Fed is stuck in between a hard place and a grenade, given this option, they will choose the hard place as unless you are looking for a one-way to ticket to nowhere you won’t choose the grenade. The Fed has nowhere to go; there is only one option available inflate the money supply or die trying to.
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Friday, February 19, 2016
Rising U.S. Interest Rates? Never Mind / Interest-Rates / US Interest Rates
By: John_Rubino
It was always a matter of when, not if, the financial markets would tell the Fed to stop raising interest rates. And it appears the message has been received:
Friday, February 12, 2016
Can the U.S. Fed Drop Interest Rates Below 0%? / Interest-Rates / US Interest Rates
By: EWI
This question is not as preposterous as it may seem.
For the financial markets, the biggest event of the week starts tomorrow: On Wednesday and Thursday (Feb. 10-11) Fed chair Janet Yellen will appear before Congress to deliver her semi-annual Monetary Policy Report.
"It's huge." That's how one strategist put it this morning, in a CNBC interview about the importance of Yellen's testimony.
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Monday, February 01, 2016
The Fed Is Not Hiking Rates: Risk Assets To Perform / Interest-Rates / US Interest Rates
By: Bob_Kirtley
The landscape of global monetary policy is changing. In late 2015 we had the Fed hiking, signalling more to come, the ECB holding back on fresh QE and even the BOJ, which has engaged in more easing than any other central bank in history, was sitting on its hands.
That tune has changed.
The BoJ moved to negative rates this week. The Fed didn’t hike and signalled that they aren’t going to hike in the short term. The ECB is making noises about expanding its QE programs. In this article we explore direction of monetary policy going forward and its implications for financial markets.
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Saturday, January 30, 2016
Lacy Hunt: Inflation and 10-Year US Treasury Yields Headed Lower / Interest-Rates / US Interest Rates
By: Gordon_T_Long
Dr. Lacy Hunt joins FRA Co-Founder Gordon T. Long in an in-depth discussion on the current debt dilemma and the decisions of the Federal Reserve. Dr. Lacy H. Hunt, an internationally known economist, is Executive Vice President of Hoisington Investment Management Company, a firm that manages over $5 billion for pension funds, endowments, insurance companies and others. He is the author of two books, and numerous articles in leading magazines, periodicals and scholarly journals. Included among the publishers of his articles are. Barron's, The Wall Street Journal, The New York Times, The Christian Science Monitor, the Journal of Finance, the Financial Analysts Journal and the Journal of Portfolio Management.
Friday, January 29, 2016
Janet Yellen "Peddling Fiction" on a Worsening Economy... Doesn’t Raise Rates and Downgrades Outlook / Interest-Rates / US Interest Rates
By: Jeff_Berwick
We have made some very bold claims in the past. Since 2010, to many jears, we said that the Federal Reserve would never raise rates significantly again. Most laughed. They said that surely this crazy, emergency 0% interest rate policy was only temporary. Five long years passed, and even a Fed Chairman later, before finally, after seven years-to-the-day, on December 16th, Janet Yellen took the bold move to raise rates 0.25%.
Tuesday, January 19, 2016
Junk Bonds Slump - Will 2016 be The Year The Fed Fails? / Interest-Rates / US Interest Rates
By: Clif_Droke
To many economists, the biggest mistake the Fed has made has been a lack of aggression in raising interest rates. After all, they reason, the U.S. job market is as strong as it has been since 2007 and the economy, even if sluggish, is at least back on an even keel. These same observers cheered the Fed's decision to raise the Fed funds rate in December by a quarter percentage point.
Yet there is even more reason to worry that the raising of the Fed funds rate last month may have been a policy blunder of major proportions. In this commentary we'll briefly examine the distinct possibility that the Fed has put the U.S. financial market on the cusp of another troublesome year ahead.
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Wednesday, January 13, 2016
Summers: Global Economy Can't Withstand Four 2016 Fed Hikes / Interest-Rates / US Interest Rates
By: Bloomberg
Former U.S. Treasury Secretary Lawrence Summers spoke with Stephanie Ruhle and David Westin on Bloomberg TV's "Bloomberg <GO>." On the expectation of four rate hikes in 2016, Summers said: "I'd be surprised if the world economy can comfortably withstand four hikes. And I think that basically markets agree with me. And that's why despite the statements that are being made, markets aren't expecting four hikes."
Summers also said: "If you ask if there are risk that we're going to find ourselves in a situation within the next two years where policy is going to have to reverse, yes. I think that is a significant risk."
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Tuesday, December 22, 2015
Is This Interest Rate Hike Rigged? / Interest-Rates / US Interest Rates
By: Anthony_Cherniawski
It’s official.This week the Federal Reserve raised the key overnight Fed Funds rate by 0.25%. The move was discussed, debated, argued, and telegraphed to death. We all heard about it until we hoped anything else financial would happen so we could finally put the tired story to rest.
Now that the rate hike is on the books, we can start talking about outcomes, like how in the world the Fed intends to enforce the rate hike, what it means, and what comes next.
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Monday, December 21, 2015
Yellen has Lift Off, But Rates Won’t Go To The Moon / Interest-Rates / US Interest Rates
By: Sam_Kirtley
At the FOMC meeting last week the Fed raised interest rates for the first time since 2006. This was a historic moment marks the first rate hike after the Fed engaged in massive quantitative easing programs to combat the Global Financial Crisis and the Great Recession. However, we are not economists or economic historians. We run a trading service and are therefore concerned with where the markets will go next. This means that our key point of analysis is around where rates will go next, rather than what they did last week.
Sunday, December 20, 2015
U.S. Interest Rates Yield Curve Flattening Further, Why it Matters / Interest-Rates / US Interest Rates
By: Dan_Norcini
I am becoming increasingly concerned over the flattening yield curve. This curve enables us to get a first hand view of sentiment towards economic growth among bond investors and other large players in the interest rate markets, some of whom are among the most sophisticated observers of the financial scene anywhere.
Saturday, December 19, 2015
U.S. Fed Mission Accomplished / Interest-Rates / US Interest Rates
By: Peter_Schiff
On May 1, 2003 on the flight deck of the USS Abraham Lincoln then President George W. Bush, after becoming the first U.S. president to land on an aircraft carrier in a fixed wing aircraft (in a dashing olive drab flight suit), declared underneath an enormous "Mission Accomplished" banner that "major combat operations" in Iraq had been concluded, that regime change had been effected, and that America had prevailed in its mission to transform the Middle East. 13 years later, after years of additional combat operations in Iraq, and a Middle East that is spiraling out of control and increasingly disdainful of America's influence, we look back at the "Mission Accomplished" event as the epitome of false confidence and premature celebration.
Friday, December 18, 2015
U.S. Yield Curve and Spreads: Fed's Real Policy Error in Pictures; What's Next? / Interest-Rates / US Interest Rates
By: Mike_Shedlock
Inquiring minds may be interested in a detailed look at the yield curve and spreads between various durations following the Fed's Wednesday rate hike. Let's start with a long-term chart from 1996 to 2015.
Thursday, December 17, 2015
Fed Rate Hike - Yellen Nailed It! / Interest-Rates / US Interest Rates
By: Bloomberg
Larry Fink, Chairman & CEO of BlackRock, spoke with Erik Schatzker, Stephanie Ruhle and David Westin on Bloomberg TV's "Bloomberg <GO>." He discussed the Federal Reserve rate increase, the possibility of dollar-euro trading at parity, and his economic outlook for 2016.
Fink praised Janet Yellen after the Fed raised interest rates yesterday: "I think she nailed it. It was not too hot, not too cold, right down the center. I think it was a very well scripted conference…And the most important thing, what she gave the market is clarity. I think the opportunity they missed in September, why the markets were so unsettled because we had no clarity on their actions. And in this case they really expressed exactly what they're looking for."
Thursday, December 17, 2015
Marc Faber - Federal Reserve Rate Hike At ‘Precisely The Wrong Time’ / Interest-Rates / US Interest Rates
By: GoldCore
Marc Faber, the editor of the Gloom, Boom & Doom Report, warned yesterday that the Federal Reserve has raised rates at “precisely the wrong time.”
Speaking to CNBC just before the interest rate decision, Faber warned that it’s the wrong time because “the global economy has decelerated very badly, and many countries are already in recession, or going into recession.”
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Wednesday, December 16, 2015
Did "Tight" Fed Interest Rates Policy Cause the Financial Crisis? / Interest-Rates / US Interest Rates
By: Robert_Murphy
Recently Senator Ted Cruz aggressively questioned Janet Yellen on the Fed’s possible role in causing the financial crisis and subsequent recession. In particular, he claimed that “in the summer of 2008” the Fed “told markets that it was shifting to a tighter monetary policy,” and that this announcement “set off a scramble for cash, which caused the dollar to soar, asset prices to collapse, and CPI [growth — RPM] to fall below zero, which set the stage for the crisis.” Cruz asked Yellen if she agreed with Bernanke’s view from his new book, in which he says the Fed made a mistake by not cutting rates in September 2008.
Wednesday, December 16, 2015
D-Day for Fed Fiat Credit System - Video / Interest-Rates / US Interest Rates
By: Mario_Innecco
Transcript Excerpt - December 16 2015 Wednesday it's the day will decide to hike interest rates
that's what most people think it's almost like a done deal so in my opinion
it's the Fed trying to deflate the biggest credit bubble amber and I guess
we don't have to go into details about that we all know that debt and credit
has been the highest ever USA national debt at almost 19 trillion so far it's
more than doubled since President Obama came to power so today will be the first
rate hike since I began its zero interest rate policy or its server or
Tuesday, December 15, 2015
Have You Considered What Wil Happen If the Fed DOESN’T Raise U.S. Interest Rates? / Interest-Rates / US Interest Rates
By: Rodney_Johnson
We’ve gotten it into our heads that Fed Chair Janet Yellen is on her way down from the mountain top carrying stone tablets etched with the details of a rate hike. We don’t know exactly what form it will take, but let there be no doubt – the financial gods have spoken, so a rate hike there will be!But it’s not that simple.
The Federal Open Market Committee (FOMC) is the group that determines monetary policy. This group must reach a consensus on policy changes before anything new can happen.
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Monday, December 14, 2015
Janet Yellen, U.S. Zero Interest Rates - Déjà vu all over Again / Interest-Rates / US Interest Rates
By: James_Quinn
Janet Yellen will increase interest rates for the first time in nine years on Wednesday. She isn’t raising them because the economy is strengthening. The economy just happens to be weakening rapidly, as global recession takes hold. The stock market is 3% lower than it was in December 2014, and has basically done nothing since the end of QE3. Wall Street is throwing a hissy fit to try and stop Janet from boosting rates by an inconsequential .25%. Janet would prefer not to raise rates, but the credibility and reputation of her bubble blowing machine is at stake. The Fed has enriched their Wall Street benefactors over the last six years, while destroying the real economy and the middle class.
Thursday, December 10, 2015
Currency Markets Anticipating a U.S. Interest Rate Hike Next Week / Interest-Rates / US Interest Rates
By: Dan_Norcini
Watching the price action in the currency markets it is becoming clearer to me that the Forex crowd has now moved beyond any expected rate hike by the Fed next week and has shifted its focus to "WHAT COMES AFTER THAT?"
In other words, we have probably seen the high in the US Dollar for a bit since the impact on the currency has effectively already been discounted into its price. Seeing the Fed Funds futures showing a probability of a Fed rate hike next week above 80%, for all practical trading purposes, it is now a done deal.
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Tuesday, December 08, 2015
Fed's Rocket Ship Turns Hoverboard / Interest-Rates / US Interest Rates
By: Peter_Schiff
Over the past year, while the U.S. economy has continually missed expectations, Federal Reserve Chairwoman Janet Yellen has assured all who could stay awake during her press conferences that it was strong enough to withstand tighter monetary policy. In delivering months of mildly tough talk (with nothing in the way of action), Yellen began stressing that WHEN the Fed would finally raise rates (for the first time in almost a decade) was not nearly as important as how fast and how high the increases would be once they started. Not only did this blunt the criticism of those who felt that the delays were unnecessary, and in fact dangerous, but it also began laying the groundwork for the Fed to do nothing over a much longer time period. To the delight of investors, the Fed has telegraphed that it will adopt a "low and slow" trajectory for the foreseeable future and move, in the words of Larry Kudlow, like "an injured snail."
Friday, December 04, 2015
Bill Gross: Fed is "Certainly Set to Go" / Interest-Rates / US Interest Rates
By: Bloomberg
Bill Gross of Janus Capital Management joined Bloomberg Radio and Television to react to today's jobs report.
Gross said the Federal Reserve is "certainly set to go…Fed is ready to go I think because of concerns on the real economy."
When asked if he lost money yesterday, Gross said: " Oh no, made money yesterday. I had lots of calls, sold lots of calls on five and 10-year German bunds, went the other way this time and so made a lot of money, making a lot of money today on those particular trades."
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Tuesday, November 24, 2015
Fed’s Tarullo: U.S. Interest Rates Liftoff Should Wait for Signs of Inflation / Interest-Rates / US Interest Rates
By: Bloomberg
Federal Reserve Board Governor Daniel Tarullo spoke with Bloomberg Television’s Stephanie Ruhle and David Westin on “Bloomberg <GO>” yesterday. He discussed when the Fed will begin raising rates and waiting for tangible signs of inflation before moving.
There’s “more than a pretty good chance” that banks will face “some net increase in the post-stress minimum capital requirements,” Tarullo said.
DAVID WESTIN: So we want to turn now to our special guest for this half hour, Federal Reserve Board Governor, Daniel Tarullo. Dan has been on the Fed now since 2009, I believe it is. He has served on the --
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Monday, November 23, 2015
Will Fed Raise the Discount Interest Rate Today? / Interest-Rates / US Interest Rates
By: Ashraf_Laidi
Will the Fed raise its discount rate at its previously unscheduled meeting for today? Thursday's post on the Federal Reserve's website that "an expedited, unscheduled meeting of the Board of Governors of the Federal Reserve to review the discount rate" will be held today (Monday) at 11:30 ET (16:30 London/GMT). The discount rate, the rate at which banks borrow from the Fed's discount window is set by the Board of Governors, rarely used by the banks. This must not be confused with the fed funds rates, which is set by the Federal Open Markets Committee.
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Saturday, November 21, 2015
Will the Fed Raise U.S. Interest Rates on Monday, November 23, 2015? - Video / Interest-Rates / US Interest Rates
By: Mario_Innecco
Earlier this morning I spoke about how the Fed will meet on Monday November 2015 even though the next meetings on December 16. They're having an expedited procedure or meeting which means their meeting in no rush and behind closed doors. It will be interesting to see what they do and might even raise rates this coming Monday even though that's very very unusual.
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Friday, November 13, 2015
The U.S. Shadow Interest Rate Casts Gloom / Interest-Rates / US Interest Rates
By: Peter_Schiff
Nearly 92% of economists surveyed this week by the Wall Street Journal expect that our eight-year experiment with unprecedented monetary easing from the Federal Reserve will come to an end at the next Fed meeting in December. Since we have had the monetary wind at our back for so many years, at least a few have begun to question our ability to make economic and financial gains against actual headwinds. But in reality, the tightening cycle that the forecasters are waiting for actually started last year. Sadly, the markets and the economy are already showing an inability to handle it.
Saturday, November 07, 2015
US Dollar Surges, December Rate Hike Odds Soar Following Strong Jobs Report / Interest-Rates / US Interest Rates
By: Mike_Shedlock
Following today's jobs report the odds of a December rate hike approached 70% and the US dollar index surged.
Friday, November 06, 2015
Bill Gross: '100% Chance' Fed will Raise U.S. Interest Rates in December / Interest-Rates / US Interest Rates
By: Bloomberg
Bill Gross of Janus Capital spoke with Bloomberg's Tom Keene and Michael McKee on Bloomberg Radio and Television this morning to respond to today's jobs report.
Gross said there is a "100 percent chance" the Fed will raise interest rates in December after jobs surged. "They're ready to go." He said: "100 percent that they go in December and then try and tamp it down with mild, gradual language that will keep the dollar from strengthening even further."
On dollar strength, Gross said: "I think the Fed fears it...They took it out of their statement last month. But prior to that, they were cognizant of the fact that a very strong dollar has negative implications for emerging markets... It's certainly a negative for the global financial system because there are many bets and much dollar denominated debt in terms of emerging market corporations and sovereigns will be impacted by this."
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Friday, October 16, 2015
Can the Fed Really Print Money? What Would Negative Interest Rates Do? / Interest-Rates / US Interest Rates
By: Mike_Shedlock
Most people believe the Fed can print money. Caught on tape, former Fed chair Ben Bernanke once admitted the Fed prints money.
However, in Hoisington's Third Quarter 2015 Review, economist Lacy Hunt makes the claim the Fed cannot print money. Let's take a look, emphasis mine.
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Wednesday, October 14, 2015
US Interest Rate Hike Odds For March 2016 Fall Below 50% / Interest-Rates / US Interest Rates
By: Mike_Shedlock
3rd Quarter GDP Forecast Slips to 0.9%
Following today's retail and business sales reports, the Atlanta Fed GDPNow Forecast for third quarter GDP slipped 0.1 percentage points to 0.9%.
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Tuesday, October 13, 2015
Brainard's Wake-up Call to Fed on U.S. Rate Hike Calls / Interest-Rates / US Interest Rates
By: Ashraf_Laidi
The growing inverse correlation between the frequency of Fed speeches and uniformity of the message on monetary policy action cannot be ignored. The newest member of the Federal Reserve Board of Governors hasn't made too many speeches, but her message has been on point since her first speech in June.
In her speech yesterday, Lael Brainard, Federal Reserve Governor since June of this year, dealt a prominent blow to the hawks at the Fed, by contradicting three major premises upon which calls for a 2015 rate hike are built. Having served as Undersecretary of the Treasury for International Affairs for over three years, she knows a few things about international developments. Here are some of the central points of her speech:
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Tuesday, October 13, 2015
The Mindless Stupidity of Negative Interest Rates / Interest-Rates / US Interest Rates
By: MM
MoneyMorning.com By Lee Adler, Editor's Note: We're sharing this Wall Street Examiner column with you today because negative interest rates are destroying trillions of dollars in wealth in Europe right now, cheered on by some of the "smartest" economists in the world – who want to bring NIRP here. Here's Lee Adler with some facts that show why negative rates are a horrible idea…
There are troubling signs that the doves at the Federal Reserve are considering a negative interest rate policy (NIRP) as a way to handle "the next crisis" – and there's always a next crisis…
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Monday, October 12, 2015
Move over ZIRP... Here Comes NIRP! / Interest-Rates / US Interest Rates
By: MoneyMetals
Precious metals prices enter the new week looking to extend the rally that began Oct. 2nd. Silver has gained nearly 10%, and gold is up almost 3.5%. The notion that the Federal Reserve governors may have missed their window to raise interest rates is beginning to sink in with investors.
In fact, if the U.S. economy should fall into recession, investors may see central planners move from zero interest rate policy (ZIRP) to the launch of negative interest rates.
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Sunday, October 11, 2015
Negative Interest Rates Tantalizing Stupidity and the Case for Gold / Interest-Rates / US Interest Rates
By: Mike_Shedlock
Financial Repression Insanity
Purportedly the Fed is ready willing and able to go to next step of financial repression insanity.
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Monday, October 05, 2015
Fed Interest Rate Hike: "I don't care. It doesn't really make much of a difference" / Interest-Rates / US Interest Rates
By: Bloomberg
Steve Schwarzman, CEO, The Blackstone Group, joined hosts Stephanie Ruhle and David Westin for the debut of Bloomberg TV's new flagship morning program, Bloomberg <GO>. Schwarzman discussed the Federal Reserve, Volkswagen in the wake of the pollution controls scandal,2016, and Ohio State Governor John Kasich.
On whether there will be a rate hike from the Federal Reserve this year, Schwarzman said: "I don't care. It doesn't really make much of a difference. Interest rate hikes of 25% that people have been talking about for 2-1/2 years, I mean really. If you haven't discounted a lot of this stuff, they've got the issue that raising interest rates is probably a good thing. However their problem is that because the US currency has appreciated against almost everyone in the world, in effect, we've had the impact of an interest rate increase already through slowing of the economy."
Saturday, October 03, 2015
U.S. Interest Rate Hikes Keep On Slippin' Into the Future; Treasury Yields Sink Again / Interest-Rates / US Interest Rates
By: Mike_Shedlock
Treasury Yields Drop Again
Curve Watcher's Anonymous notes a further plunge in yields today following the disastrous payroll and factory order reports.
Yield on the 30-year long bond fell to 2.80% from 2.85% yesterday. Yield on the 10-year note once again sports a 1-handle at 1.97%, down from 2.03%.
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Friday, October 02, 2015
U.S. Rake Hike - Fed Must Thank China and EM / Interest-Rates / US Interest Rates
By: Ashraf_Laidi
The US September jobs report deals a significant blow to the notion of a 2015 Fed hike--against which we consistently disagreed throughout the year - as it achieved the gloomy feat of disappointing across the board -- headline rate (first back-to-back months of sub 200K in 18 months), downward revision in prior months (-59K), notable decline in average hourly earnings, and the unchanged unemployment rate was offset by the decline in the participation rate to a fresh 38-year lows.
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Friday, October 02, 2015
U.S. Three Month Treasury Yields Turn Negative, Recession Warning? / Interest-Rates / US Interest Rates
By: Mike_Shedlock
Curve Watcher's Anonymous points out 3-month treasury yields dipped briefly negative on several days recently.
Yield on the 3-month bond was negative again today. Here is a table I put together with Treasury Yield Quotes from Bloomberg.
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Friday, October 02, 2015
Can You Imagine The Fed Raising Rates In This World? Everything Going Wrong At Once Edition / Interest-Rates / US Interest Rates
By: John_Rubino
After the markets failed to embrace its most recent interest rate dither, the Fed dispatched pretty much its entire PR team to make sure we understood that rates would rise Next Month For Sure.
Then everything kind of fell apart. Emerging market capital flight accelerated…
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Tuesday, September 29, 2015
Interest Rates All Bad at 0%? / Interest-Rates / US Interest Rates
By: Axel_Merk
We call on central banks to abolish their zero interest rate policy (ZIRP) framework before more harm is done. In our assessment, ZIRP is bad for all stakeholders and may even lead to war.
Friday, September 25, 2015
No U.S. Interest Rate Hike Until 2017, It’s Always 1982 Somewhere / Interest-Rates / US Interest Rates
By: John_Mauldin
By Jared Dillian
First, let’s get the gloating out of the way. I said that the Fed would not hike rates here and here. Nobody likes a chest pounder, so that’s the end of the discussion.
So now, what is the trade? Not only did the Fed not hike rates, but the directive was so dovish, it was far outside the range that any reasonable person thought was possible. Should be bullish, right?
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Friday, September 25, 2015
From ZIRP to NIRP Sudden End of Fed's Ambition to Raise Interest Rates / Interest-Rates / US Interest Rates
By: Alasdair_Macleod
The sudden end of the Fed's ambition to raise interest rates above the zero bound, coupled with the FOMC's[1] minutes, which expressed concerns about emerging market economies, has got financial scribblers writing about negative interest rate policies (NIRP). Coincidentally, Andrew Haldane, the chief economist at the Bank of England, published a much commented-on speech giving us a window into the minds of central bankers, with zero interest rate policies (ZIRP) having failed in their objectives.[2]
Tuesday, September 22, 2015
Behind the Fed’s Decision: The Government Numbers Don’t Add Up / Interest-Rates / US Interest Rates
By: Rodney_Johnson
After keeping the markets on edge in the days and weeks leading up to today’s decision, the Fed has decided once again to leave interest rates unchanged.As we’ve spent this week discussing “all things Fed,” it’s worth spilling a little ink on what the quasi-government-but-really-private organization is supposed to do.
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Monday, September 21, 2015
Why The Big Banks Want Higher Interest Rates / Interest-Rates / US Interest Rates
By: John_Rubino
Something strange is happening in the banking business.
In theory, a low interest rate environment is good for banks because it allows them to borrow money for next to nothing and lend it to auto or home buyers for considerably more, making a nice fat spread.
And that’s pretty much how it’s been going. U.S. bank earnings were up 7% y-o-y in the second quarter, to a record $43 billion. Bank lending rose across the board from industrial to auto to mortgage loans, and delinquencies fell for the 21st consecutive quarter.
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Sunday, September 20, 2015
R.I.P. Interest Rates / Interest-Rates / US Interest Rates
By: Investment_U
Andrew Snyder writes: I went to the doctor Friday morning. What a problem we have.
“How’s the pain? Do you want some pills for that?” he asked.
“No thanks, doc. Let’s just figure out what’s causing it.”
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Saturday, September 19, 2015
Higher U.S. Interest Rates? Not Next Month, Not Even Next Year, In Three Charts / Interest-Rates / US Interest Rates
By: John_Rubino
Not only did the Fed vote to keep interest rates stable yesterday, it did so overwhelmingly -- with just as many members apparently favoring lower rates as higher. Now all the people who bought the "rate normalization" promise/threat are backtracking. From today's Bloomberg:
Friday, September 18, 2015
Groundhog Day at the Fed / Interest-Rates / US Interest Rates
By: Peter_Schiff
Every dictator knows that a continuous state of emergency is the best means to justify tyrannical policies. The trick is to keep the fictitious emergency from breeding so much paranoia that routine activities come to a halt. Many have discovered that its best to make the threat external, intangible and ultimately, unverifiable. In Orwell's 1984 the preferred mantra was "We've always been at war with Eurasia," even though everyone knew it wasn't true. In its rate decision this week the Federal Reserve, adopted a similar approach and conjured up an external threat to maintain a policy that is becoming increasingly absurd.
Friday, September 18, 2015
Fed Remains Paralysed by Fear, Keeps U.S. Interest Rates on Hold at 0.25% / Interest-Rates / US Interest Rates
By: Nadeem_Walayat
The FOMC once more decided to do nothing and keep US interest rates on hold at the panic low level of 0.25% with speculation now switching to whether the Fed will finally get the balls to raise interest rates at its October meeting, or will the Fed chicken out once more fearing that they may spark Financial Collapse 2.0.
Friday, September 18, 2015
Fed Keeps US Interest Rates Unchanged - Comparison of Sep and July Statements / Interest-Rates / US Interest Rates
By: Ashraf_Laidi
The Fed kept rates unchanged with an unambiguously dovish statement, focusing on weakening inflation, rising market turbulence and a new reference to foreign developments. The dot forecasts pointed to slower growth and lower core inflation and lower fed funds projections. The only hawkish dissent to the decision was from Richmond Fed's Lacker, but this point was made moot by not only due to Lacker's well documented hawkish stance, but also by the fact that the dot plot showed one Fed member expecting negative rates, even if this member is the widely dovish Minneapolis Fed's Kocherlakota.
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Thursday, September 17, 2015
Stock Market Optimism Ahead Of Fed's Interest Rate Decision Release / Interest-Rates / US Interest Rates
By: Paul_Rejczak
Briefly: In our opinion, no speculative positions are justified
Our intraday outlook is neutral, and our short-term outlook is neutral:
Intraday outlook (next 24 hours): neutral
Short-term outlook (next 1-2 weeks): neutral
Medium-term outlook (next 1-3 months): bearish
Long-term outlook (next year): bullish
Thursday, September 17, 2015
Don't Buy the Fed's New "Bribe-a-Bank" Interest Rate Policy / Interest-Rates / US Interest Rates
By: ...
MoneyMorning.com Lee Adler writes: After seven long, strange years, we're now looking at the end of ZIRP as we know it.
And good riddance, too. It's been a disaster for the U.S. economy, the middle class, the housing market – just about every facet of American economic life has suffered from this fiscal disaster masquerading as coherent monetary policy.
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Thursday, September 17, 2015
U.S. Fed Must Avoid Bank of Japan Errors / Interest-Rates / US Interest Rates
By: Ashraf_Laidi
No, the US is not Japan and the Federal Reserve is not the Bank of Japan. But when we assess the implications of what could be the first Fed rate after 7 years of zero interest rate policy in the US, there's no better reference than the BoJ.
Wednesday, September 16, 2015
Lowdown on U.S. Rate Hikes / Interest-Rates / US Interest Rates
By: Axel_Merk
Will she raise or will she not? As financial markets focus on whether we will see a Fed rate hike this week, investors may be in for a rude awakening.
Wednesday, September 16, 2015
U.S. Interest Rate Hike - Will The Fed Pick A Winning Combination? / Interest-Rates / US Interest Rates
By: Raul_I_Meijer
It’s highly amusing to read all the ‘expert’ theories on a Federal Reserve hike or no hike tomorrow, but it’s also obvious that nobody really has a clue, and still feel they should be heard. Don’t know if that’s so smart, but I guess in that world being consistently wrong is not that big a deal.
Thing is, US economic numbers are so ‘massaged’ and unreliable, the Fed can pick whichever way the wind blows to argue whatever decision it makes. As long as jobs numbers get presented for instance without counting the 90-odd million Americans who are not in the labor force, and a majority of new jobs are waiters, just about anything goes in that area. Numbers on wages are just as silly.
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Tuesday, September 15, 2015
One and Done Fed is a Wall Street Fantasy / Interest-Rates / US Interest Rates
By: Michael_Pento
One of the current myths promulgated by Wall Street is that the Federal Reserve will raise rates once this year, breathe a sigh of relief, and be done until the "12th of never". But those who are familiar with our central bank's history are aware that the Federal Open Market Committee (FOMC) has never tightened the Fed Funds Rate just once. A quarter point hiking cycle has no historical basis and is just wishful Wall Street thinking.
Saturday, September 12, 2015
The US Has Already Tightened — Which Explains A Lot / Interest-Rates / US Interest Rates
By: John_Rubino
Next week we’ll find out if the longest-ever will-they-or-won’t-they drama involving a virtually insignificant quarter-point interest rate change will amount to anything. But either way, US monetary policy is already a lot tighter than it was a year ago.
The Fed’s balance sheet, for instance, is a measure of how much new currency it is pumping into the banking system. And it’s up only $79 billion, or 1.8%, in the past year. In real terms, that’s flat to slightly negative.
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Friday, September 11, 2015
Bloomberg Interest Rate Hike Odds Still Wrong; Deflationary Bust Coming / Interest-Rates / US Interest Rates
By: Bloomberg
As of September 10, the CME has the of a September hike by the Fed at 24%. Bloomberg says the probability of a move is 28%.
Wednesday, September 09, 2015
Fed Interest Rate Tightening Cycles and USD Performance / Interest-Rates / US Interest Rates
By: Ashraf_Laidi
Is the peak of the US dollar behind us? Depending on your USD measure of choice, the dollar may have already peaked, when using EUR and JPY, the two largest and most liquid currencies aside from the greenback. If the bulk of the USD bull market starting in summer 2014 was based on heightened expectations of a Fed hike, then would an actual Fed hike signal the peak of the US dollar? Here is our analysis on the response of the US dollar to each of the last three Fed tightening cycles (1994-1995, 1999-2000 and 2004-2006). One common theme was found.
Friday, September 04, 2015
Bill Gross: Jobs Report Means ‘Fifty-Fifty’ Chance of Fed Sept Interest Rate Move / Interest-Rates / US Interest Rates
By: Bloomberg
Bill Gross of Janus Capital spoke with Bloomberg's Tom Keene and Michael McKee on Bloomberg Radio and Television about today's jobs numbers, the markets and Fed policy.
When asked whether the Fed will raise rates on September 17th, Gross said: "I still think it’s 50/50 and China and global conditions are the dominant factor. Otherwise, I would have said, yes, I think Fischer and Yellen and maybe even Dudley their fingers are itching."
Tuesday, September 01, 2015
Forget Decoupling - The Fed will NOT Raise Interest Rates this Year / Interest-Rates / US Interest Rates
By: Ashraf_Laidi
USD under renewed pressure from a combination of renewed China data disappointment, weak US manufacturing ISM and lingering chatter of a September Fed hike. US stock futures began selling off 6 hours before the release of China's manufacturing PMI, which showed the first contraction in six months and the lowest figure in three years. The largely-weaker than expected manufacturing ISM (lowest in 27 months) was accompanied by broader weakness in all components.
Friday, August 14, 2015
Fed will Cut 'Transitory' in September / Interest-Rates / US Interest Rates
By: Ashraf_Laidi
A Russian saying goes "nothing is more permanent than temporary". At the Federal Reserve, "transitory" may mean "permanently", or could also mean "we have no clue". Oil has dropped by 57% since over the last 12 months but the +200 PhDs at the world's biggest central bank continue to describe lower energy prices as "transitory". At the June FOMC, the Fed made some progress and finally dropped its phrase from the FOMC statement that "energy prices have stabilized".
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Thursday, August 13, 2015
China’s Doing Yellen’s Job and Creating a Trillion Dollar Profit Pivot / Interest-Rates / US Interest Rates
By: Money_Morning
Keith Fitz-Gerald writes: Despite what the markets seem to think and many news sources would have you believe, China’s move to devalue the yuan by 1.9% is not an act of desperation intended to prop up a failing economy. It’s not a surprise. And, it sure as heck is not the end of the financial universe as we know it.
Instead, it’s a brilliant move that singlehandedly changes the investing landscape and creates a fabulous new set of profits if you’ve got the guts and the smarts to make your move.
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Sunday, August 09, 2015
The Unseen Consequences of Zero-Interest-Rate Policy / Interest-Rates / US Interest Rates
By: MISES
Ronald-Peter Stöferle writes: In a dynamic economy, an action not only triggers just one effect, but always an entire series of different consequences. While the cause of the first effect is easily recognizable, the other effects often occur only later and no such recognition occurs. Frédéric Bastiat described this phenomenon in 1850 in his ground-breaking essay “What Is Seen and What is Not Seen”:
Read full article... Read full article...In the economic sphere, an act, a habit, an institution, a law produces not only one effect, but a series of effects. Of these effects, the first alone is immediate; it appears simultaneously with its cause; it is seen. The other effects emerge only subsequently; they are not seen; we are fortunate if we foresee them …
Friday, August 07, 2015
Fed Taper Tantrum Coming? It Won't Be Where Nearly Everyone Is Looking! The Next Tantrum / Interest-Rates / US Interest Rates
By: Mike_Shedlock
Investors have been expecting another "Taper Tantrum" when the Fed starts hiking.
The term "Taper Tantrum" refers to the surge in US treasury yields (global government bond yields as well), in summer of 2013 when then-Fed Chairman Ben Bernanke put a spotlight on the wind down of Fed asset purchases (tapering off QE).
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Friday, August 07, 2015
Bill Gross Warns Fed Will Raise U.S. Interest Rates in September by 25 Basis Points / InvestorEducation / US Interest Rates
By: Bloomberg
Bill Gross of Janus Capital spoke with Bloomberg's Tom Keene following today's jobs report.
Gross said he sees the Fed raising interest rates in September by 25 basis points: "There have some pretty strong signals from Lockhart and others that September is the number. And I think it's because of financial conditions. We know that inflation is close to zero. Yes, unemployment is steady, but low... Whether it's 25 or 50 basis points-- probably 25, I hope. 50 would scare the market."
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Tuesday, August 04, 2015
Treasury Positioning at Odds with Fed Interet Rate Hike / Interest-Rates / US Interest Rates
By: Ashraf_Laidi
Why is positioning in US 10-year treasury notes at its most bullish levels in 27 years despite several FOMC members calling for at least one rate hike this year? The latest positioning figures from the CFTC show longs exceeding shorts by 65,642 contracts, the biggest net long position since May 2013. Such growing bullishness on the 10-year treasury is consistent with the 5-week decline in bond yields, which coincided with plunging oil prices.
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Monday, July 27, 2015
Are We Seeing a Trend Reversal with U.S. Interest Rates? / Interest-Rates / US Interest Rates
By: Submissions
Frank Suess writes: In the second quarter, we saw a jump in yields across the board. The yield of 10-Year US Treasuries jumped from 1.9% to 2.4% over the course of the quarter, representing a yield increase of 50 bps. This led to a decline of almost 2% in the Bloomberg US Treasury Bond Index. In Europe the development was much more dramatic; over the quarter, the Bloomberg German Sovereign Bond Index lost around 4.5% in value. This was due to an increase in the German 10-Year yield from 0.2% to 0.8% (60 bps). It is not completely clear what sparked the massive yield increase in Europe. It might have been a technical correction due to the very high prices bonds were trading at, increased risk aversion towards Europe due to the situation in Greece (Bill Gross even called shorting German bunds "the short of a lifetime"), or possibly aggressive short positions by some investors.
Thursday, July 23, 2015
The ‘Real’ Reason the Fed Wants to Raise Interest Rates / Interest-Rates / US Interest Rates
By: Gary_Tanashian
In case you thought you were smart enough to know why the Fed wants to do what it supposedly wants to do [1] MarketWatch sets you straight with the real scoop. We’ll use this as a talking point and see what comes of it…
Here’s the real reason the Fed wants to raise rates
Policy makers want to give themselves some room to maneuver
That is the commonly held belief and who am I to dispute it? A big part of the problem is and has been their refusal to begin a journey toward normalization 2 years ago, when the economy began to visibly (we noted the seeds of that improvement in January of that year) improve. They had no confidence and I was left to wonder (aloud here, frequently and I am sure, sometimes obnoxiously) why Grandma [2] (and her 0% savings account payout) had to continue to bear the brunt of this non-action despite a recovering economy.
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Tuesday, July 14, 2015
Has The Federal Reserve Missed Its Chance To Increase Interest Rates / Interest-Rates / US Interest Rates
By: AnyOption
The finance news space has been bombarded with so many different stories recently that many are starting to forget about one of the biggest stories in the space that we've seen throughout the year; the Federal Reserve. If you remember back to the beginning of the year, there were quite a bit of talks about a Federal Reserve interest rate hike that was to come in June, then it was September, and now, the story seems to have dissipated. Nonetheless, it's still a very important issue to follow; and more importantly, the landscape has changed quite a bit. So today, we'll talk about why Federal Reserve interest rates are so important, how the landscape has changed with regard to the topic, and why I think the Fed may have missed its chance to act. So, let's get right to it...
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Wednesday, July 08, 2015
China Crash, Can You Imagine The Fed Raising Rates In This World? / Interest-Rates / US Interest Rates
By: John_Rubino
$1.4 trillion of Chinese stocks have stopped trading. Greece is finally imploding. The US trade deficit is widening on falling exports.Copper just fell back to 2009 levels. And safe-haven capital flows are revving up again, with Swiss 10-year bonds once again trading with negative yields.
Thursday, June 25, 2015
Fed Taper Talk, And The $10 Bill / Interest-Rates / US Interest Rates
By: Steve_H_Hanke
Since May 2013, Fed taper talk has fluctuated between hot and cold. When it’s hot, the markets anticipate a monetary tightening and prices become volatile.
Recently, speculation about just when the Fed will increase interest rates has reared its head, again. Since early 2013, I have said that the Fed would not act until late 2015. Well, it’s now approaching that date and I think the Fed will act, but later, rather than earlier.
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Tuesday, June 23, 2015
Long Term Interest Rates Are On The Up…What’s Next? / Interest-Rates / US Interest Rates
By: Harry_Dent
The Fed has delayed a rate hike yet again. It seems convinced the economy isn’t ready to survive on higher short-term rates. So we continue to see zero rates to stimulate more economic activity. But today the market is proving just how limited the Fed’s influence really is!I’ve been warning for years now that there is a limit to how much you can stimulate the economy with free money and zero interest rate policies before the financial drugs no longer work. Eventually, the system breaks down from excessive debt and overexpansion.
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Monday, June 22, 2015
Interest Rates Are Rising for All the Wrong Reasons / Interest-Rates / US Interest Rates
By: Michael_Pento
Wall Street carnival barkers are relishing in the fantasy that the economy has finally achieved escape velocity. Therefore, they accept with alacrity that this is the primary reason why interest rates have started to rise. However, the fact still remains for the first half of 2015 GDP growth will probably be less than 1%.
Tuesday, June 16, 2015
Why the Fed Is Afraid To Raise Interest Rates / Interest-Rates / US Interest Rates
By: Michael_Pento
Even though the major stock market averages are flat for the first six months of the year, by nearly every measure the stock market is still extremely overvalued. This point is not lost on Ms. Yellen and company, as the Fed Chair herself has recently assented that the current value of stocks are "quite high". Given this, the Fed must privately be afraid that even a small change in the Fed Funds Rate could serve as the needle that pops the massive bubble in the stock market.
Saturday, June 13, 2015
What You Really Need to Know to Play Rising Rates and Win / Interest-Rates / US Interest Rates
By: ...
MoneyMorning.com Keith Fitz-Gerald writes: Millions of investors are understandably flummoxed by the prospect of rising rates, and with good reason – it’s something that they’ve never had to contend with because interest rates have been on a one way trip down since 1981 when they peaked above 15%.
Naturally, Wall Street’s hype machine is in full gear and the headlines are terrifying. For every one telling you this isn’t a big deal there are 10 telling you it’s the end of the financial universe as you know it.
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Tuesday, May 26, 2015
U.S. Fed Considers a More Seasoned Approach / Interest-Rates / US Interest Rates
By: Peter_Schiff
Just as the steady torrent of awful economic data, which began in the First Quarter and continued well into April and May, had forced many market analysts to grudgingly concede that 2015 would not see the robust economic growth that most had expected, the statisticians arrived on the scene like a cavalry charge and routed the forces of pessimism with a wave of their spreadsheets.
Monday, May 25, 2015
Janet Yellen is Right: She Can't Predict the Future / Interest-Rates / US Interest Rates
By: Dr_Ron_Paul
This week I found myself in rare agreement with Janet Yellen when she admitted that her economic predictions are likely to be wrong. Sadly, Yellen did not follow up her admission by handing in her resignation and joining efforts to end the Fed. An honest examination of the Federal Reserve's record over the past seven years clearly shows that the American people would be better off without it.
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Saturday, May 23, 2015
Yellen Interest Rate Hike If Economy Improves....Really? / Interest-Rates / US Interest Rates
By: Jack_Steiman
I didn't know that already? Fed Yellen made sure she reminded us today of this reality. A bad economy means no rate hikes and a good means there will be. I'm glad I understand things better now. So if we get a bad GDP, possibly even a negative one next week, the market will love it? It just may work out that way. It almost seems as if the bulls can't lose. A good number means things are getting better so let's celebrate that with some upside action.
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Sunday, May 17, 2015
Velocity of Money - The Chart the Fed Doesn’t Want You to See / Interest-Rates / US Interest Rates
By: Investment_U
Andrew Snyder writes: The folks at the Fed are getting desperate. Their patient is slowly healing, but he refuses to do it without a big dose of painkillers. It’s clear that if the money manipulators hide their pills now, our addict will throw an economic fit none of us is eager to experience.
On Wednesday, markets were shaken when the world’s top pill pusher Fed Chief Janet Yellen boldly told us that stocks are overpriced. It was a half-cocked assertion that Alex Green quickly overcame (read his argument here).
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Thursday, April 30, 2015
Bill Gross on Pimco Hiring Bernanke and Fed Interest Rate Hike 2015 / Interest-Rates / US Interest Rates
By: Bloomberg
Bill Gross of Janus Capital spoke with Bloomberg Television's Erik Schatzker about today's Federal Open Market Committee statement and the outlook for Federal Reserve policy, global bond markets and Pacific Investment Management Co.'s move to hire former Fed Chairman Ben S. Bernanke as an adviser.
On Pimco hiring Bernanke, Gross said: "Obviously it's a public relations effort….To be able to hook up with Ben Bernanke, I think it is. And that was one of the reasons why we did it with Alan Greenspan [when I was at Pimco], but we found out that there were some very positive benefits to it as well."
Friday, April 17, 2015
The Consequences of The Fed's Interest Rate Hike / Interest-Rates / US Interest Rates
By: Arkadiusz_Sieron
Although sometimes we doubt whether the Fed is going to increase interest rates soon, it is worth analyzing the consequences of such a game-changing move. The hike would be the first in nearly a decade. Theoretical effects of rising interest rates are well-known: higher interest rates mean higher borrowing costs (something to consider: if you have a variable rate mortgage and believe that Fed will eventually hike interest rates, think about locking in at current low rates with a fixed-rate mortgage), lower asset prices, reduced risk-premium and a stronger greenback. All of these are relatively bad for the stock market. Higher discount rates mean lower stock prices, while reduced risk-premium makes equities less attractive compared to new issues of bonds. Higher borrowing costs hurt indebted companies, while a stronger greenback negatively affects the exporters and international businesses, which are a significant part of the U.S. stock market. This is why the equity indices were generally falling in March in anticipation of the Fed's hike and surged after the publication of the dovish FOMC statement.
Wednesday, April 15, 2015
Boom Zero Interest Rates / Interest-Rates / US Interest Rates
By: Gary_Tanashian
There is so much data flying around out there. From the Credit data we reviewed yesterday to weakening manufacturing and exports to employment up nicely one month and down big the next, to frisky consumers (the economy’s ‘back end’, putting it nicely) out there confidently living it up.
Tuesday, April 07, 2015
U.S. Interest Rates - How the Federal Reserve Has Completely Fooled Us for Years / Interest-Rates / US Interest Rates
By: DailyWealth
Dr. Steve Sjuggerud writes: We must be idiots...
The Federal Reserve has completely fooled us for more than six years...
"Higher interest rates are just around the corner," they tell us today.
The thing is, they've told us that over and over – since the Fed first cut interest rates to zero back in 2008.
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Tuesday, March 31, 2015
Why are Interest Rates So Low? Ben Bernanke, Confused as Ever, Starts His Own Blog to Prove It / Interest-Rates / US Interest Rates
By: Mike_Shedlock
Ben Bernanke just started his own blog at the Brookings Institute. His first post, from today, Inaugurating a New Blog is the announcement.
Let's dive into Bernanke's second post of the day: Why are Interest Rates So Low?
Bernanke: Low interest rates are not a short-term aberration, but part of a long-term trend. As the figure below shows, ten-year government bond yields in the United States were relatively low in the 1960s, rose to a peak above 15 percent in 1981, and have been declining ever since. That pattern is partly explained by the rise and fall of inflation, also shown in the figure.
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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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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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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.
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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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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Tuesday, March 03, 2015
Bill Gross Says Fed May Raise Rates 25 Basis Points in June / Interest-Rates / US Interest Rates
By: Bloomberg
Bill Gross of Janus Capital spoke with Bloomberg Television's Trish Regan about the outlook for Federal Reserve policy, the U.S. economy and his objectives at Janus Capital.
On what he aims to do at Janus, Gross said: "I wanted to show clients and to show the world, to the extent that they're interested, that I can continue to produce a track record like I did at PIMCO. I won't have five to 10 to 15 years of leeway like I had at PIMCO in terms of proving that. But certainly for the next two, three or four years. I'm a very competitive person and I like to post numbers that are better than the market and better than the competition."
Saturday, February 28, 2015
Fed Raising U.S. Interest Rates - Shovelin’ Schmitt Against the Tide / Interest-Rates / US Interest Rates
By: John_Mauldin
There is an obsession in the marketplace over the date when the Fed will once again begin to raise rates. As if another 25 basis points is going to change the economics on tens of trillions of dollars of investments. But as we reflect on the issue more deeply, it becomes obvious that a minor bump in the fed funds rate will indeed change a great deal of economics all over the world.
No, it won’t do much to the cap rate on your latest real estate purchase, but it is likely to greatly affect the pricing of the currency and commodity markets. And those markets will affect corporate profits, which will affect the stock market. It’s all connected.
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Wednesday, February 11, 2015
Goldman Sachs’s Cohn: Fed in ‘Tough Position’ on Interest Rate Hike / Interest-Rates / US Interest Rates
By: Bloomberg
Gary Cohn, President and COO of Goldman Sachs, joined Bloomberg Businessweek reporter Brad Stone for an interview on Bloomberg TV. He spoke about the company's investments in the technology industry, regulation of the financial industry and the outlook for oil prices and Federal Reserve policy
When asked whether we will see a rate increase this year, Cohen said: "The Fed is in a very tough position...They’re going to be constrained by circumstances, going to be concerned about the strength of the dollar, and other countries are going to continue to devalue.”
Sunday, February 08, 2015
Why the Federal Reserve Will Move U.S. Interest Rates / Interest-Rates / US Interest Rates
By: Money_Morning
Michael E. Lewitt writes: To say that markets are confused about when the Federal Reserve is going to raise interest rates is the understatement of the year.
The confusion is understandable. While the U.S. economy no longer needs crisis-era policies like zero interest rates and quantitative easing, the rest of the world is still struggling.
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Friday, January 30, 2015
Bullard Says Rates at Zero Interest Rates Not Right for U.S. Economy / Interest-Rates / US Interest Rates
By: Bloomberg
James Bullard, President of the Federal Reserve Bank of St. Louis, spoke with Bloomberg Television and Bloomberg Radio today about monetary policy, the U.S. economy and the oil market.
Bullard said "Zero interest rates is not the right interest rate for this economy. We are much closer to goals than we've been in a long time. Inflation is a little bit low, but it's not low enough to rationalize the zero interest rate policy."
He said: “The market has a more dovish view of what the Fed is going to do than the Fed itself… Markets should take it at face value." He said it’s “reasonable” to expect an increase in June or July.
Thursday, January 22, 2015
Are Plunging Petrodollar Revenues Behind the Fed’s Projected Rate Hikes? / Interest-Rates / US Interest Rates
By: Mike_Whitney
Why is the Fed threatening to raise interest rates when the economy is still in the doldrums? Is it because they want to avoid further asset-price inflation, prevent the economy from overheating, or is it something else altogether? Take a look at the chart below and you’ll see why the Fed might want to raise rates prematurely. It all has to do with the sharp decline in petrodollars that are no longer recycling into US financial assets.
Monday, January 19, 2015
Where Would Interest Rates Be If The Fed Didn't Exist? / Interest-Rates / US Interest Rates
By: Michael_Pento
On January 7th CNBC's Rick Santelli and Steve Leisman engaged in a heated debate that posed an interesting question; is the free market at work keeping interest rates low, or is it the central banks' put? This made me consider the real question to ask which is: Where would rates be if central banks didn't exist?
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Friday, January 09, 2015
The Hidden Perils of Low Interest Rates / Interest-Rates / US Interest Rates
By: John_Browne
Late last year, with the U.S. economy experiencing falling unemployment and seemingly low inflation, observers were extremely confident that the Federal Reserve would move judiciously in 2015 to restore 'normal' interest rates sooner rather than later. However, in light of the recent fall in both stocks and oil, that conviction has softened considerably.
Many, such as the very influential Bill Gross, now believe that our current Zero Interest Rate Policy (ZIRP), which has been in place for six years, will remain in place throughout the year. While this likelihood is a disappointment to many, who would have preferred to see the economy move along without Fed-supplied training wheels, few really understand the pernicious effects these policies are inflicting on the economy the longer they are held in place. In short, ZIRP is slowly transforming the world economy into a dysfunctional basket case.
Sunday, December 07, 2014
Why the Fed Won’t Raise Interest Rates in 2015 / Interest-Rates / US Interest Rates
By: Investment_U
Alexander Green writes: U.S. short-term interest rates have stayed near zero for six years.
But if there’s one thing investment analysts of all stripes can agree on now, it’s that the Fed will start gradually raising rates in 2015.
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Saturday, November 15, 2014
No U.S. Interest Rate Hike in 2015? / Interest-Rates / US Interest Rates
By: DailyWealth
Dr. Steve Sjuggerud writes: Everyone expects higher interest rates in 2015... Everyone, that is, except Jim Rickards.
Jim Rickards is an original thinker...
I've already shared with you in DailyWealth Jim's brilliant but out-of-the-mainstream view that DEFLATION – not inflation – is the financial storm that nobody is expecting. (I urge you to go back and read the DailyWealth I wrote about that, right here.)
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Monday, October 20, 2014
A Funny Thing Happened on The Way to Raising Rates / Interest-Rates / US Interest Rates
By: Michael_Pento
It wasn't too long ago that the stock market was busy celebrating a "great" September jobs report. There were 248k net new jobs created and the unemployment rate dropped to 5.9 percent. Janet Yellen, Ben Bernanke and the rest of Washington D.C.'s central planners deemed it a great time to take a Keynesian victory lap, basking in the delusion that they now have proved you actually can print and borrow your way to prosperity.
And, because of their success, the Fed would be able to raise interest rates without any damage to the economy.
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Tuesday, October 14, 2014
Inflation, Deflation, and Our Very Confident Bet in T-Bonds / Interest-Rates / US Interest Rates
By: Rick_Ackerman
I’ve been touting the ongoing bull market in T-Bonds as one of the best investment opportunities of our lifetime – a no-brainer, as far, as I can recommend. About the only way this bet can lose is if inflation returns with a vengeance. This has never been much of a worry for me, since, on the inspiration of C.V. Myers’ prescient 1976 book, I’ve been writing about the threat of deflation for more than 20 years. As Myers noted, every penny of very debt must eventually be paid – if not by the borrower, then by the lender. So far, lenders have hung tough on their terms, and although a recklessly expansive monetary policy has cut mortgage debtors in particular some slack, there is no reason to think private lenders will let homeowners skip free when the second stage of the housing collapse that began in 2007 begins anew. Deflation-wise, this is where the rubber will meet the road, drawing irresistible power from the inevitable implosion of the quadrillion dollar Ponzi scheme popularly known as “derivatives.”
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Saturday, October 04, 2014
The Fed Cannot Wait For Wage Inflation to Raise Interest Rates / Interest-Rates / US Interest Rates
By: EconMatters
5.9% Unemployment Rate
Wednesday, October 01, 2014
Why The U.S. Fed WILL Raise Interest Rates / Interest-Rates / US Interest Rates
By: Raul_I_Meijer
This is not the first time I’ve written on this topic, but I want to do it again, because rate hikes, when they come, will have a tremendous effect on everybody’s loves and economies, wherever you live. And because I think there’s still far too much complacency out there, far too much ‘conviction’ that higher rates will come only after a comfortable period of time, and even then only gradually.
There are three steps in the Fed’s ‘policies’. There’s QE, which will end in October. There’s ultra low interest rates, which have so far been maintained. And then there’s the dollar, whose rate many people still think is determined by the ‘markets’, even if the Fed is in effect the ‘markets’. When the Fed buys, or makes third parties buy, bonds and stocks (and we know it has), it’s not going to let the dollar roam free. That makes no sense.
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Tuesday, September 30, 2014
Dallas Fed Fisher: Would Like To See U.S. Interest Rate Lifoff At End Of First Quarter / Interest-Rates / US Interest Rates
By: Bloomberg
In an interview with Bloomberg Radio's Kathleen Hays and Vonnie Quinn, Federal Reserve Bank of Dallas President Richard Fisher said he would like to see interest-rate increases start at the end of the first quarter and continue in quarter-point increments.
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Monday, September 22, 2014
Why U.S. Interest Rates They’re Not Headed Up Anytime Soon / Interest-Rates / US Interest Rates
By: DailyGainsLetter
George Leong writes: The Federal Reserve has spoken and to no one’s surprise, there was really nothing new from Fed Chair Janet Yellen, who did as was expected after shaving off another $10.0 billion in monthly bond purchases. The Federal Reserve will cut the remaining $15.0 billion in October, bringing its third round of quantitative easing (QE3) to an end.
What the stock market here and around the world also heard was that the Federal Reserve will likely maintain its near-zero interest rate policy for a “considerable time” after the QE3 cuts.
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Monday, September 22, 2014
Interest Rate Doves Don't Know History / Interest-Rates / US Interest Rates
By: Michael_Pento
A wise saying goes like this; "Those who do not remember history are condemned to repeat it." So ask yourself; what is the fate of those who seem to have absolutely no recollection of events that happened just a few years ago?
We are nearing the end of 2014, and to the debt markets, it is almost as if the 2008 economic collapse never happened. It appears that borrowers and lenders are suffering from a severe case of collective amnesia. Yes, consumer debt levels took a slight breather in 2009-10. But today, total consumer credit in the U.S. has risen by 22 percent over the past three years, and at this point 56 percent of all Americans have a subprime credit rating.
Saturday, September 13, 2014
The Fed Has A Big Surprise Waiting For You / Interest-Rates / US Interest Rates
By: Raul_I_Meijer
The topic of potential interest rate hikes by central banks is no longer ever far from any serious mind interested in finance. Still, the consensus remains that it will take a while longer, it will take place in a very gradual fashion, and it will all be telegraphed through forward guidance to anyone who feels they have a need or a right to know. Sounds like complacency, doesn’t it?
Sunday, September 07, 2014
Real U.S. Interest Rates and Future Chaos / Interest-Rates / US Interest Rates
By: John_Rubino
The folks at Gresham’s Law just published a nifty interactive chart of real (i.e., inflation-adjusted) interest rates since the 1960s that explains a lot about today’s world.
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Monday, August 25, 2014
The Fed Will Raise U.S. Interest Rates in March 2015 / Interest-Rates / US Interest Rates
By: EconMatters
March or June?
The big question for financial markets is whether the Fed will raise rates in March or June, it used to be Whether it would be June or September of 2015, and I think as the data gets better in the second half of the year, and QE ends in October, the timeline could be moved up even further, say January of 2015 for the first rate hike.
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Saturday, August 23, 2014
U.S. Interest Rates - Is It Time To Ignore The Fed? / Interest-Rates / US Interest Rates
By: Sy_Harding
All eyes are on the Fed. When will it begin to raise interest rates? Some say next summer. Others think sooner, in the first quarter of next year. A few Fed governors insist that will be too late, that the Fed needs to act before year-end.
Analysts hoped some hints could be gleaned by reading between the lines of Fed Chair Yellen’s speech in Jackson Hole on Friday morning, or perhaps from nuances in her tone of voice.
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Saturday, August 23, 2014
U.S. Interest Rate Rise to Occur Mid-2015 According to Fed's Williams / Interest-Rates / US Interest Rates
By: Bloomberg
Bloomberg Television's economics editor Michael McKee spoke with San Francisco Federal Reserve President John Williams in Jackson Hole, WY today, who said that very accommodative policy is what's needed now.
Williams said, "...it's clear unemployment is too high and inflation is still too low and it calls for a very strong accommodative policy, and I think that's been a big factor helping our economy recover. And I wouldn't want to see us tightening the policy until we've made further progress in that some time next year."
Friday, August 22, 2014
U.S. Interest Rates Can Rise States Fed President / Interest-Rates / US Interest Rates
By: Bloomberg
In an interview with Bloomberg's Michael McKee, Federal Reserve Bank of Kansas City/MO President Esther George said she sees 'significant progress' in the labor market in 2014, "We have seen significant progress in the labor market over the last three years, and particularly this year," gains have been "broad-based, and that's a very encouraging sign."
George told McKee that "Inflation looks to be stable," and "there's every reason to think we should start talking about normalization."
The Kansas City Federal Reserve President also said that we must return the balance sheet to the smallest amount we can and noted that the very large balance sheet has "complicated the process of monetary policy."
Tuesday, July 29, 2014
Real U.S. Interest Rates - Fed Exit a Blue Pill? / Interest-Rates / US Interest Rates
By: Axel_Merk
While we are busy arguing whether the Fed’s exit will consist of rising rates, reverse repos or the trimming of its massive portfolio, the Fed may well be fooling all of us. Investors must have been swallowing lots of blue pills not to see the illusion hiding in plain sight.
Thursday, July 17, 2014
The Fed Needs to Raise U.S. Interest Rates Now! / Interest-Rates / US Interest Rates
By: EconMatters
ZIRP Policy & Asset Valuations
The conditions in so many asset classes are unsustainable from a price perspective once interest rates rise even under a “new normalized rate environment” and the longer rates stay at ZIRP status these unsustainable price levels continue to move in the wrong direction from a sustainability standpoint, i.e., the underlying fundamentals apart from ZIRP policy would not support said asset prices in a natural price discovery process.
Read full article... Read full article...
Wednesday, July 02, 2014
Planning for Future Interest Rate Hikes: What Can History Tell Us that the Fed Won’t? / Interest-Rates / US Interest Rates
By: F_F_Wiley
It stands to reason that when the Fed eventually lifts interest rates, we’ll see the usual effects. After a sustained rise in rates, you can safely bet on:
- Fixed investment and business earnings dropping sharply
- GDP growth following investment and earnings lower
- Many people losing their jobs
- Risky assets performing poorly
Monday, June 23, 2014
The Fed’s Stealth Tightening / Interest-Rates / US Interest Rates
By: Casey_Research
By Bud Conrad, Chief Economist
As expected, the Fed tapered its purchases of mortgage-backed securities on Wednesday to $15 billion per month and its purchases of longer-term Treasury securities to $20 billion per month.
That means total monthly purchases, which were $85 billion last year, are now down to $35 billion. That’s a significant cut.
Read full article... Read full article...
Sunday, May 18, 2014
Fed to Raise U.S. Interest Rates in 9 Months / Interest-Rates / US Interest Rates
By: EconMatters
James Bullard Speech
The biggest news to come out of Friday`s financial market activity was James Bullard’s thoughts on when he expects the Fed to start raising rates, he believes the Fed will start raising rates sometime near the end of the first quarter of 2015.
He also said, “While first-quarter GDP growth was weak, growth in coming quarters is still predicted to be robust,” according to slides for his speech. He added, “the average quarterly pace of growth in 2014 may still be an improvement relative to 2013.”
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Tuesday, May 13, 2014
PIMCO See's Slow Interest Rate Rise in 'New Neutral' - Video / Interest-Rates / US Interest Rates
By: Bloomberg
Richard Clarida, global strategic adviser at Pacific Investment Management Co., talks about the outlook for the global economy and implications of the "new neutral." Clarida speaks with Bloomberg's Tom Keene, Scarlet Fu and Adam Johnson on Bloomberg Television's "Surveillance." James Lockhart, vice chairman of WL Ross & Co., also joined the discussion.
Tuesday, April 22, 2014
Rates are NOT Rising! / Interest-Rates / US Interest Rates
By: Jonathan_Davis
Back in December our firm noted that ‘everyone’ was saying interest rates would soon rise. After all, they said, The Governor of the Bank of England and the Federal Reserve of the US had all but announced it.
We also noted that rates had been falling for getting on for 40 years.
We wondered if those saying higher rates are coming were looking in the wrong places.
Read full article... Read full article...
Thursday, April 10, 2014
Interest Rate Hikes on the Horizon? Not Likely / Interest-Rates / US Interest Rates
By: Matt_Machaj
Recent weeks were not bad for those gold investors’ hearts filled with golden hopes. The price of gold depends on many factors, but past patterns can give us important hints and suggest which of them are to be carefully studied and properly comprehended. If history were to teach us anything about gold’s past market values it would most primarily be the following: watch out for the feds! Wise observation of government policies is the main driving force for what is happening in the gold market (surely along with supply factors in the longer run). As we discussed a month ago, this is the main reason for the observed correlation between the gold price and the interest rates. Not because interest rates per se are always casually linked to the gold price. But because interest rates are a reflection of current government policies.
Thursday, March 20, 2014
Fed Changes the Rules to Maintain ZIRP / Interest-Rates / US Interest Rates
By: Michael_Pento
The New Chairperson of the Federal Reserve showed off her dovish feathers after the latest meeting of the FOMC. Ms. Yellen abrogated the threshold of 6.5% on the unemployment rate as the starting point for short term rate hikes and replaced it with amorphous and ambiguous language that allows plenty of wiggle room with rates.
Just like a child sometimes changes the rules of a game in mid-stream in order to guarantee a favorable outcome, the Fed has ripped up the rulebook to suit its own needs.
Wednesday, February 05, 2014
Challenging the Consensus for Rising Interest Rates / Interest-Rates / US Interest Rates
By: John_Mauldin
One of the most universal consensus calls in the markets today is that interest rates are destined to rise. Thirteen out of 13 major investment banks all think that interest rates for global fixed-income will rise this year. I get nervous when everybody is on the same side of the boat. And so does my good friend and business partner Niels Jensen of Absolute Return Partners in London. This week’s Outside the Box is another of his thoughtful essays, giving us five reasons why interest rates may in fact go down this year. That is not to say that we don't both agree that rates have to go back up eventually, but to us the timing is not so obvious as it is to the major investment banks. Rather than tip his thunder, I’ll let Niels advocate for his position. (And you can see more of his consistently excellent work at www.arpinvestments.com.)
Friday, January 31, 2014
FOMC on Future U.S. Interest Rates / Interest-Rates / US Interest Rates
By: Matt_Machaj
In terms of asset purchases monetary policy was, is and will be accommodative. More importantly so is the case with interest rates, which are still flirting with zero percent range - despite the fact that that lowering was believed by some to be temporary. I remember that even in 2009 there were people seriously arguing that we should expect interest rate hikes in few months. The history has proven them to be astonishingly wrong.
Sunday, January 26, 2014
TNX Chart: Specter of Rising U.S. Interest Rates / Interest-Rates / US Interest Rates
By: Jim_Willie_CB
We are at the doorstep of a major USTreasury Bond breakdown. The TNX (10-year bond yield) is at the 3.0% doorstep, as 3.5% looms very likely in the coming months. A horrible threat of a 3.7% target is presented in the chart. A rising trend is seen in many characteristics that cannot be easily dimissed. The following graphic is an extremely powerful chart, thus the center piece of the article. If and when the breakout comes, it will make the Taper Talk backfire seem rather insignificant, as a gathering storm will hit like a financial hurricane on every continent. The Jackass is on record with a forecast of 3.5%, which remains in place. One must be patient to watch it unfold, since it can take months to unfold and to manifest itself. That is far more time than the nitwits who are quick to label it a wrong forecast call. But then again they are are loud unimpressive dullards who litter the audience, taking up valuable space.
Thursday, January 23, 2014
Could A Compound Debt Interest Rate Payments Wildfire Threaten US Solvency? / Interest-Rates / US Interest Rates
By: Dan_Amerman
For the first time since the end of World War II, the total US federal debt now equals 100% of the size the US economy. But while that is obviously a situation of great concern, it may not be the worst of the danger.
Instead, the greatest debt-related threat to the solvency of the United States government and the value of the dollar could be the fact that the US isn't actually making any net principal or interest payments on its debt.
Read full article... Read full article...
Saturday, December 28, 2013
U.S. Treasury Bond Yields Creeping Higher / Interest-Rates / US Interest Rates
By: PhilStockWorld
Courtesy of Doug Short: What’s New: The 10-year note closed the week at 3.02%, up 17 bps since the close before the latest FOMC minutes were released and the highest since July 25, 2011. The interim closing low was 1.43%, exactly one year later on July 25, 2012.
The latest Freddie Mac Weekly Primary Mortgage Market Survey, released yesterday, puts the 30-year fixed at 4.48%, 117 bps above its all-time low of 3.31% in late November of last year and 10 bps below its interim high reported on August 22nd.
Read full article... Read full article...
Monday, December 23, 2013
Small Pullback in Money Printing = Big Spike in Interest Rates? / Interest-Rates / US Interest Rates
By: Profit_Confidential
Michael Lombardi writes:
Quietly, without much fanfare or news, the bellwether 10-year U.S. Treasury hit a yield of 2.9% this past Friday—double what it yielded in June of 2012. (Source: Treasury.gov, last accessed December 20, 2013.)
Yes, the Federal Reserve only slightly pulled back on its money printing program and interest rates are already spiking.
Wednesday, December 04, 2013
When Saving Interest Rates Go Negative / Interest-Rates / US Interest Rates
By: BATR
What is more frightening, then the loss of your money. Since most people have, some meager amount held in some form of a financial institution, the prospect of the banksters' cabal placing a charge against your account for the mere privilege of maintaining a deposit, is horrible. The Business Insider warns, In The Future, You May Have To Pay The Bank To Hold Your Money, and raises a very dreadful prospect.
Sunday, November 17, 2013
Code Red - The Unintended Consequences of ZIRP, Zero Interest Rates Policy / Interest-Rates / US Interest Rates
By: John_Mauldin
Yellen's coronation was this week. Art Cashin mused that it was a wonder some senator did not bring her a corsage: it was that type of confirmation hearing. There were a few interesting questions and answers, but by and large we heard what we already knew. And what we know is that monetary policy is going to be aggressively biased to the easy side for years, or at least that is the current plan. Far more revealing than the testimony we heard on Thursday were the two very important papers that were released last week by the two most senior and respected Federal Reserve staff economists. As Jan Hatzius at Goldman Sachs reasoned, it is not credible to believe that these papers and the thinking that went into them were not broadly approved by both Ben Bernanke and Janet Yellen.
Friday, November 08, 2013
Janet Yellen's Mission Impossible / Interest-Rates / US Interest Rates
By: Peter_Schiff
Most market watchers expect that Janet Yellen will grapple with two major tasks once she takes the helm at the Federal Reserve in 2014: deciding on the appropriate timing and intensity of the Fed's quantitative easing taper strategy, and unwinding the Fed's enormous $4 trillion balance sheet (without creating huge losses in the value of its portfolio). In reality both assignments are far more difficult than just about anyone understands or admits.
Read full article... Read full article...
Monday, November 04, 2013
What the Fed Doesn't Want You to See / Interest-Rates / US Interest Rates
By: Money_Morning
David Zeiler writes: Ever heard of the Taylor Rule?
Not many people have, but the folks at the U.S. Federal Reserve are very familiar with it - and they'd probably prefer that this highly respected guideline for the federal funds rate languish in obscurity.
Read full article... Read full article...
Wednesday, October 23, 2013
Interest Rates 60 Year Cycle Low / Interest-Rates / US Interest Rates
By: readtheticker
The cost if capital is rising, the big cycles are rolling over. Today's debt slaves will not be happy.
For the fundamental trader a good reason that interest rates are on the long trend higher can be found via Steven Roach comments on a change in China.
Read full article... Read full article...
Tuesday, October 22, 2013
Fed Flying Blind - Fixing the Economy as Easy as 1-2-3 / Politics / US Interest Rates
By: Axel_Merk
With the economy stuck in first gear, a couple of common sense steps that wouldn't cost taxpayers an arm and a leg could help the economy shift into a higher gear.
Tuesday, October 22, 2013
Janet Yellen the U.S. Interest Rates Hawk? / Interest-Rates / US Interest Rates
By: Steve_H_Hanke
Well, it’s official. President Obama has picked Janet Yellen as his nominee to be the next Federal Reserve Chairman. In the months leading up to this announcement, the press unanimously dubbed Yellen the Queen of the Doves, pointing to her reluctance to roll back the Fed’s Quantitative Easing program. As it turns out, however, Yellen is hardly the dove she is made out to be. Indeed, when it comes to money supply, Dr. Yellen seems, well, downright hawkish.
Wednesday, September 18, 2013
What Investors Can Do About Rising Interest Rates / Stock-Markets / US Interest Rates
By: InvestmentContrarian
Sasha Cekerevac writes: As my long-time readers are fully aware, one of the concerns I have brought up over this past year has been the reaction in the economy to what I believed would occur—higher interest rates.
As we are now seeing interest rates increase, the result of this action is beginning to seep through into the economy.
Read full article... Read full article...
Wednesday, September 11, 2013
Why the Fed Needs to Taper Now in Spite of Weak Jobs Report / Interest-Rates / US Interest Rates
By: InvestmentContrarian
George Leong writes: The Federal Reserve will need to make a big decision soon, prior to its Federal Open Market Committee (FOMC) meeting in mid-September, regarding the continuation of its monetary policy. Before Friday’s non-farm payrolls report, the decision was somewhat easy to make on the heels of positive economic data and a good second-quarter gross domestic product (GDP) reading. The initial claims for the most recent week were the lowest since before the recession.
Read full article... Read full article...
Wednesday, September 11, 2013
How This Week’s Fed Meeting Could Impact Your Portfolio / Interest-Rates / US Interest Rates
By: InvestmentContrarian
Sasha Cekerevac writes: All eyes are on this week’s important Federal Reserve meeting, in which many analysts expect that the Federal Reserve will decide to begin to lower its $85.0-billion-per-month asset purchase program.
But things might not be that easy, since the report on job creation released last Friday is showing signs of deceleration.
Read full article... Read full article...
Friday, August 30, 2013
How Rising Interest Rates Will Affect You / Stock-Markets / US Interest Rates
By: Investment_U
Marc Lichtenfeld writes: According to a survey, 63% of investors don’t know how rising interest rates will affect their portfolios.
They should, because rates are climbing fast. The 10-year Treasury is at nearly 3%. Just three months ago, it was under 2%. The 10-year Treasury yield can affect mortgage rates, interest rates on credit cards… and especially your portfolio.
Read full article... Read full article...
Saturday, August 24, 2013
U.S. Treasury Bonds Are Oversold / Interest-Rates / US Interest Rates
By: Sy_Harding
Has there ever been an asset class bombarded by such intense negativity in such a short period of time? Fed Chairman Bernanke’s warning in May that the Fed would soon begin to ‘taper’ its QE bond-buying stimulus program brought ‘The End of Bonds’ headlines out in force. And bond investors responded.
Tuesday, August 20, 2013
QE Party is Ending, Rising Interest Rates Means the Fed Could Go Bankrupt / Interest-Rates / US Interest Rates
By: Graham_Summers
The QE party is ending. And the following hangover is going to be brutal.
Since 2007 the Central Bankers of the world have operated under the belief that they can hold the financial system together by engaging in round after round of Quantitative Easing (QE) without losing control of the bond markets/ interest rates.
Read full article... Read full article...
Tuesday, August 20, 2013
Rising Treasury Yields, Tight Money Has Already Started / Interest-Rates / US Interest Rates
By: Clif_Droke
Aside from the fact that the 10-Year Treasury Yield Index (TNX) is rising, one reason for the recent equity market sell-off is the uncertainty generated by the Fed's latest announcement concerning the future of QE3.
At its latest press conference, Fed Chairman Bernanke indicated the central bank could start winding down its $85 billion/month asset purchase program in September. This has understandably caused a certain amount of consternation on Wall Street, especially given the feeling among many traders that QE has been largely responsible for the stock market's rebound.
Read full article... Read full article...
Sunday, August 04, 2013
If You're Worried About Rising Interest Rates, Look at This Chart / Interest-Rates / US Interest Rates
By: DailyWealth
David Eifrig writes: "Don't fight the Fed."
You can hear that phrase on bond-trading desks throughout Wall Street. It's a warning to investors and traders. Don't try to outthink the central bank or anticipate its next moves...
Wednesday, July 10, 2013
How High Will U.S. Interest Rates Go? / Interest-Rates / US Interest Rates
By: Michael_Pento
To best answer the question as to where U.S. Treasury yields are headed in the next quarter or two, it is important to know where they would be without the manipulation of our central bank, where they would be in a growing economy and, also, absent the threat from an imminent collapse of a major foreign currency. The current yield on the Ten-Year Note is 2.6%, up from 1.6% less than two months ago. True, that rate has surged of late but it is still far below its 40-year average of around 7%. But just prior to the beginning of the Great Recession (in fall of 2007) the yield on the Ten-Year Note was 4%--140 basis points higher than today.
Read full article... Read full article...
Sunday, July 07, 2013
Mortgage Backed Securities Clobbered and U.S. Treasury Yields Soar Following Job Numbers / Interest-Rates / US Interest Rates
By: Mike_Shedlock
Curve Watchers Anonymous notes that treasury yields surged higher and mortgage backed securities (MBS) had a steep selloff following purportedly good job numbers.
Beneath the surface, the economy actually shed 326,000 full-time jobs.
Read full article... Read full article...
Monday, June 24, 2013
How Recent Surge in Yields Compares with the Past / Interest-Rates / US Interest Rates
By: PhilStockWorld
Courtesy of Doug Short : The bond market selloff after the FOMC meeting and Chairman Bernanke’s surprising specifics about exiting QE was quite stunning. However, his hawkish position was supported by today’s release by the Bank for International Settlements (BIS) of its annual report. The abstract for opening section, headed Making the most of borrowed time, begins with the following assertion:
Read full article... Read full article...Originally forged to describe central banks’ actions to prevent financial collapse, “whatever it takes” has become a rallying cry for them to continue their extraordinary policies. But we are past the height of the crisis, and the goal of policy today is to return to strong and sustainable growth.
Monday, June 24, 2013
U.S. Treasury Bond Market Panic Profitable Plays for Investors / Interest-Rates / US Interest Rates
By: DailyGainsLetter
Moe Zulfiqar writes: It’s no secret: the Federal Reserve has kept U.S. bond prices higher and yields historically low by keeping interest rates low with multiple rounds of quantitative easing.
But now things have taken a minor turn, after the Federal Open Market Committee (FOMC) meeting minutes were released on June 19. “The committee currently anticipates that it will be appropriate to moderate the monthly pace of purchases later this year,” said Fed chairman Ben Bernanke. “And if the subsequent data remain broadly aligned with our current expectations for the economy, we will continue to reduce the pace of purchases in measured steps through the first half of next year, ending purchases around mid-year.” (Source: “Bernanke says Fed likely to reduce bond buying this year,” Reuters, June 19, 2013.)
Saturday, June 22, 2013
Tapering the Fed QE Taper Talk / Interest-Rates / US Interest Rates
By: Peter_Schiff
As usual the Federal Reserve media reaction machine has fallen for a poorly executed head fake. It has been fooled by this move many times in the past and for its efforts it has tackled nothing but air. Yet right on cue, it took the bait once more. Somehow the takeaway from Wednesday's release of the June Fed statement and the Bernanke press conference is that the Central bank is likely to begin scaling back, or "tapering," it's $85 billion per month quantitative easing program sometime later this year, and that the program may be completely wound down by the middle of next year.
Friday, June 21, 2013
Why U.S. Interest Rates Are Rising Sharply Even Though Inflation Is Non-Existent / Interest-Rates / US Interest Rates
By: InvestmentContrarian
Sasha Cekerevac writes: As we all know, the Federal Reserve has two mandates: keep the inflation rate low (officially, they have an optimal rate of two percent) and try to keep employment at or near maximum levels.
Because the extent of the recession has been so large and deep, in both of these measures, the Federal Reserve has not yet attained either goal. As a result, the Federal Reserve has enacted an extremely aggressive monetary policy stance.
Read full article... Read full article...
Thursday, June 20, 2013
Will Rising Interest Rates Ruin the Economic Recovery? / Interest-Rates / US Interest Rates
By: Clif_Droke
Sometimes words speak louder than actions. That has certainly been the case lately with the Fed hinting that it may taper off asset purchases by the end of this year. On Wednesday, Fed Chairman Bernanke said the Federal Reserve would keep monetary policy loose a while longer but hinted that the days of easing may be numbered. Bernanke said that the Fed may wind down its quantitative easing (QE) program if the economy continues to improve.
Read full article... Read full article...
Friday, June 07, 2013
The Painful Price of Subsidized Money / Interest-Rates / US Interest Rates
By: Money_Morning
Martin Hutchinson writes: Bond yields have been generally declining, and the market as a whole is set up for them to continue the trend.
Not bad, right?
Wrong.
It's extremely dangerous - to all investors - because it can't go on forever. It's not a question of if this might happen, it's a question of when.
Read full article... Read full article...
Tuesday, May 14, 2013
Why I'm NOT Betting on Higher Interest Rates / Interest-Rates / US Interest Rates
By: DailyWealth
Dr. Steve Sjuggerud writes: Bill Gross is the world's greatest bond investor. But I'm not betting on his latest market call... And you shouldn't either.
Gross is to the bond market what Warren Buffett is to the stock market...
Just like Buffett, Gross has managed to trounce his peers for decades even as his assets under management have grown to an incredible size. Gross' firm PIMCO now manages over $2 trillion in assets, making it the world's largest bond investor.
Wednesday, May 01, 2013
Financial Collapse - Is Bernanke Preparing to Jump Ship? / Interest-Rates / US Interest Rates
By: Graham_Summers
The Fed meets today and tomorrow. The ECB meets on Thursday. Those will be the defining market forces for the next three trading sessions.
There is little if any point in trying to trade this week (at least until Thursday). The Fed is notorious for leaking info to the well-connected. The most recent “accidental” sending of a report a day early is just the latest example.
Read full article... Read full article...
Wednesday, February 20, 2013
Why U.S. Interest Rates Are Rising / Interest-Rates / US Interest Rates
By: Michael_Pento
The interest rate on the Ten-year Note has risen from 1.58% on December 6th of last year, to as high as 2.03% by mid-February. Most equity market cheerleaders are crediting a rebounding economy for the recent move up in rates. According to my count, this is the 15th time since the Great Recession began that the economy was supposedly on the threshold of a robust recovery.
Read full article... Read full article...
Saturday, February 02, 2013
United States the Biggest Money Printing Loser / Interest-Rates / US Interest Rates
By: Peter_Schiff
In Switzerland, it's not just the clocks that are cuckoo. Over the past four years Swiss politicians and central bankers have gone on an unprecedented buying spree of foreign exchange reserves. In 2012, their cache swelled to as much as $420 billion worth of various currencies, primarily the euro. This figure is a seven-fold increase since 2008 and equates to 70% of the country's annual GDP. The sum translates to $200,000 per family of four, enough to keep the Swiss in clocks, chocolates, and fondue for many years to come. The Swiss leadership will claim the money has been "invested" with an eye to the future, but what they've done is impoverished themselves in the present. Although such a decision seems perverse, it makes perfect sense when seen through the lens of today's presiding economic thinking.
Thursday, January 10, 2013
When Will U.S. Interest Rates Rise? / Interest-Rates / US Interest Rates
By: Clif_Droke
Recently I was asked a question that I suspect has been on many investors' minds. Here's the question: "Is it possible that the bond market will be the market to tumble into 2014, and as it does, the general market decline is mitigated by the rotation of money out of bonds and into stocks?"
Here's my answer: Anything is possible in today's upside-down world. As my late friend and mentor Bud Kress used to ask, "Does anything surprise you anymore?" But I'd have to say here - and I firmly believe Bud would echo this sentiment - if there's any validity to the 120-year Kress cycle, a sustainable rising interest rate trend isn't likely until after October 2014.
Read full article... Read full article...
Sunday, January 06, 2013
U.S. Interest Rates Forecast 2013, Don’t Fight The Fed! / Interest-Rates / US Interest Rates
By: Robert_M_Williams
I’ve been watching the Fed for years and like everyone else, I’ve always paid attention to the old saying that, “You don’t fight the Fed.” So it stands to reason that when the Fed says they’ll keep interest rates at zero well into 2015, you would expect rates to stay at or close to zero. They even went so far as to put an exclamation point on this policy two weeks ago when they announced that they were buying as much as 90% of all new issues. In short the US Federal Reserve is now acting as a buyer of last resort. That statement set off all sorts of warning bells in the deep recesses of my mind as my experience tells me that whenever a government is acting as a buyer of last, it’s in deep trouble. It brings back memories of many failed banana republics’!
Monday, December 10, 2012
Side Effects from the Federal Reserve’s Monetary Policy Program / Interest-Rates / US Interest Rates
By: InvestmentContrarian
Sasha Cekerevac writes: The historic and unprecedented action by the Federal Reserve in enacting extremely loose monetary policy is an attempt to stimulate the economy. I’ve always felt that a central bank should have one mandate: the stability of the currency. The Federal Reserve has a dual mandate; in addition to keeping inflation in check, the American central bank also is attempting to lower the unemployment rate through monetary policy, a task not easily achieved.
Read full article... Read full article...
Thursday, November 29, 2012
Have Interest Rates Finally Bottomed? / Interest-Rates / US Interest Rates
By: Submissions
Timothy Lutts writes: The media in recent weeks have been full of stories about the coming Fiscal Cliff. No one knows exactly how Congress is going to deal with it, but one fairly common opinion is that taxes will go up on investment income.
As a result, many smart people have been making moves to take income now rather than in 2013 (or later.)
Sunday, November 25, 2012
Is The US Bond Market Ponzi Scheme Coming To An End? / Interest-Rates / US Interest Rates
By: WavePatternTraders
The US Bond market has been in a bull market since the 1980s and although I originally was looking for a potential high early this year, we have not really progressed much further, expect that real rates have come down even lower and tested the prior December 2008 lows at 2.5%, potentially creating a double bottom.
Monday, September 24, 2012
Ron Paul - Interest Rates Are Prices / Politics / US Interest Rates
By: Dr_Ron_Paul
One of the most enduring myths in the United States is that this country has a free market, when in reality, the market is merely the structural shell of formerly free institutions. Government pulls the strings behind the scenes. No better illustration of this can be found than in the Federal Reserve's manipulation of interest rates.
Read full article... Read full article...
Wednesday, July 25, 2012
Horse-Whipping Interest Rates to Zero / Interest-Rates / US Interest Rates
By: Rob_Kirby
Note how we barely see the hand of the ‘mystery’ rider [Geithner]. Note the conduit [crop] through which the force is applied. Now note the animal that does the heavy lifting…
Interest Rate Swaps and the Long End of the Interest Rate Curve
The rest of the world has been a net seller of U.S. Treasuries for a number of years now. It has been the U.S. Treasury – exercising / implementing Imperialist U.S. monetary policy through the trading desks of the magnificent five [J.P. M., BofA, Citi, Goldy and MS] – IN THE LONG END OF THE INTEREST RATE CURVE by selling tens upon tens of Trillions of Interest Rate Swaps [IRS] – deals between the banks [payers of fixed] with the Exchange Stabilization Fund [ESF] brokered by the N.Y. Fed trading desk. This is what has kept things “appearing somewhat normal” in the long end of the interest rate curve.
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Wednesday, July 25, 2012
Fiat Currencies from Nullifying to Negative Nominal Interest Rates / Interest-Rates / US Interest Rates
By: Axel_Merk
The once unthinkable might become policy: negative nominal interest rates. Investors should care as they may be increasingly punished for not taking risks. Yet masochistic investors believe they may be the prudent ones given the risks lurking in the markets. What are investors to do, and what are the implications for the U.S. dollar and currencies?
Tuesday, July 03, 2012
Low Interest Rates Having No Effect on Economy / Interest-Rates / US Interest Rates
By: InvestmentContrarian
Danny Esposito writes: The Federal Reserve is frustrated that its low interest rate policy and thus low mortgage rates are having no effect on the U.S. economy. The Federal Reserve was hoping to stimulate borrowing to get the U.S. economy growing again.
The problem is the record number of people whom are long-term unemployed: 5.4 million were unemployed for longer than 27 weeks as of May.
Read full article... Read full article...
Thursday, June 28, 2012
When Zero Interest Rates Don't Work / Interest-Rates / US Interest Rates
By: Fred_Sheehan
Jon Hilsenrath, the Wall Street Journal's ferret at the Fed, reports what the Federal Reserve wants the public to know while retaining anonymity. He found the professors in a stew. In the June 19, 2012, edition, Hilsenrath disclosed: "Fed officials have been frustrated in the past year that low interest rate policies haven't reached enough Americans to spur stronger growth, the way economics textbooks say low rates should. By reducing interest rates-the cost of credit-the Fed encourages household spending, business investment and hiring, in addition to reducing the burden of past debts. But the economy hasn't been working according to script."
Thursday, June 07, 2012
Will the Fed Provide New Financial Accommodation Soon? / Interest-Rates / US Interest Rates
By: Asha_Bangalore
The economic scene has changed in many ways since the April 24-25 FOMC meeting. Labor market data for May have been disappointing with a paltry 69,000 increase in payrolls and an 8.2% unemployment rate in May. Auto sales slowed slightly to an annual rate of 13.8 million units during May from a 14.4 million sales pace in April, real GDP eked out only a 1.9% increase in first quarter, and the financial crisis of the eurozone presents a significant downside risk not only to the US but also to the entire global economy. Market participants will be watching closely Chairman Bernanke’s testimony tomorrow at the Joint Economic Committee and Vice-Chair Janet Yellen’s remarks tonight.
Thursday, April 26, 2012
OMC Meeting: Nature of Economic Data Will Dictate Next Policy Step / Interest-Rates / US Interest Rates
By: Asha_Bangalore
Forward guidance for monetary policy of a low federal funds rate through late 2014 was retained, with a 9-1 vote in favor of this stance. President Lacker of the Richmond Fed dissented as he “does not anticipate that economic conditions are likely to warrant exceptionally low levels of the federal funds rate through late 2014.”
The outcome of the April 24-24 FOMC meeting needs to be examined under three separate segments – the policy statement, highlights of press conference, and forecast.
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Saturday, April 14, 2012
Recent Federal Budgetary Trends: Facts, Not Opinions / Interest-Rates / US Interest Rates
By: Paul_L_Kasriel
The federal budget deficit reached its widest gap on a 12-month moving total basis in February 2010 at $1.478 trillion. Although remaining at astronomical levels, the budget deficit has been trending lower and stood at $1.246 trillion in March 2012. The year-over-year growth in the 12-month moving total of federal outlays peaked at 19.7% in July 2009. In March 2012, the year-over-year change in the 12-month moving total of federal outlays was minus 1.1%. The median growth in the year-over-year moving total of federal outlays from December 1955 through March 2012 is 6.6%.
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Friday, April 13, 2012
Different Opinions on Near Term Monetary Policy Prevail Within the FOMC / Interest-Rates / US Interest Rates
By: Asha_Bangalore
Fed officials have voiced different opinions about the direction of monetary policy in the past two days. Among FOMC members who are wary of the current stance of Fed policy, President Kocherlakota of the Minneapolis Fed indicated the Fed needs to commence reversing the extraordinary accommodation in the next six to nine months.
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Wednesday, April 04, 2012
Fed Actions Speak Louder Than Words / Interest-Rates / US Interest Rates
By: Axel_Merk
Investors may be taken for a ride by today's Minutes of the Federal Open Market Committee (FOMC), which expand on the FOMC's March 13, 2012 statement; in the interim, we believe the Federal Reserve (Fed) Chairman Bernanke has gone out of his way to assure the markets that monetary policy will remain "highly accommodative," at least through late 2014.
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Thursday, March 29, 2012
ECB’s Cheap Funds – Waiting for a Turnaround in Lending / Interest-Rates / US Interest Rates
By: Asha_Bangalore
The European Central Bank’s (ECB) financial accommodation through the longer-term refinancing operation (LTRO) in December 2011 and February 2012 amounting to over 1 trillion euros has stabilized financial markets. But, the desired impact on bank lending is not visible yet. Granted, it is a bit too soon to expect positive signs, but it is an important aspect to track in the near term. The objective of LTRO’s is to prevent a severe disruption of the flow of credit to businesses and households. The February LTRO reached a larger number of institutions compared with the December package and included expanded collateral that enabled smaller financial institutions to participate.
Wednesday, March 28, 2012
What Causes Interest Rates to Rise / Interest-Rates / US Interest Rates
By: Michael_Pento
The prevailing notion among the main stream media and economists is that interest rates are rising because of improving economic growth. But like many of the readily accepted tenets of today’s world of popular finance, this too has its basis in fallacy.Read full article... Read full article...
Tuesday, March 27, 2012
Bernanke – Additional Monetary Accommodation Is Entirely Possible / Interest-Rates / US Interest Rates
By: Asha_Bangalore
Chairman Bernanke presented an extensive assessment of the labor market this morning. Bernanke repeated his depiction of the labor market as “far from normal,” which was his opinion at the February 29, 2012 semi-annual testimony to the Financial Services Committee of the House of Representatives. He listed positive developments in the labor market – the noticeable increase in payrolls in the three months ended February (+245,000, 3-month moving average), moderation in layoffs in the public sector, longer workweek, the drop in the unemployment rate from 9.0% in September 2011 to 8.3% in February 2012, and the declining trend of new jobless claims. On the negative side, he mentioned it is unclear if the recent gains in payrolls “will be sustained,” and listed another set of indicators to watch – jobless rate, long-term unemployment, and the rate of net hiring.
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Tuesday, March 20, 2012
Keep Tabs on the Short End of the U.S. Interest Rate Curve / Housing-Market / US Interest Rates
By: Asha_Bangalore
The 10-year Treasury note yield was trading at 2.39% as of this writing, up from 1.96% on March 6 and 2.04% on March 12. The focus has been on the long end of the yield curve in the last few trading days. Moving over to the short end, the effective federal funds rate has moved up roughly seven basis points since early January (see Chart 1).
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Wednesday, March 14, 2012
America Mortgaged at an Adjustable Interest Rate / Politics / US Interest Rates
By: Peter_Schiff
The Federal Reserve ran another "stress test" on major financial institutions and has determined that 15 of the 19 tested are safe, even in the most extreme circumstances: an unemployment rate of 13%, a 50% decline in stock prices, and a further 21% decline in housing prices. The problem is that the most important factor that will determine these banks' long-term viability was purposefully overlooked - interest rates.
Wednesday, March 14, 2012
Are U.S. Interest Rates About To Rise? / Interest-Rates / US Interest Rates
By: Marty_Chenard
Will Interest Rates jump higher?
It could happen, as you will see on today's weekly chart of the 10 year yields .... symbol: $TNX.
The good news is that today's 10 year yield chart shows a five down trend. The bad news is that the one year weekly trend line is breaking out to the upside.
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Saturday, March 10, 2012
The Fed gets creative / Interest-Rates / US Interest Rates
By: Alasdair_Macleod
According to a story in Wednesday’s Wall Street Journal, the US Federal Reserve is considering buying long-term Treasury and mortgage bonds in return for deposits held at the Fed. There has been no comment from the Fed and the story might have been no more than a trial balloon, in which case Bernanke and Co may be considering skewing the yield curve so that long-term bonds are less attractive than the time-preferences set by the market.
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Monday, February 27, 2012
Short Term Interest Rates and Their Implications, Under the Radar / Interest-Rates / US Interest Rates
By: Tony_Caldaro
When a potental economic downturn is first sensed investors gradually start to shift into what is perceived as safe assets, namely Treasury bills, notes and bonds. As more and more investors pick up on this scenario a trend begins to appear. When economic data starts to confirm the downturn, the shift to safety turns into a long term trend and rates drop substantially. The opposite, of course, occurs during an economic upturn. When this occurs investors gradually shift out of the Treasury safe haven, and rates begin to rise. The initial shift, in both situations, is quite subtle, but measurable. We track these events using the 1 year T-bill.
Wednesday, February 08, 2012
The Deception of 0% Interest Rates, High Costs and Capital Destruction / Interest-Rates / US Interest Rates
By: Jim_Willie_CB
The interminable extension by the US Federal Reserve on the 0% rate into 2014 represents history in the making. It is the adoption of pure heresy in monetary policy, making it mainstream. Worse, it forces foreign central banks to adopt the same destructive policy in the Competing Currency War. Once upon a time, the highest priests from the central bank would admit in a guiding tone that accommodation on interest rates must be temporary. Nowadays it is engrained in the market mindset and permanent in monetary policy. The chronic 0% means the entire financial and monetary system is totally irreparably broken. The old pendulum where the tilt was toward bonds during recession, then toward stocks during recovery, that is all gone, shattered by the endless financial crisis. One must incorporate a new thinking, that the entire financial and monetary system is totally irreparably broken, then adapt in fierce defense. Larry Fink of Blackrock private equity firm made news today by suggesting that 0% bond yields offer no return on investment. How true! He did not offer any accurate reflection of reality that the financial structures are broken, nor that all attempts at remedy were flimsy and misdirected. He gave the ALL IN signal for buying stocks in 2012, thus putting on the risk trade. The immediate ancillary signal is to back up the truck and load up with GOLD also.
Wednesday, February 08, 2012
Has Zero Interest Rate Policy Held Back Economic Recovery? / Interest-Rates / US Interest Rates
By: Asha_Bangalore
The Fed instituted the zero-interest-rate policy (ZIRP) in December 2008 in response to the financial crisis. The ZIRP policy has been extended to late-2014 following the January 24-25 FOMC meeting, which will make it a six-year project. The current ZIRP policy of the Fed has its critics and advocates; Bill Gross presents arguments in today's Financial Times article for putting an end to the ZIRP policy because it is the root cause of economic woes today. His focus is on the absence of incentives for banks to find suitable projects to finance if they can park money at the Fed risk free for 25bps. He also adds that investors are most likely to shun Treasury securities as "there are multiples of downside price risk compared to appreciation."
Friday, February 03, 2012
FOMC Pushes Unchanged Interest Rates Forecast Out to 2014, Fed Sets Inflation Target / Interest-Rates / US Interest Rates
By: Dr_Jeff_Lewis
Among the recent price consolidation, it should not be forgotten that the U.S. Federal Open Market Committee of the Federal Reserve Board decided to leave rates at 0.0% to 0.25% until at least late 2014, according to the FOMC statement released on January 25th.Read full article... Read full article...
Wednesday, November 23, 2011
Manipulated U.S. Interest Rates Seesaw Gold Prices / Interest-Rates / US Interest Rates
By: John_Browne
This week, world attention finally shifted away from debt problems in Europe to the unresolved and worsening debt crisis here in the United States. The Congressional Super Committee, which had been created over the summer to postpone making tough cuts, chose to avoid responsibility itself. In so doing, the Committee has followed the path of least resistance and maximum irresponsibility. Given the likely after-effects, the outcome should be judged as criminal dereliction of duty. It should now be crystal clear to even the most casual observer that a solution to the U.S. debt crisis will not come from within, but will be imposed, perhaps brutally, from without.
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Friday, November 04, 2011
The Fed’s Forecast Begs for Action, Bernanke Hints at QE3 / Interest-Rates / US Interest Rates
By: Asha_Bangalore
The main conclusion from Bernanke’s press conference on November 2 is that the Fed has two choices. QE3 (quantitative easing) is one option given the Fed’s gloomy forecast (see Table 1). The precise timing, magnitude and composition of QE3 are unknown but Bernanke’s responses suggest that there is a willingness to engage, if essential. Large asset purchases are likely to be a combination of Treasury securities and mortgage-backed securities. The second alternative is its communication strategy much like the August announcement that the federal funds rate would be held at the current rate at the least until mid-2013. In other words, it would entail tying interest rate decisions to economic conditions in policy communications.Read full article... Read full article...
Thursday, November 03, 2011
The Fed is Less Optimistic about Growth and Employment, But Stands Pat / Interest-Rates / US Interest Rates
By: Asha_Bangalore
The Fed left current policies intact and opted not to take any action today after implementing far reaching policy changes at the August and September FOMC meetings. Fed President Evans of the Chicago Fed cast the dissenting vote and would have preferred to provide more monetary policy accommodation. This is in stark contrast to the three dissents in August and September when Fed Presidents of Dallas, Minneapolis, and Philadelphia voted against the decision to hold the policy rate unchanged until mid-2013 and to undertake the maturity extension program of $400 billion dollars. Fed President Rosengren of Boston had cast a similar dissent in December 2007 arguing for a larger cut of the federal funds rate when the Fed lowered the policy rate by 25 bps to 4.25%.
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Saturday, October 29, 2011
U.S. Fed Operation Twist – Unmet Goal, For Now / Interest-Rates / US Interest Rates
By: Asha_Bangalore
The Fed put in place “Operation Twist” on September 21, 2011 with the goal of guiding long rates to a lower level. The 10-year Treasury note yield closed at a low of 1.72% on the day after the new policy was instituted. As of this writing, it is trading at 2.33%. The 30-year mortgage rate dropped briefly to 3.94% but is back up at levels seen just prior to the announcement (4.10%).
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Wednesday, October 26, 2011
Beware of Floating Interest Rates / Interest-Rates / US Interest Rates
By: Neeraj_Chaudhary
According to US government figures, the yield on the 10-Year US Treasury note reached a record low of 1.72% last month. Thus, despite the fact that government debt has exploded at a rate of more than $1 trillion per year, and the fact that S&P recently downgraded US debt, it appears that market demand for long-term US debt is nearly insatiable.
Sunday, October 23, 2011
Fed Officials Offer Broad Hints That QE3 is Likely if Soft Patch Persists / Interest-Rates / US Interest Rates
By: Asha_Bangalore
Vice-Chair Janet Yellen, Fed Governor Tarullo and Boston Fed President Rosengren have in the past two days voiced their support for more Fed action to support economic activity. Governor Tarullo indicated that there is “ample room” for the Fed to consider buying mortgage back securities. Two rounds of quantitative easing have helped to bring down mortgage rates, with QE1 (quantitative easing) appearing to have been the more successful (see Chart 1) program of the two programs.
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Wednesday, October 05, 2011
Will the Hawks of the FOMC Have to Reconsider? / Interest-Rates / US Interest Rates
By: Asha_Bangalore
The Bernanke Fed is currently divided about its view of the pace of future economic activity. The vote at the August and September meetings included three dissents. The dissenters held the view that additional monetary policy support is uncalled for and they remain concerned about future inflationary pressures. Charts 2-4 are telling exhibits that represent market assessment of future economic conditions.
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Friday, September 30, 2011
Fed Officials Voice Dissenting Opinions Again / Interest-Rates / US Interest Rates
By: Asha_Bangalore
Chairman Bernanke highlighted the gravity of the unemployment problem in the Q&A session in his speech after markets closed yesterday.
“This unemployment situation we have, the jobs situation, is really a national crisis,” We’ve had close to 10 percent unemployment now for a number of years and, of the people who are unemployed, about 45 percent have been unemployed for six months or more. This is unheard of.”
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Thursday, September 22, 2011
FOMC Engages in Operation Twist, Another Unconventional Step / Interest-Rates / US Interest Rates
By: Asha_Bangalore
The Fed left the federal funds rate unchanged, as expected, at 0.0-0.25%. The much awaited action called “Operation Twist” was part of the policy announcement. It was not an unanimous vote, three Fed Presidents -- Richard Fisher of Dallas, Narayana Kocherlakota of Minneapolis and Charles Plosser of Philadelphia – who are concerned about inflation dissented. These three Fed officials opposed the FOMC's August 9, 2011, decision that included an assurance of holding short-term interest rates near zero until mid-2013.
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Wednesday, September 21, 2011
Today's FOMC Meeting Will Prove That Team Bernanke is Out of Ideas / Interest-Rates / US Interest Rates
By: Money_Morning
Kerri Shannon writes:
If you're handicapping the U.S. Federal Reserve's two-day Federal Open Market Committee (FOMC) meeting that concludes today (Wednesday), you can make the following two predictions - and you'll almost certainly be right:
Wednesday, September 21, 2011
Details to Note Prior to Fed Announcement on September 21 / Interest-Rates / US Interest Rates
By: Asha_Bangalore
It is widely anticipated that the Fed will announce new monetary policy support following the 2-day FOMC meeting on September 21, 2011. The Fed is expected to put in place “Operation Twist” to bring down rates at the long-end by purchasing long term U.S. Treasury securities to replace U.S. Treasury securities of short maturities in its portfolio. A large percentage of the Fed’s holdings are of 1-5 years maturity (see Chart 1).
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Wednesday, September 07, 2011
Awaiting Panic Low in U.S. Tresury Bond Yield / Interest-Rates / US Interest Rates
By: Mike_Paulenoff
Remarkably, 10-year yield has declined beneath its December 2008 "crisis" low of 2.04% to a new "generational low" of 1.94% so far, as global money continues to flow into U.S. Treasury paper (despite its suspect rating downgrade in August).
Purely from a technical perspective, all eyes now are on the behavior of weekly RSI (momentum), which so far has NOT confirmed recent yield weakness from 2.30% and which we should consider a potential warning signal that 10-year yield is in its price capitulation phase.
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Monday, September 05, 2011
Falling Interest Rates and the Fallacy of Monetary Deflation at the Zero Bound / Interest-Rates / US Interest Rates
By: Jesse
Liquidity Trap, Straight Up, with a Twist
I think we are all familiar with the recently popular viewpoint that as the financial economy crashed, what people called 'money destruction' would follow. Well actually the destruction of credit which some considered the same as money, as money itself. There were many detailed and complex thought experiments to explain why this must happen, involving monetary theories.
Friday, August 26, 2011
Bernanke's Invisible Bazooka Ploy / Interest-Rates / US Interest Rates
By: Mike_Shedlock
Bernanke is out of tools that make any sense even to him.
Seriously, what can he do he has not already done? Given that $1.6 trillion in excess reserves did not do a damn thing to spur lending or job creation, what possible good can another $1 trillion do?
Tuesday, August 16, 2011
Smallest Yield Curve Gap Between US and Japan in 19 Years Confirming Deflation / Interest-Rates / US Interest Rates
By: Mike_Shedlock
Curve Watchers Anonymous notes amazingly low yields across the entire yield curve for the US, Japan, Germany, and the UK. Here is a chart I put together this evening.
Saturday, August 13, 2011
The Zero Interest Rate Market Fix is In / Interest-Rates / US Interest Rates
By: Peter_Schiff
This week's wild actions on Wall Street should serve as a stark reminder that few investors have any clue as to what is really going on beneath the surface of America's troubled economy. But this week did bring startling clarity on at least one front. In its August policy statement the Federal Reserve took the highly unusual step of putting a specific time frame for the continuation of its near zero interest rate policy.
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Thursday, August 11, 2011
Fed's Extension of Low Interest Rates For Another Two Years Will Deliver Damaging Inflation / Interest-Rates / US Interest Rates
By: Money_Morning
David Zeiler writes:
With little ammo left in its arsenal, the Federal Open Market Committee (FOMC) yesterday (Tuesday) was unable to offer jittery markets anything more than a two-year extension of the Fed's low interest rates.
Instead of promising to keep rates at their low 0% to 0.25% level for an "extended period" as it has in its past several meetings, the FOMC said it would maintain those rates "at least through mid-2013."
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Thursday, August 11, 2011
Why the Yield Curve is Steepening / Interest-Rates / US Interest Rates
By: Dr_Jeff_Lewis
Investors know that the yield curve can be used to forecast market movements. When the difference in yield between short-dated debt and long-dated debt grows or shrinks, the next major move is a bearish or bullish signal for risk-related investments.
Now the yield curve is steepening significantly, but this time, the steepening of the yield curve shows indecision in lending, not indecision in investing.
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Wednesday, August 10, 2011
The Fed Holds Federal Funds Rate Unchanged Until Mid-2013, Also Leaves Door Open For More / Interest-Rates / US Interest Rates
By: Asha_Bangalore
The one-day FOMC meeting concluded with an unchanged federal funds rate, no surprises here. In light of a string of recent weak economic reports a downgrade of its economic outlook was also not a surprise. The FOMC now sees “downsides risks the economic outlook” as having increased compared with its assessment in June. The Fed depicted labor market conditions to have “deteriorated,” household spending to have “flattened out,” the housing sector as languishing in a “depressed” state and the supply chain disruptions due to the natural disaster in Japan explaining only part of the economic slowdown.
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Sunday, July 31, 2011
Interbank Credit Markets Show Low Systemic Risk / Stock-Markets / US Interest Rates
By: Steven_Vincent
Tape action--market responsiveness to news, earnings and technical events--has been largely bullish as well. Psychology appears to be sufficiently negative to support a bottom as well. While doom and gloom are not at apocalyptic levels, there is a pervasive sense that after six months of grind and whipsaw, traders are tired and at a loss and are sitting on the sidelines waiting for the right cue. All in all, this is the stuff of which major bottoms are made. BullBear Traders are looking to build long positions as the market passes through a bottoming process soon, probably coinciding with the announcements of the downgrade of US sovereign debt and a DC debt deal. We are also keeping our eyes open to the possibility of a significant bearish market break.
Thursday, July 28, 2011
The Fed’s Funny Money / Interest-Rates / US Interest Rates
By: Dr_Ron_Paul
Today's hearing is the second in a series examining the relationship between Federal Reserve policy and the performance of the United States economy. Today we are receiving testimony from the Federal Reserve banks. Of the half-dozen Reserve banks we contacted, only President Hoenig was willing to testify in front of this subcommittee, and we welcome him here today.
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Wednesday, July 06, 2011
How Commercial Paper Prices In Economic Recession / Interest-Rates / US Interest Rates
By: Tony_Pallotta
In what is becoming a multi part series on how various products price in recession tonight it is time to check out the commercial paper markets. Below are two charts (1) showing the last two recessions and how commercial paper rates performed and (2) commercial paper rates since Q2 2009. Both charts utilize non financial AA rated 30 and 90 day terms. The results were similar for financial paper as well.
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Tuesday, June 28, 2011
Big time trouble dead ahead thanks to the Federal Reserve / Interest-Rates / US Interest Rates
By: Submissions
Sam Houston writes: The paper money dollar experiment of the last 40 years has reached an unsolvable impasse. Since 1971, when Nixon defaulted on the dollars convertibility into gold there has been no restraint whatsoever on the Federal Reserve's ability to finance the U.S. government's boondoggle spending programs both foreign and domestic.
Sunday, June 26, 2011
More Treachery at the Fed? / Interest-Rates / US Interest Rates
By: Mike_Whitney
No one expects the Fed to announce a rate-hike at the end of the today's FOMC meeting, but that doesn't mean there won't be a few surprises. The problem is that the recovery has stalled and the Fed can't decide whether we've just hit a "soft patch" or if it's something more serious. If it is more serious, then the Fed will need a contingency plan for kick-starting the economy. So, what's it going to be; another round of Quantitative Easing (QE), rate caps on short-term Treasuries or something else altogether? That's what the financial media will want to know, and only Fed chairman Ben Bernanke knows the answers.
Saturday, June 25, 2011
Bernanke - Concern? / Interest-Rates / US Interest Rates
By: Ian_R_Campbell
When Ben Bernanke was appointed the Chairman of the U.S. Federal Reserve in early 2006 I then said he was the person that lost the game of musical chairs. Bernanke has always impressed me as a sincere and honest man who inherited problems not of his own making. I believe he works hard at - as golfer Bobby Jones might have said to him - playing the ball as it lies with little if any complaint. As best I know he is paid something north of U.S.$200,000 per year - hardly a princely sum for someone who holds one of the most important financial jobs in the world. How ridiculous is that when measured against the Wall Street, Bay Street, London City, and corporate executive salaries. One side of that equation is materially wrong - you decide which one.
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Thursday, June 23, 2011
U.S. Monetary Policy, A Case of Self-Induced Paralysis? / Interest-Rates / US Interest Rates
By: Paul_L_Kasriel
This is a paraphrased title of an essay written in 2000 for the Peterson Institute for International Economics by then Princeton economics professor, Ben Bernanke. In Professor Bernanke's essay, "Japanese Monetary Policy" appeared in the title, not "U.S. Monetary Policy." In the essay, Professor Bernanke makes the case that the Japanese economy's weak real and nominal growth in the 1990s was the result of weak aggregate demand for goods and services, not aggregate supply constraints.
Monday, June 20, 2011
June 21-22 FOMC Meeting - Preview / Interest-Rates / US Interest Rates
By: Asha_Bangalore
The policy statement of the April 26-27 FOMC meeting mentioned that the "economic recovery is proceeding at a moderate pace and overall conditions in the labor market are improving gradually." This assessment has changed; Chairman Bernanke noted in the June 7, 2011 speech that "U.S. economic growth so far this year looks to have been somewhat slower than expected ... A number of indicators also suggest some loss of momentum in the labor market in recent weeks." The June 22 policy statement is most likely to reflect these developments.
Friday, June 10, 2011
Bernanke's Credible Irresponsibility: The Logic Behind Cheap Money / Interest-Rates / US Interest Rates
By: Ben_Traynor
Does Ben Bernanke want us to trust him? Maybe not…
IN THE murky realm of economic policy, things are not always what they seem.
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Wednesday, June 08, 2011
Bernanke - Accommodative Monetary Policy is Still Necessary / Interest-Rates / US Interest Rates
By: Asha_Bangalore
If financial markets were expecting hints about QE3, Bernanke did not offer it in today's speech. However, he noted that "the Committee also continues to anticipate that economic conditions are likely to warrant exceptionally low levels for the federal funds rate for an extended period."
Friday, May 27, 2011
Implication of U.S. Low Borrowing Rates for Savers, Don't Cry for PIMCO / Interest-Rates / US Interest Rates
By: Bloomberg
PIMCO's Bill Gross spoke to Bloomberg Television’s Tom Keene today. Gross said that “savers are being disadvantaged” 5 to 15 years when compared to creditors, as the U.S. keeps borrowing rates low to reduce its debt burden and that investors should look to corporate bonds instead of U.S. debt.
Thursday, May 19, 2011
Methodology of U.S. Monetary Policy Interest Rate Tightening / Normalization Strategy / Interest-Rates / US Interest Rates
By: Asha_Bangalore
The minutes of April 26-27 FOMC meeting published today contain noteworthy insights about the future course of monetary policy. Financial markets so far have digested the policy statement, published on April 27, and studied the details of the first press conference of Chairman Bernanke. The Fed published economic projections at the close of the meeting in April which previously have been part of the minutes of the meeting.
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Sunday, May 01, 2011
U.S. Treasury And Fed Put Out Cash, Raising Fist Pumping Crowd For Ben / Interest-Rates / US Interest Rates
By: PhilStockWorld
Courtesy of Lee Adler at the Wall Street Examiner : The market waltzed through a week of heavy Treasury auction supply, but it did not have to pay the piper until Friday and Monday, May 2, when all the new paper was due to settle. Thursday’s settlement actually saw bills paid down by $11 billion. That and $16 billion in POMO gave the markets plenty of juice for Ben’s coming out party. The US Government, just like Colonel Kadaffy, sent out wads of cash to its minions to insure that cheering, fist pumping crowds would show up for Ben’s appearance before the scripted, adoring mob of ink stained wretches. It was sickening. And I’m not even talking about the so called reporters in the room with him. I’m talking about the security market apparatus. Anyone who dared protest that the market show had gone too far was beaten to a pulp. Even venerable bear David Rosenberg of Gluskin Sheff was cowed into submission.
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Thursday, April 28, 2011
Fed Holds Policy Rate Steady, Signals Intention to Complete Asset Purchases and Maintain Balance Sheet Size / Interest-Rates / US Interest Rates
By: Asha_Bangalore
Yesterday's post-FOMC meeting analysis has two components: policy statement and Chairman Bernanke's press conference. Starting with the policy statement, the Fed held the federal funds rate unchanged at the narrow band of 0 to ¼ percent. There were no dissents, although in recent speeches, Fed Presidents Plosser and Fisher (both voting members) had voiced their concern about imminent inflationary pressures.
Thursday, April 14, 2011
Why the FOMC Interest Rate Doves Have an Advantage at the April Meeting / Interest-Rates / US Interest Rates
By: Asha_Bangalore
Economic recessions have differences and similarities. In terms of the duration and depth of a recession, the most recent downswing in economic activity is a close cousin of the 1981-82 recession, which lasted 16 months. During this recession, real GDP fell 2.6% from peak to trough and the unemployment rate shot up to 10.8% by December 1982. The most recent recession is 18 months long, real GDP has dropped 4.1% from peak to trough, and the unemployment rate hit a high of 10.1% in October 2009.
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
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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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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Tuesday, March 15, 2011
Fed FOMC Interest Rate Meeting March 15th Preview / Interest-Rates / US Interest Rates
By: Asha_Bangalore
The March 15 FOMC meeting is nearly certain to end with no change in the Fed's current monetary policy stance with an indication that it would continue the second round of quantitative easing. Market participants are keeping a close eye on the policy statement to assess if there is a shift in the Fed's view. A change in the Fed's outlook, if any, will be visible if the phrase "exceptionally low levels for the federal funds rate for an extended period" is modified. Differences of opinion within the policy making committee about the quantitative easing program, involving a purchase of $600 billion Treasury securities, suggest a contentious debate. In addition, an exit plan should be part of the agenda.
Monday, March 14, 2011
The Best Opportunity for Safe, Tax-Free Income You'll See in 2011 / Interest-Rates / US Interest Rates
By: DailyWealth
Dr. David Eifrig writes: If you can ignore one of the media's biggest sources of hype, you'll see there's an amazing opportunity for income investors right now...
But if you're interested in collecting this income, I encourage you to act soon. It won't be available for long.
Wednesday, March 09, 2011
Dallas Fed President Fisher Could Dissent if Crude Oil Prices Maintain Upward Trend / Interest-Rates / US Interest Rates
By: Asha_Bangalore
Dallas Fed President Fisher indicated yesterday that he would vote to scale back or discontinue the Fed's Treasury securities buying program of $600 billion at the March 15 FOMC meeting. Last week, Chairman Bernanke has indicated that only under conditions of strong sustained growth, expanding payrolls, and inflation readings that are consistent with price stability would the Fed consider terminating the program. Current economic data indicate that the Fed is not even close to meeting these targets.
Friday, March 04, 2011
Fed and ECB - A World Apart / Interest-Rates / US Interest Rates
By: Axel_Merk
The U.S. Federal Reserve (Fed) and the European Central Bank (ECB) are divided by a common goal: price stability. Fed Chairman Bernanke has made it clear in his recent testimony and speeches that the Fed would react should food and commodity inflation lead to an increase in core inflation. Let's spell this out: the Fed is ready to R E A C T. We are not aware of any central bank that is proud of reacting, but rather acting preemptively to mitigate inflationary concerns; naturally, a central bank may often be forced to react, but to do so by design puts the cynical view that central bankers are too far behind the curve into a new light.
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Saturday, February 12, 2011
U.S. Treasury Yield Curve Starts to Decline / Interest-Rates / US Interest Rates
By: Donald_W_Dony
After three years of progressive climbing, the U.S. Yield curve is now starting to decline. Yield curves start to fall when short term bond yields rise at a faster pace then long bond yields. This event typically occurs in the first or second year of a bull market.
The economic factors that drive this movement (declining yield curve) can vary from one cycle to the next but the implications are normally the same. They represent growing economic strength.
Friday, February 11, 2011
How to Profit from Rising Interest Rates / Interest-Rates / US Interest Rates
By: Terry_Coxon
Terry Coxon, The Casey Report writes: In the fall of 2008, the Federal Reserve responded to the Lehman bankruptcy by igniting a rapid expansion in the U.S. money supply. It did so because, by its lights, the immediate and obvious menace to the economy was a deflationary collapse, with one giant bankruptcy breeding another. And it went about the task without compromise; the monetary base more than doubled in less than a year, and the public's M1 money supply (checkable deposits plus hand-to-hand currency) jumped by 20%.
Friday, February 11, 2011
What Dissension in the Fed's Ranks Means / Interest-Rates / US Interest Rates
By: Mike_Larson
A remarkable thing happened this week. Truly remarkable. But just in case it got lost amid the Egyptian chaos … coverage of the subzero temperatures up north … or the after-analysis of the Super Bowl, I’m going to shout it from the rooftops for you:
A couple of Federal Reserve officials actually stood up and said “Enough is enough!”
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Thursday, February 10, 2011
Insights from Q&A of Bernanke’s Testimony / Interest-Rates / US Interest Rates
By: Paul_L_Kasriel
Chairman Bernanke's testimony today was a repetition of the February 3, 2011 speech at the National Press Club. He stressed that the unemployment rate was unacceptably high and inflation was low. In Q&A session, Representative Ryan questioned Chairman Bernanke about whether the Fed is monetizing debt. Bernanke explained that "debt monetization" stands for a permanent change in money supply to finance the debt. He went on to add that the Fed plans to reverse course, thus it is not debt monetization. Money supply grew 4.2% from a year ago during the week ended January 24 (see Chart 1), which is hardly indicative of impending inflationary pressures.
Tuesday, February 08, 2011
U.S. Low Interest Rates and High Deficits Aren't Helping Jobs Growth / Interest-Rates / US Interest Rates
By: Money_Morning
Martin Hutchinson writes:
When the government released its latest jobs report last week, economists were initially cheered because it showed that the nation's unemployment level had dropped much more sharply than anyone expected.
But that cheer immediately turned into concern when the report also revealed that the U.S. economy created only 36,000 new jobs in January. That's so far below the norm for this stage of an economic recovery that it would take us 10 years to put back to work all the folks who have lost their jobs since 2007.
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Friday, February 04, 2011
Bernanke Reiterates January FOMC Policy Statement and Defends Fed’s Unconventional Monetary Policy / Interest-Rates / US Interest Rates
By: Asha_Bangalore
Chairman Bernanke reiterated the main thrust of the January FOMC policy statement for the most part today. In addition, he defended the large-scale asset purchases that the Fed has undertaken. His remarks also included the fiscal policy challenges the nation currently faces.
Thursday, January 27, 2011
FOMC Policy Statement - Status Quo is Also Noteworthy / Interest-Rates / US Interest Rates
By: Asha_Bangalore
The federal funds rate was left unchanged at 0%-0.25% as expected; it has held at this level since December 2008. The Fed's plan to purchase $600 billion of Treasury securities has also been left in place along with the existing arrangement of reinvesting principal payments from its holdings of securities. The vote was unanimous although four members of the voting panel were replaced for 2011. Charles Plosser of the Federal Reserve Bank of Philadelphia, Richard Fisher of the Dallas Fed, Charles Evans of the Chicago Fed and Narayana Kocherlakota of the Minneapolis Fed are the replacements. Of these four voting members, Fisher and Plosser have been critics about the second round of quantitative easing that is currently underway. They have held the opinion that the current stance of monetary accommodation carries with it inflationary consequences that would be damaging to the economy. However, unlike President Hoenig of the Kansas Fed who shared this opinion and dissented at each meeting in 2010, these two members voted along with majority in today's meeting.
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Monday, January 24, 2011
Bernanke's Golden Dismount / Interest-Rates / US Interest Rates
By: Michael_Pento
There can be little doubt that Fed Chairman Benjamin Bernanke has been a very, very good friend to gold investors. However, some of those who have benefited from his largesse now fear that the recent selloff in gold indicates an imminent end to Bernanke's monetary high-wire act. Most assume that a cessation of the Fed's stimulative efforts, if it were to occur, would spell the end of gold's bull run. But a closer reading of Bernanke's economic philosophy and the Fed's own recent history, shows that once central banker begins a strenuous routine starts, it is very hard, if not impossible, for them to dismount.Read full article... Read full article...
Saturday, January 22, 2011
U.S. Interest Rates Federal Open Market Committee Meeting Preview / Interest-Rates / US Interest Rates
By: Asha_Bangalore
The Federal Open Market Committee (FOMC) meeting on January 25-26 is most likely to close without any change in Fed policy. The FOMC will reaffirm its plan to complete the $600 billion purchase of Treasury securities. The policy statement should contain modifications that would reflect the nature of latest economic reports. The strength in recent retail sales data, the sluggish labor market, and ongoing challenges of the housing market will feature in the policy statement.
Thursday, January 20, 2011
Another Consequence of Zero Interest Rates / Stock-Markets / US Interest Rates
By: Andy_Sutton
Over the past two years, I have visited the topic of the consequences of our new zero rate world on several occasions. Despite media ramblings about ‘free’ money stimulating the economy and igniting another 2005-esque period of time, there have been several very negative consequences. Obviously, pathetic rates of return on what are traditionally referred to, as ‘risk-free’ assets are one well-understood development. There are others. This week we’ll take a look at the specter of zero-rates from a risk management perspective and demonstrate exactly how much our world has changed. Perhaps, ironically, the news is not all bad; there is a bit of a silver lining in here!
Tuesday, January 18, 2011
U.S. Interest Rates, Economy, and the 1YR T-Bill / Interest-Rates / US Interest Rates
By: Tony_Caldaro
When one monitors the various markets for a number of years they accumulate tidbits of technical/economic information mostly from others, and some on their own. It is this “some on their own” that can give an investor just enough of an edge to be ahead of the crowd. It is common knowledge that the FED raises and lowers short term interest rates to meet their full employment/low inflation mandate. We can generally observe the movement of their rate decisions by monitoring the 1YR t-bill rate, as illustrated by the 30 year chart below.
Monday, January 10, 2011
Toward Sensible Monetary Policy / Politics / US Interest Rates
By: Dr_Ron_Paul
Last week the 112th Congress was sworn in. I am pleased that I will be chairing the Monetary Policy Subcommittee of the Financial Services Committee, which has oversight of the Federal Reserve. Obviously, this position will facilitate my efforts to ensure the Fed provides the American people with more information about what they have been doing with and to our money. Not surprisingly, since my chairmanship was announced, apologists for the Fed have been recycling the old canard about how increased transparency threatens the Fed's so-called political independence.
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Thursday, January 06, 2011
2011: Year of the Yellow Brick Road / Interest-Rates / US Interest Rates
By: Axel_Merk
The Wizard of Oz would be proud of our policy makers: perception may be reality when it comes to investor confidence, even if we live in a fairy tale. However, investors that can afford to build a yellow brick road paved with gold may outshine those who build theirs with magic.
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Friday, December 31, 2010
Global Interest Rate Hiking Cycle Gathers Steam; What to Do … / Interest-Rates / US Interest Rates
By: Mike_Larson
Not a creature was stirring, not even a mouse, here in the U.S. markets late last week. But on Christmas Day, China’s central bank shocked investors …
Specifically, the People’s Bank of China raised short-term interest rates for the second time in the past three months.
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Thursday, December 30, 2010
The Fed’s Monetary Policy Is About to Run Into a BRIC Wall / Interest-Rates / US Interest Rates
By: Graham_Summers
Over the last few months I’ve noted repeatedly that THE key issue for the financial markets is the ongoing tension building between the Fed’s pro-inflation policy and China’s anti-inflation policy.
That tension just kicked it up a notch.
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Wednesday, December 29, 2010
Asset Speculation and Capital Destruction, The Cost Of 0% Money / Interest-Rates / US Interest Rates
By: Jim_Willie_CB
Since the early 1990 decade, the nation's maestros have promulgated the notion that cheap money is a beneficial factor for the sustenance of wealth, for economic development, for the standard of living, for the robust industries, in general for the American society. Nothing could be further from the truth, but even today the reckless US economists from the Keynesian Camp and their controllers from Wall Street have convinced the multitudes that cheap money is a good thing. Cheap money comes with a deadly ultimate cost. The inept professor occupying the US Federal Reserve Chairman post has gone on record claiming the US banking sector has a secret weapon in the Printing Pre$$ that it can use with zero cost, in its electronic form.
Thursday, December 16, 2010
Quantitative Easing Unintended Consequences, Rising Interest Rates / Interest-Rates / US Interest Rates
By: John_Mauldin
Correct me if I'm wrong, but I seem to remember that one of the reasons for QE2 was to lower rates on the longer end of the US yield curve. Clearly, that has not happened? Today we look at come of the unintended consequences of monetary policy, turn our eyes briefly to consumer debt, and wonder about deflating incomes. There are a lot of very interesting things to cover. (This letter will print long, but there are a lot of graphs. Usual amount of copy.)
Wednesday, December 15, 2010
U.S. Treasury Bond Interest Rates Rising Steeply / Interest-Rates / US Interest Rates
By: Richard_Shaw
Contrary to Bernanke's goal of lowering interest rates by the QE II intervention, rates have been rising. In fact, they have begun to rise steeply as of late, with corresponding decline in bond prices. The following two charts for the 10-year Treasury bond illustrate the situation (top chart yield, bottom chart price). Better cash than bonds right now - or high quality, high yield growth US equities.
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Wednesday, December 15, 2010
FOMC Policy Statement, Fed on Watch-and-Wait Mode / Interest-Rates / US Interest Rates
By: Asha_Bangalore
The Fed is essentially on a watch-and-wait mode. The asset purchase plan of $600 billion of longer-term Treasury securities, known as QE2, was left intact and the program is set to expire in June 2011. The Fed made small modifications to the November policy statement. The pace of economic recovery is now seen as "insufficient to bring down unemployment" vs. a more amorphous description in November that output and employment conditions are "slow." The Fed upgraded its view about consumer spending and depicted it as "increasing at a moderate pace," while in November, the Fed saw consumer spending as "increasing gradually." The retail sales report of November (see discussion below) justifies this modification. The Fed indicated in November that "housing starts continue to be depressed," which is now revised to read as the "housing sector continues to be depressed."
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Monday, December 13, 2010
December 14 FOMC Meeting, Interest Rate Surprises Are Unlikely / Interest-Rates / US Interest Rates
By: Asha_Bangalore
The last FOMC meeting for 2010 is likely to end without any surprises. The Fed is expected to maintain the current band (0%-25%) for the federal funds rate. There has been significant criticism about the $600 billion purchase of Treasury securities to provide an extra lift to economic activity and bring about a lower unemployment rate. The Fed projected lower interest rates and a depreciation of the dollar as a result of the second round of purchases of securities, termed as QE2. However, yields have risen since the announcement of QE2 on November 3. The 10-year Treasury note yield closed at 3.32% on December 10, the highest since June 10, 2010 (see Chart 1). Mortgage rates have risen close to 40bps since November 3 (see Chart 1). Read full article... Read full article...
Saturday, November 20, 2010
Higher Interest Rate Yields Impact on Gold, Metals and Other Commodities / Interest-Rates / US Interest Rates
By: Jeb_Handwerger
Every precious metals investor should be concerned about China raising its rates and rising yields. Rising rates in one of the fastest growing economies will affect precious metals investors. Changes in the rates affect stock prices. China is leading the world and we can see the fears are profound as sell offs this week were much stronger that any of the relief rallies. If China’s market corrects then the commodity market which was fueling the equity market could experience a severe correction. It is a domino effect.
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Tuesday, November 16, 2010
Analysis of QE2 Success or Failure at Lowering Bond Market Interest Rates / Interest-Rates / US Interest Rates
By: Mike_Shedlock
Curve Watchers Anonymous is investing Bernanke's claim that QE II has already been a success at lowering treasury rates.
Friday, October 29, 2010
QE2 Sends U.S. Interest Rates Higher / Interest-Rates / US Interest Rates
By: Mike_Larson
So if the latest reporting is to be believed, QE2 is a fait accompli.
The Wall Street Journal on Wednesday said the Federal Reserve plans to purchase “a few hundred billion dollars” worth of Treasuries over a period of “several months.” The Fed will stick largely with Treasury notes, rather than bills or bonds, with the lion’s share of the buying focused on securities with maturities between two and ten years.
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Thursday, October 14, 2010
A Plunge into a Monetary No Man’s Land / Interest-Rates / US Interest Rates
By: Bob_Chapman
The question keeps swirling around regarding the Fed and just how much Treasury paper they can buy from the market under current rules. Our guess is about $1.7 trillion. A good part of that may well be in notes, which will probably keep long dated rates low. On the other hand they may increase the current limit, and buy everything in sight.
Wednesday, September 22, 2010
FOMC Policy Statement, Fed's Level of Uneasiness Up Several Notches, Postpones Action / Interest-Rates / US Interest Rates
By: Asha_Bangalore
As expected, the target federal funds rate was left unchanged. President Hoenig of Kansas City cast the lone dissenting vote; he has taken the opposing stance in all meetings year-to-date.
Tuesday, September 14, 2010
Does the Fed Ultimately Control U.S. Interest Rates? / Interest-Rates / US Interest Rates
By: Michael_Pento
In forecasting the consequences of current economic policy, many pundits are downplaying the risks associated with the surging national debt and the rapid expansion of marketable Treasury securities. Their comfort stems from the belief that a staggering debt burden will be manageable as long as interest rates remain extremely low; and, as they believe the Fed is in complete control of setting rates across the yield curve, they see no danger of rates ever rising past the point of comfort. Those who subscribe to this fairy tale forget that, in real life, there are many more hands on the interest rate steering wheel.
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Friday, August 27, 2010
Interest Rates Remain Low as Economic Concerns Persist / Interest-Rates / US Interest Rates
By: LiveCharts
National average mortgage rates remain historically low and there appears to be no end in sight to the Fed’s low to no interest rate policy. A less than stellar Commerce Department report on the second quarter gross domestic product Friday (August 27) morning is the latest contributor to the sense of pessimism hanging over the US economy.
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Wednesday, August 11, 2010
Impotent U.S. Fed 'Swings' Limp Appendage / Interest-Rates / US Interest Rates
By: Alex_Wallenwein
Bernanke and the other Fed governors know they are out of bullets, and that even if they had any bullets left, there would be nothing to shoot them at. So, the next best policy option on August 10, 2010 was for them to at least appear to be doing “something” to assure financial markets and institutional investors that they could rest (in peace?) in the secure knowledge that, because the Fed is doing “something” at least, there must still be something it can do to make the economy all better.
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Tuesday, August 03, 2010
Hedonic Adjustments and the Mulligans of Monetary Policy / Interest-Rates / US Interest Rates
By: Richard_Daughty
I knew it was going to be "one of those days" when, on the very first fairway, this new guy Bob says that he thought my tee shot had landed over there behind those trees, and how he is surprised to see that my golf ball is now sitting on the fairway, and another twenty yards further towards the hole, too.
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Friday, June 25, 2010
When It Comes to Increasing Aggregate Demand, What's Fiscal Policy without Monetary Policy? / Interest-Rates / US Interest Rates
By: Paul_L_Kasriel
Not much. Suppose the central government decides to increase spending without increasing taxes. Where do the funds come from? From entities who are willing to lend. If those lending entities are the nonbank public, for the most part, all this does is transfer spending power to the central government from these entities. Net, net, total spending in the economy does not increase. Rather, there is just a change in the distribution of spending.
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Tuesday, June 22, 2010
Fed’s Next Move is to Ease U.S. Interest Rates / Interest-Rates / US Interest Rates
By: Michael_Pento
The FOMC meets today to discuss their record-low interest rate policy. The announcement of their decision will be released on Wednesday. While no increase in interest rates is expected, there is little doubt amongst investors that the future direction for the central bank’s target rate will be up. In fact, Kansas City Fed President Thomas Hoenig has repeatedly expressed his desire for an increase in overnight lending rates to 1 percent from the current zero-0.25 percent range by the end of summer.
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Saturday, May 22, 2010
U.S. Interest Rates Remain on Hold or Heading Higher? / Interest-Rates / US Interest Rates
By: John_Mauldin
The Case for a Fed Rate Hike
Employment Is Turning the Corner
The Headwinds of Money Supply
Who Stole the Inflation?
The Fed Is On Hold
An Inverted Yield Curve?
LA, Vancouver, San Francisco, and a First
Often Wrong, Seldom in Doubt
Everywhere there are arguments that we are in a "V"-shaped recovery. And there are signs that in fact that is the case. Today we will look at some of those, and then take up the topic of when the Fed will raise rates. We open the case and look at the evidence. Is there enough to come to a real conviction? I think there is. (And at the end of the letter I mention two conferences I am speaking at in the next few months, in Vancouver and San Francisco.)
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Friday, May 14, 2010
U.S. Solvency Contingent on Low Interest Rates / Interest-Rates / US Interest Rates
By: Michael_Pento
According to the Department of Treasury’s Auction Staff, the U.S. auctioned $8.8 trillion in Bills, Notes and Bonds in fiscal year 2009. That number is greater than the entire publicly traded debt, which is currently $8.4 trillion. The reason for the enormous amount of debt issuance is due to our surging annual deficits and rollovers that must occur more frequently because of the government’s decision to issue debt on the short end of the yield curve.
Monday, April 26, 2010
Rising Interest Rates Right Around the Corner! Protect Yourself NOW! / Interest-Rates / US Interest Rates
By: Mike_Larson
Benjamin Franklin once called death and taxes the only certainties in this world. These days, I’d add rising interest rates!
I believe they’re coming … that the Federal Reserve is powerless to stop the inevitable … and that investors need to take protective action immediately.
Read full article... Read full article...
Friday, April 23, 2010
How the Banks Print Their Money / Interest-Rates / US Interest Rates
By: Adrian_Ash
Gosh! Banks print money, bleeding tax-payers and savers for ink...
RESCUING THE BANKS was supposed to be about saving the savers.
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Thursday, April 15, 2010
Higher Rates are Foreboding Inflation / Interest-Rates / US Interest Rates
By: Michael_Pento
I know we were all told that it was not supposed to happen, but interest rates are rising on both U.S. government debt and mortgages. Fortunately for investors, market forces are not subjugated by media’s groupthink. Therefore, I was able to predict and profit from this nascent move up in rates, despite being vilified by those who told me that rates had already priced in the removal of government support.
Read full article... Read full article...
Monday, April 12, 2010
Surging U.S. Interest Rates Ahead / Interest-Rates / US Interest Rates
By: Mike_Larson
Brace yourself for one of the greatest interest-rate surges in decades — beginning first in the long-term Treasury markets … later spreading to shorter term Treasuries … and ultimately enveloping nearly every loan, debt, credit, and money market instrument on the planet.
Tuesday, April 06, 2010
Where Are Mortgage Interest Rates Headed And Why? / Interest-Rates / US Interest Rates
By: John_Mauldin
This week we look at two brief essays for your Outside the Box. The first is my friend Barry Habib talking to us about where mortgage rates are headed. Barry gives us a very simple, but logical analysis on why rates are headed up. Then we jump to Spencer Jakab writing in the Financial Times about the problems in the municipal markets. Seems we may be under funded on our public pensions by about $3.5 trillion. As a tease to his column:
Saturday, March 20, 2010
Faber Expects U.S. Interest Rates to Stay at Zero Forever (Below the Rate of Inflation) / Interest-Rates / US Interest Rates
By: Submissions
"I think interest rates forever in the US will be at zero. By zero I mean below the rate of inflation" Marc Faber told CNBC. A slowing U.S. Economy will be followed by more money printing that will prevent a stock market crash. Eventually Governments will go bust, but before they will go bust they will print a lot of money.
Friday, March 19, 2010
The Taylor Rule Tool for Predicting Fed Interest Rate Policy / Interest-Rates / US Interest Rates
By: Casey_Research
Bud Conrad, Editor, The Casey Report writes: On March 3, I heard John Taylor over lunch at the San Francisco Federal Reserve. In his talk he reviewed the government’s bailouts and their effects on our economy. If you aren’t familiar with Taylor, he co-authored, along with Bob Hall, the macroeconomics textbook most widely used these days. In addition, he served as undersecretary of the Treasury in the early Bush years where, among other responsibilities, he was tasked with bringing a new currency to Iraq.
Friday, March 05, 2010
U.S. Negative Real Interest Rates, Case-Shiller CPI Now Tracking CPI-U / Interest-Rates / US Interest Rates
By: Mike_Shedlock
It's been about 4-5 months since I last talked about Case-Shiller CPI (CS-CPI). Case-Shiller CPI is formulated by substituting the Case-Shiller housing index for Owner's Equivalent Rent (OER) in the CPI for all urban consumers (CPI-U) index, commonly shortened to CPI.
Thursday, March 04, 2010
Three ETFS to Protect From Rising Interest Rates / Interest-Rates / US Interest Rates
By: Ron_Rowland
Wall Street is obsessed with interest rates. Many consumers are, too, especially anyone who wants to buy a home or car.
There’s a good reason for this: Debt — or you might call it “leverage” — is the lubricant that keeps the financial markets moving. Imagine a car without oil … it would soon grind to halt. The same is true of the modern economy.
Read full article... Read full article...
Thursday, February 25, 2010
Short-Term Interest Rates Create Long-Term Problems / InvestorEducation / US Interest Rates
By: Andy_Sutton
One of the first orders of business that goes on during most initial meetings with a mainstream financial advisor is an inventory of assets, income, and other particulars. What generally follows next is series of pie charts that lumps you into one of three or four categories along with ‘projections’ of your future wealth if you’ll only contribute $3,000/year to that IRA for two decades. We’ve all heard the spiel. By contributing a mere pittance, you too can retire to millionaire acres in just 30 years. While there have been many candidates for financial crime of the century (even though we’re only 10 years in), this one has to rank right up there.
Tuesday, February 23, 2010
How the Fed Lost Control of Monetary Policy / Interest-Rates / US Interest Rates
By: Dr_Jeff_Lewis
While investors contemplate the recent increase in the Federal Funds rate, astute investors realize this arbitrary figure means nothing in regards to fighting inflation or decreasing the money supply. Although the Federal Funds rate may have made an impact in 2008, its impact on the market was lost after the Fed expanded the balance sheet to buy illiquid assets in late 2008 through 2009.
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Monday, February 22, 2010
U.S. Federal Reserve Raises Discount Rate, What is the Economic Significance? / Interest-Rates / US Interest Rates
By: Barry_Grey
In a move that took the financial markets by surprise, the US Federal Reserve Board on Thursday announced that, effective Friday, it was raising its discount rate by a quarter point, from 0.50 percent to 0.75 percent.
Monday, February 22, 2010
Interest Rate Yield Curve Steepest In History, Is it Different This Time? / Interest-Rates / US Interest Rates
By: Mike_Shedlock
Curve Watchers Anonymous is once again taking a look at the yield curve looking for economic clues. Here are a few charts to consider.
Friday, February 19, 2010
U.S. Treasury Debt Auctions Bombing, China Heading for the Hills … Higher Interest Rates Dead Ahead! / Interest-Rates / US Interest Rates
By: Mike_Larson
You can’t count on Washington to proactively warn you about major economic and market problems …
Politicians and Fed policymakers failed to warn investors away from tech stocks during the Nasdaq bubble.
They failed to warn you in advance that the housing and mortgage markets would crash.
Friday, February 19, 2010
Fed Raises Discount Interest Rate, Dollar Soars, Equity Futures Sink, What's It Really Mean? / Interest-Rates / US Interest Rates
By: Mike_Shedlock
The Fed has been talking about its "exit strategy" for quite some time. Few believed he would pull the trigger on anything soon. Yet, Bernanke, unexpectedly raised the discount rate headed into options expiration.
Friday, February 19, 2010
Is all this Fed Central Bank Exit Strategy Talk Warranted? / Interest-Rates / US Interest Rates
By: Tim_Iacono
Boy, for a group of policymakers at the nation's central bank who, in a best case scenario, are going to just sit on their hands for at least the rest of the year, there sure has been a lot of talk about an "exit strategy".
Wednesday, February 17, 2010
The End of Low Interest Rates Is Near / Interest-Rates / US Interest Rates
By: Francois_Soto
Long Term Interest Rates To Double By 2020
We believe 10-Year U.S. Treasuries Government Yield is going to double over the next decade to eventually reach 10% by 2020. This prediction seems quite nonsensical as interest rates are hovering at their lowest level but secular financial environment changes occur most of the time when market participants are expecting it the least... And this might just be the case with long term interest rates!
Tuesday, February 16, 2010
Fed Chooses to Exit through Eye of Needle / Interest-Rates / US Interest Rates
By: Michael_Pento
Ben Bernanke is making sure the Fed’s exit strategy goes as easily as a camel can pass through the eye of a needle. Instead of choosing to just sell assets and unwind the amount of securities it holds, the Fed chairman is seeking to be creative once again—as he was in the buildup of its balance sheet--and increase the amount of interest it pays on excess reserves. He said this in a prepared statement for the House Financial Services Committee that was released on Wednesday, “It is possible that the Federal Reserve could for a time use the interest rate paid on reserves, in combination with targets for reserve quantities, as a guide to its policy stance, while simultaneously monitoring a range of market rates.”
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Saturday, January 16, 2010
Rising Interest Iates and Lower Stock Market Before End of 2010 / Interest-Rates / US Interest Rates
By: Lorimer_Wilson
"The unprecedented run in the equity markets has boosted confidence among households and helped solidify the economy's shaky foundations. The improving economic outlook undoubtedly applies increasing pressure on the U.S. Federal Reserve and Bank of Canada to hike interest rates from record-low levels. Are traders and investors ready for the end of nearly free money?" asks Paul Vieira of The Financial Post in an article entitled 'The End of Free Money'. Below are edited excerpts from Vieira's article examining the repercussions such increased rates would have on the economies of Canada and the United States.
Friday, January 15, 2010
Technical Update On IEF And TLT / Interest-Rates / US Interest Rates
By: Guy_Lerner
When we last looked at longer term Treasury yields, I stated that longer term Treasury yields were likely to undergo a secular trend change from down to up, but I had reservations because significant resistance was overhead, sentiment was too bullish for higher yields, and Treasury yields were greatly overbought. Honestly, last week I was not sure which way the bond market was going to go but I did offer up a game plan. This article will review the game plan that now have me more constructive on bonds or bearish on Treasury yields.
Sunday, January 10, 2010
Bill Gross Say FED Will Exit Easy Monetary Policy, Quantitative Easing in March 2010 / Interest-Rates / US Interest Rates
By: G_Abraham
The latest PIMCO newsletter suggests that 2010 will be year of caution and change. And yet he gives ample suggestions to the coming holocaust in financial markets if things do not go as planned.
Friday, January 08, 2010
Cutting Through the Fed U.S. Interest Rate Tightening Claptrap / Interest-Rates / US Interest Rates
By: Mike_Larson
There’s a real debate waging on Wall Street. Just like that famous scene from the 1974 movie Chinatown, where Faye Dunaway’s Evelyn Mulwray goes back and forth saying “She’s my daughter … She’s my sister,” today’s pundits keep debating the Fed. “The Fed will tighten” … “The Fed won’t tighten” … “The Fed will tighten” — the commentary shifts with each new data point that crosses the transom.
Wednesday, January 06, 2010
Baum Makes Mincemeat of Bernanke's Twisted Zero Interest Rate Logic / Interest-Rates / US Interest Rates
By: Mike_Shedlock
In Ivory Tower Doesn’t Have a Mortgage, Bloomberg columnist Caroline Baum makes mincemeat out of Bernanke's twisted defense of Fed policy.
Thursday, December 24, 2009
The Zero Interest Rate Corner, Costs and Isolation 2010 / Interest-Rates / US Interest Rates
By: Jim_Willie_CB
Think isolation. Think monetization. Think trapped. Think Catch-22, no remotely viable option. Think motive for propaganda. Think end of the road in a gigantic US Treasury bubble, in the process of discredit. Think last resort of monetization, due to the absence of bidders at US treasury auctions. Think pressure like a vise. The USGovt is in a great big bind and chooses not to discuss it. As European nations ponder the plight of sovereign debt default, the United States compares an order of magnitude worse from deeper insolvency. A default closer to home is considered unthinkable. So was a broad mortgage market breakdown. So was an endless housing decline. So was an insolvent broken banking system. So were consecutive $1 trillion federal deficits. All were forecasted here.
Wednesday, December 23, 2009
Bernanke Pushing His Luck on U.S. Interest Rates / Interest-Rates / US Interest Rates
By: John_Browne
The vast majority of economists now say that the recession is over. Many expect nominal GDP growth as high as four percent in 2010. Now, with the economy assumed to be back on stable footing, some in the private sector are starting to talk about inflation.
Tuesday, December 22, 2009
U.S. Treasury Bonds Spell Trouble for Bernanke Low Interest Rates / Interest-Rates / US Interest Rates
By: Marty_Chenard
Bernanke is vowing to keep interest rates low ... but, can he?
We say this because the market is not satisfied with receiving low yields when risk levels are perceived to be rising. That clearly showed up on the 10 year yields yesterday when the yield jumped up to 36.82.
Read full article... Read full article...
Monday, December 21, 2009
Why the Fed Will Be Sidelined in 2010 / Interest-Rates / US Interest Rates
By: Michael_Pento
The release of the Non-Farm Payroll Report for November along with the latest inflation data from the Bureau of Labor Statistics placed further into question the Federal Reserve’s free money policy. The spate of less bad news on the economy and increases in certain price levels has brought some of the bond vigilantes back from hibernation, while the cacophony from the hard-money guys (me chief among them) to raise interest rates is growing yet louder.
Read full article... Read full article...
Monday, December 21, 2009
Government Reports Reveal Economy Faces Unprecedented Risk of Rising Interest Rates / Interest-Rates / US Interest Rates
By: Martin_D_Weiss
Never before have I seen a broader range of investment opportunities as those opening up early in January!
But if you’re among those throwing caution to the wind … or if you’re slashing your keep-safe holdings to practically zero, then take a long, hard look at the …
Read full article... Read full article...
Thursday, December 17, 2009
Fed Tightening U.S. Interest Rates? Give Us a Break! / Interest-Rates / US Interest Rates
By: Axel_Merk
At the end of its scheduled two-day meeting, the Federal Reserve's Open Market Committee (FOMC) confirmed it will leave its target range for the federal funds rate unchanged and is on schedule to phase out various special liquidity programs. The Fed also confirmed it will continue to buy mortgage backed-securities (MBS) and expects to gradually slow the pace of these purchases; the Fed expects the entire $1.25 billion of MBS purchases to be executed by the end of the first quarter of 2010.
Read full article... Read full article...
Wednesday, December 16, 2009
Could the Fed Hike U.S. Interest Rates Sooner than Expected? / Interest-Rates / US Interest Rates
By: Gary_Dorsch
One more Dance before Midnight Strikes, “As the old saying goes, what the wise man does at the beginning, fools do in the end,” said Warren Buffett, at Berkshire Hathaway’s Annual Meeting, in May 2006. “It’s like Cinderella at the ball. You know that at midnight everything’s going to turn back to pumpkins and mice. But you look around and say, one more dance, and so does everyone else. Everyone thinks they’ll get out at midnight. The party does get more fun, dance partners get prettier, - one more glass of champagne. And besides, there are no clocks on the wall. And then suddenly, the clock strikes 12, - and everything turns back to pumpkins and mice,” the sage of Omaha said.
Wednesday, December 16, 2009
Why You Should Expect U.S. Interest Rates to Rise Soon / Interest-Rates / US Interest Rates
By: Claus_Vogt
Last December, the yield on the 10-year Treasury bond fell to 2 percent, the lowest level in 40 years. The financial and economic crisis had investors heading for a safe harbor … and Fed members panicked. Deflation was the buzz word of the time.
If market forces had been allowed to take over and purge the system of all the imbalances, malinvestments, and excesses that characterized the bubble years, a deflationary wave would have swept the world. And after this sharp and deep cleansing process, a new healthy recovery would have begun.
Read full article... Read full article...
Sunday, December 06, 2009
Australian Luxury of High Interest Rates, Should the U.S. Follow Suit? / Interest-Rates / US Interest Rates
By: Oakshire_Financial
Many are quick to question the logic behind Australia's recent pattern of raising interest rates, citing the risk involved with this strategy and the "danger" it puts Australia's economy in by lowering housing demand and making financing more difficult for businesses. Some call it an outright mistake.
Boo hoo. The finance gurus of the world sound like a bunch of children jealous that their little brother opened a Christmas present that they asked for. 'Tis the season.
Sunday, December 06, 2009
David Malpass: Near Zero Interest Rates are Hurting the Economy / Interest-Rates / US Interest Rates
By: Trader_Mark
Following up some excellent commentary he has been doing as a guest on CNBC (see video here) [Oct 16, 2009: The Inverse Correlation Between Stocks and the US Dollar in 1 Chart] David Malpass makes an eloquent argument on how near zero interest rates are hurting the US economy in a Wall Street Journal opinion piece.
Friday, November 27, 2009
New Record Low Two Year Treasuries Yield, Is This Start Of U.S. Dollar Rally? / Interest-Rates / US Interest Rates
By: Mike_Shedlock
In the wake of the Dubai default (please see Dubai Defaults - Deflation In Action - Watched Pot Theory Revisited for details), I am up watching treasury yields.Two year treasury yields plunged to an new all-time record low as the following Bloomberg table shows.
Read full article... Read full article...
Thursday, November 26, 2009
Zero Interest Rates, the Cruelest Tax of All / Interest-Rates / US Interest Rates
By: Sarel_Oberholster
The zero-interest-rate policy of the Fed is sold to the public as a benign economic rescue in the public interest. The stark reality is that this policy is a disguised tax implemented by the Fed. It takes income from savers and hands it as a subsidy to borrowers. It also facilitates and funds the fiscal deficit policies of central government. Such a well disguised tax is a boon for governments. The cruelest tax of all is this 100 percent tax on interest income, disguised and rationalized as "good" policy.
Saturday, November 21, 2009
The Unintended Consequences of the Federal Reserve's Low Interest Rate Policy / Interest-Rates / US Interest Rates
By: John_Mauldin
Where the Wild Things Are
It Is Not Just Japan
The Euro-Yen Cross and the Dollar Carry Trade
Where the Wild Things Are is a beloved children's book and now a beautiful movie. But in the investment world there are really scary wild things lurking about in the hidden recesses of the economic landscape. Today we look at one of the unintended consequences of the Federal Reserve's low interest rate policy.
Read full article... Read full article...
Monday, November 16, 2009
The Fed's Policy of Near Zero Interest Rates / Interest-Rates / US Interest Rates
By: Bob_Chapman
One of the outcomes of Fed policy of near zero interest rates is that seniors cannot live on an income of 1-1/% and that pension funds, insurance companies and endowments cannot fulfill their commitments. As yields eventually rise, although the Fed has signaled that is at least a year away, and if Japan is any guideline, we could be 19 years away from solving the problem of fiduciaries.
Tuesday, November 10, 2009
Why is the Stock Market Rising When The Economic Recovery is Weak? / Stock-Markets / US Interest Rates
By: John_Mauldin
"Why" many ask, "is the stock market going up when the bond market is telling us the recovery will be tepid? Isn't there a disconnect?" And the answer is that there is, and this week good friend and fishing buddy Paul McCulley of PIMCO fame discusses that very topic with his usual insight and wit. He poses the conundrum that those expecting a "V" shaped recovery have pushed risk assets up quite high, and that the real risk to their position is that they in fact get a "V" shaped recovery. And yet, they could go higher and into bubble territory.
Tuesday, October 20, 2009
If Bernake Doesn’t Raise The Fed Interest Rate Very Soon There Will Be BIG Trouble / Interest-Rates / US Interest Rates
By: Andrew_Butter
The debate about whether it was Alan Greenspan’s “fault” will continue for generations, the “other side” summed up their position nicely in a quip that came up in the debate about whether to let the Fed have more power, “ That’s like buying your teenager a sports car after he wreaked the family saloon”.
Saturday, October 17, 2009
The Fed Does Not Care About the Dollar, Easy Money is Here to Stay / Interest-Rates / US Interest Rates
By: Mike_Larson
Every so often, someone decides to pick a fight with me over the Federal Reserve. They say I’ve got it all wrong. They say the Fed is going to prove its mettle. They say that foreign central banks are crying “Uncle” over the dollar, and that this will force the Fed to reverse course and start raising rates.
Wednesday, September 30, 2009
Stock Market Investors Don’t Fight the Fed / Stock-Markets / US Interest Rates
By: Hans_Wagner
Martin Zweig, in his investment book “Winning on Wall Street” points out investors should not “fight the Fed”. In his book, he discusses the relationship between the discount rate and the performance of the US stock market. As he showed, most of the time, a rise in the discount rate leads to a lower average share prices. A drop in the discount rate leads to higher average share prices. Another concept called “two tumbles and a jump” indicates that two decreases in the discount rate within a six-month period lead to a jump up in the stock market. On the other hand, one or two rate increases within a 6-month period are moderately bearish for stocks. Three or more rate increases are extremely bearish.
Tuesday, September 22, 2009
When Will the Fed Start Raising U.S. Interest Rates? / Interest-Rates / US Interest Rates
By: Mike_Shedlock
Calculated Risk has an interesting chart and discussion on the unemployment rate and Fed rate hikes.
Saturday, September 19, 2009
Keynesian Economics and Negative Interest Rates / Interest-Rates / US Interest Rates
By: Gary_North
There is considerable discussion about the possibility that the Federal Reserve could and possibly should create a monetary environment in which interest rates are negative.
Read full article... Read full article...First, why should it do this?
Sunday, August 23, 2009
Big Interest Rate Move Around the Corner? / Interest-Rates / US Interest Rates
By: Marty_Chenard
Interest rates ... housing demand ... housing affordability ... bank loans ...
Headline confusion? ... Here are the current housing related headlines on a Yahoo news search:
Read full article... Read full article...
Tuesday, August 18, 2009
Bernanke’s Federal Reserve Interest Rate Indecision Meeting / Interest-Rates / US Interest Rates
By: Money_and_Markets
Nilus Mattive writes: Last week, the Federal Reserve held a two-day interest rate policy meeting, and nobody was surprised by their lack of action. Heck, it’s unlikely that we’re going to see a real change in their target rate for a while yet.
But I do think there were some important suggestions buried in their comments, and I want to talk about those today. Plus, I want to throw my hat into the ring on the “Will Bernanke get another term?” debate as well.
Read full article... Read full article...
Thursday, August 13, 2009
Bernanke, Do You Have The Cojones To Raise U.S. Interest Rates? / Interest-Rates / US Interest Rates
By: Mike_Whitney
Mike Whitney writes: Booyah. It's morning in America. The jobless numbers are stabilizing, the stock market is sizzling, quarterly earnings came in better than expected, traders have turned bullish, housing is showing signs of life, and clunker-swaps have given Detroit a well-needed boost of adrenalin. Even Cassandra economists --like Paul Krugman and Nouriel Roubini--have been uncharacteristically optimistic. Is is true; did we avoid a Second Great Depression? Is the worst really behind us?
Monday, July 27, 2009
Real U.S. Treasury Yields Highest In History / Interest-Rates / US Interest Rates
By: Mike_Shedlock
Bloomberg is reporting Real Yields Highest Since 1994 Aid Record Debt Sales.
Wednesday, July 08, 2009
The True Cost of 0.25% Interest Rate / Interest-Rates / US Interest Rates
By: Adrian_Ash
"Hey! If banks won't lend at low-to-zero rates of interest, maybe we should try sub-zero rates instead..."
IT'S NO BIG DEAL at present – only about $200 in fact.
Read full article... Read full article...
Sunday, June 14, 2009
Interest Rate Hikes Coming as Investors Return to Risky Assets / Interest-Rates / US Interest Rates
By: Prieur_du_Plessis
Bloomberg: Pimco says “rate hikes will be some time in coming” “Pacific Investment Management Co., which runs the world’s biggest bond fund, said the economic outlook ‘looks bad’ for most of the world and central banks will refrain from raising interest rates.
“‘Rate hikes will be some time in coming,’ Andrew Balls, a managing director for the company in London, wrote in a report on the company’s web site.
Read full article... Read full article...
Friday, June 05, 2009
U.S. Fed Throttling the Economic Recovery? / Economics / US Interest Rates
By: Andy_Sutton
Despite the calm appearance on the economic waters of late, there is quite a bit of turbulence building beneath the surface on a multitude of fronts. Several developments have emerged that fly directly in the face of the idea that we’re headed for a green shoots recovery. Even more surprising, when you take a deeper look at these issues, some rather remarkable inconsistencies emerge in that the methods being used in some critical areas virtually guarantee that they will not be successful. We’ll take a look at two of these areas, but first, let’s discuss manoeuvring room.
Wednesday, June 03, 2009
Why Interest Rates are Rising / Interest-Rates / US Interest Rates
By: Marty_Chenard
Today ... I must speak about long term interest rates and mortgages.
Yesterday, the 30 year yields closed at 44.89. At the end of December, the 30 year yields were only 25.19 ... that was a significant rise (see the chart below). 30 year mortgage rates got down as low as 4.5%, and yesterday they ranged from 5.25% to 5.375%.
Read full article... Read full article...
Thursday, May 07, 2009
Will Interest Rates Sky Rocket as Inflationary Pressures Build? / Interest-Rates / US Interest Rates
By: Money_Morning
Martin Hutchinson writes: U.S. Treasury bond yields are going higher - much higher. And that’s even before we factor in the likely effects of rising inflation, which we haven’t seen yet, but can certainly anticipate.
Monday, May 04, 2009
Sorry Ben Bernanke, You Don’t Control Long Term Interest Rates / Interest-Rates / US Interest Rates
By: Michael_Pento
It is disappointing to discover that the Harvard- and M.I.T.-educated Ben Bernanke did not learn while attending school that long-term interest rates must be set by the free market. Belatedly, the Chairman of the Federal Reserve is about to learn this valuable and costly lesson because these rates cannot be manipulated lower by any central bank for a great length of time.
Monday, April 20, 2009
Harvard Professor Says Cut U.S. Interest Rates Below Zero / InvestorEducation / US Interest Rates
By: Mike_Shedlock
Time For Mankiw To Resign
- On Saturday I checked my watch to verify the date. A quick check showed it was April 18. Just to be sure I asked my wife Joanne and she assured me it was the 18th. Likewise my computer said it was the 18th.For a brief moment, I thought we had flashed back in time and it was April 1.
Read full article... Read full article...
Tuesday, March 17, 2009
The Real Ponzi Scheme– Unreal Interest Rates / Interest-Rates / US Interest Rates
By: Rob_Kirby
Recently, former chairman of the Federal Reserve – Alan Greenspan – penned an editorial, “ The Fed Didn't Cause the Housing Bubble ”. It was published in The Wall Street Journal March 11, 2009 .
In the article Mr. Greenspan attempts to blame today's global financial crisis on “too-low mortgage rates” between 2002 and 2005 which led to a real estate bubble.
Read full article... Read full article...
Saturday, March 07, 2009
Inflection Point in U.S. Treasury Bond Interest Rates Near? / Interest-Rates / US Interest Rates
By: Michael_Pollaro
Pity the tortured Treasury bond buyer; what to do, what to do. These headlines from Bloomberg news chronicle the struggle. On March 4th :
Treasuries Fall on Looming Auctions, Deficit Funding Concern
By Susanne Walker
March 4 (Bloomberg) – Treasuries fell as stocks rose and traders speculated the U.S. will sell $60 billion of notes and bonds next week after the worst two months of losses in government debt in five years
Saturday, December 20, 2008
Fed Targeting Long-term Interest Rates to Force Mortgage Rates Lower / Interest-Rates / US Interest Rates
By: John_Mauldin
- I Meant to Do That
- The Lights of Myanmar
- Some Good News for Borrowers
- Madoff May Give Us a Sell-Off
The Fed has taken interest rates to zero. They have clearly started a program of quantitative easing. What exactly does that mean? Are we all now Japanese? Is the Fed pushing on a string, as Japan has done for almost two decades? The quick answer is no, but the quick answer doesn't tell us much. We may not be in for a two-decades-long Japanese malaise, but we will experience a whole new set of circumstances. In what will hopefully be a shorter holiday version of the e-letter, I will tackle these questions and more.
Read full article... Read full article...
Wednesday, December 17, 2008
Fed Fights Deflation with Zero Interest Rates / Interest-Rates / US Interest Rates
By: Prieur_du_Plessis
The US Federal Reserve yesterday pulled out all the stops in a frantic effort to save the US economy from collapse and stem the deflationary forces. The Fed funds rate was slashed from 1% to a target range between 0 and 0.25% – the lowest the central bank's key rate has been since records began in 1954. Read full article... Read full article...
Wednesday, December 17, 2008
Quantitative Interest Rate Easing American Style: Free Money / Interest-Rates / US Interest Rates
By: Mike_Shedlock
The Treasury rally continued in spectacular fashion in conjunction with the ZIRP Arrival: Fed Targets Interest Rates 0 to 1/4 Percent . From the FOMC Press Release . The focus of the Committee's policy going forward will be to support the functioning of financial markets and stimulate the economy through open market operations and other measures that sustain the size of the Federal Reserve's balance sheet at a high level.
Read full article... Read full article...
Tuesday, December 16, 2008
Zero Interest Rates Policy Arrives as Fed Targets 0% to 0.25% / Interest-Rates / US Interest Rates
By: Mike_Shedlock
Effective today, the Fed is done cutting rates. ZIRP has arrived. The Fed is targeting interest rates in a range of 0 to 1/4 percent as noted today's FOMC Press Release .
Release Date: December 16, 2008 - For immediate release
Read full article... Read full article...
Thursday, November 20, 2008
Credit Collapse, U.S. Treasury Yields Fall to Record Lows / Interest-Rates / US Interest Rates
By: Mike_Shedlock
Once again treasury bears who do not understand the implications of a collapse in credit are taking a beating as Treasury Yields Drop to Record Lows .
Treasury yields declined to record lows, with two-year notes dropping below 1 percent for the first time, as global stocks slumped and a deepening recession drove investors to the safest assets.
Read full article... Read full article...
Wednesday, November 19, 2008
Economic Forecast, Peering into a Debt Ridden Future / Interest-Rates / US Interest Rates
By: Mick_Phoenix
Welcome to the weekly report. This week we look at some longer term indicators that will help identify when a turning point in the economy has arrived and why you should cancel Christmas, or at least go back to its traditional meaning, forgoing the pointless consumerism that surrounds it.
Before we start, you may have wondered (or not) why the weekly report wasn't around. I have spent the past 3 weeks laying out the groundwork for an attempt to peer into the longer term future. Subscribers have seen all 3 articles, culminating in the new scenario. I have released the first 2 articles to the public, the final part will also be released but not for awhile yet.
Wednesday, November 12, 2008
How Low Will the Fed Funds U.S. Interest Rates Go / Interest-Rates / US Interest Rates
By: Hans_Wagner
On Wednesday October 29th, the Federal Reserve lowered the Fed Funds rate by 50 basis points to 1.0%. This comes on top of an earlier rate reduction on October 8, 2008 of 50 basis points. The rate is now at the level former Fed Chairman Alan Greenspan kept during 2003 and 2004. This raises the question can and should the Fed lower rates further?Read full article... Read full article...
Thursday, November 06, 2008
UK Interest Rate Cut by 1.50% / Interest-Rates / US Interest Rates
By: Nadeem_Walayat
The Bank of England surprised all market participants by cutting UK interest rates by 1.5%, far more than the consensus forecast of 0.5%, and even greater than the Market Oracle forecast cut of 1%.Read full article... Read full article...
Saturday, November 01, 2008
Fed Desperate U.S. Interest Rate Measures / Interest-Rates / US Interest Rates
By: Tim_Wood
The Fed's action to either raise or lower rates has become a major focal point for the markets in recent years. It seems that the vast majority of the public believes that the Fed is actually controlling interest rates and as a result that they are controlling the credit and equity markets. For a week before the Fed meeting it seems that the entire global markets focus on “what the Fed is going to do.” Will they cut a quarter, will they cut a half or will they not cut at all? Then, after the meeting the talking heads and analysts sit around and try to analyze the meaning of their “Fed Speak.” This is a joke. I am about to show you the proof that the Fed follows the short-term credit market and that in reality they do not lead. The data simply does not support this widely held belief. I realize that this may come as a shock to you, but reality is what it is. The data speaks for itself. Read full article... Read full article...
Friday, October 31, 2008
U.S. Fed Zero Interest Rate Policy Coming? / Interest-Rates / US Interest Rates
By: Mike_Shedlock
The Fed did not want to cut the Fed Funds Rate below 2%. And because Congress recently granted authority for the Fed to pay interest on reserves, Bernanke thought incorrectly that he could keep rates above 2%. So much for that academic theory. Now many are wondering if ZIRP (Zero Interest Rate Policy) is coming to the Fed. Read full article... Read full article...
Wednesday, October 29, 2008
U.S. Fed Anticipated 0.5% Interest Rate Cut / Interest-Rates / US Interest Rates
By: Ashraf_Laidi
The main question is whether today's anticipated Fed rate cut will succeed in maintaining the current boost to global risk appetite, regardless of the size of the easing. Since the beginning of the market crisis 7 weeks ago, the Federal Reserve has proven more creative in its overall actions than surprisingly dovish in its rate cuts. At the last scheduled FOMC meeting, the Committee kept rates unchanged despite the collapse of Lehman Bros but offered a bridge loan to AIG. In keeping with current Modus Operandi, a 50-bp rate cut in the fed funds rate is the most likely scenario, while a 25-bp easing is more plausible than 75-bps. Read full article... Read full article...
Friday, October 10, 2008
U.S. Fed Fears Loss of Power in Preventing Financial Collapse / Interest-Rates / US Interest Rates
By: Money_Morning
Shah Gilani writes: The truth? You can't handle the truth.”
The truth is, the U.S. Federal Reserve does not directly control the Federal Funds rate, and its efforts to reduce the benchmark rate from 2.0% to 1.5% may do more damage than good – though for reasons you'd never guess. Attempts to lower the Fed Funds rate could irreparably damage Fed credibility and may actually narrow the Fed's credit-crisis-management options.
Read full article... Read full article...
Friday, October 03, 2008
US Payrolls Signalling Recession and US Interest Rate Cut / Economics / US Interest Rates
By: Ashraf_Laidi
September payrolls fell by 159K, worst decline since May 2007, while the unemployment rate held at 6.1%. Although unchanged, the unemployment rate is widely expected to breach above the 6.3% rate in coming months, which would be the highest jobless rate since 1994. Our long held base call of 50-bps easing before year-end is now completely priced in the market, with about 55% chance of the cut emerging before the October 29 meeting. Read full article... Read full article...
Wednesday, September 17, 2008
Federal Reserve Holds Interest Rates Defying Wall Street / Interest-Rates / US Interest Rates
By: Money_Morning
Martin Hutchinson writes: The U.S. central bank's Federal Open Market Committee (FOMC) yesterday (Tuesday) left the benchmark Federal Funds rate target at 2.0%, after many had expected the central bank policymaking committee to cut rates in the wake of the Lehman Brothers Holdings Inc. ( LEH ) collapse. Read full article... Read full article...
Friday, September 12, 2008
FOMC US Interest Rate Meeting of September 16th / Interest-Rates / US Interest Rates
By: Joseph_Brusuelas
Nearly ten years ago the Federal Open Market Committee convened a special meeting to address the problems in U.S. financial markets regarding the failure at Long Term Capital Management. It is not without irony that one decade later the Fed and the U.S. Treasury are addressing an infinitely more complex problem with respect to Fannie Mae and Freddie Mac, while at the same time contemplating the potential failure of major investment and commercial banks. Read full article... Read full article...
Wednesday, September 03, 2008
Real US Interest Rates Are Too High / Interest-Rates / US Interest Rates
By: Mike_Shedlock
I am going to make a shocking statement. Here it is: Real interest rates are high. Before stating the basis for such a seemingly wild claim it is important to define some terms. In this case "real" means inflation adjusted. Of course this means we have to agree on the meaning of the word "inflation". For this discussion I am going to waver from my usual stance that "Inflation is an increase in money supply and credit" to something mainstream.
Read full article... Read full article...
Thursday, August 28, 2008
Treasury Dull Range bound Holiday Season Trading / Interest-Rates / US Interest Rates
By: Levente_Mady
On the financial sector front, there is just no relief in sight. Credit spreads remain under pressure. The stock price of Fannie Mae and Freddie Mac continue to plunge. Swap spreads are wider again. LIBOR is trading and levels indicative of severe financial distress. The good news is that the rest of the market is hanging in there. The bad news is that the present distress in the financial space is likely to spread to other sectors soon.Read full article... Read full article...
Monday, August 11, 2008
Could Lower Commodity Prices Pave the Way to Steady Interest Rates? / Interest-Rates / US Interest Rates
By: Money_Morning
William Patalon III writes: With oil trading near a three-month low (and corn now at a four-month low), U.S. Federal Reserve policymakers may have just the ammunition they need to hold the line on interest rates for the foreseeable future - or at least until their Sept. 16 policymaking meeting.
On the other hand, threats of hurricanes in the Gulf of Mexico and geopolitical turmoil in Iraq, Turkey, Nigeria - and now the fireworks between Russia and Georgia - could spark a dramatic reversal in sentiment and renew fears of supply disruptions.
Read full article... Read full article...
Wednesday, August 06, 2008
Fed's Next US Interest Rate Move is Down / Interest-Rates / US Interest Rates
By: John_Browne
Yesterday, the Fed surprised no one and left its key rates unchanged and gave no indication that the committee was preparing to raise or lower rates anytime in the foreseeable future. As always, the market reactions were much more interesting and unpredictable. In this case, bond markets barely changed, the U.S. stock market jumped, and Euro futures strengthened slightly against the U.S. dollar.Read full article... Read full article...
Tuesday, August 05, 2008
Talk of US Rate Hikes is Comical Says Pimco Chief Bill Gross / Interest-Rates / US Interest Rates
By: Mike_Shedlock
Yahoo!Finance is reporting Fed Can't Raise Rates .The Federal Reserve's decision to hold the line on interest rates was the only move the central bank could make considering the state of the US economy, PIMCO chief Bill Gross said on CNBC.
Read full article... Read full article...
Tuesday, July 01, 2008
Its Inflation NOT Deflation, US Heading for Sharply Higher Interest Rates / Economics / US Interest Rates
By: David_Petch
It is the end of the week and the start of a long weekend up here in the Great White North, so today's commentary will be brief. Oil climbed overnight to peak at $141.71/barrel and this is likely not set to slow down yet until something breaks. Continue to stock up on dry goods such as rice, whole-wheat flour, powdered milk, brown sugar etc. because prices are going much higher. Many of the countries around the globe with currencies pegged to the US dollar have been forced to depreciate them via interest rates and fiat expansion to keep at a preset level. This has caused prices to rise higher than anticipated and many such nations are being forced to raise interest rates. Read full article... Read full article...
Sunday, June 29, 2008
The End of the Anglo-American Empire? / Politics / US Interest Rates
By: Richard_C_Cook
Much of the world's history over the last century has been dominated by the United States. But by the turn of the millennium in 2000-2001, the “American Century” had begun to descend into a chamber of horrors.
The years since then have been marked by the huge financial bubbles engineered by the U.S. Federal Reserve System and the virus of predatory global capitalism. We have the looming worldwide economic crisis with rising bankruptcies, credit disruptions, and soaring fuel and food prices. Alongside has been the thinly-disguised but continuing attempt by the U.S. to conquer the Middle East by force of arms under the heading of the “War on Terror.”
Read full article... Read full article...
Saturday, June 28, 2008
Fed Blows It! Wall Street and Dollar Pounded! / Interest-Rates / US Interest Rates
By: Money_and_Markets
Mike Larson writes: Boy, did Federal Reserve Chairman Ben Bernanke blow it this week!
Investors were looking for a strong Fed statement because they believed it would support the dollar and snuff out the recent surge in commodities prices.
Read full article... Read full article...
Thursday, June 26, 2008
Markets Panic as Feds Bluff Called on US Interest Rates / Interest-Rates / US Interest Rates
By: Jim_Willie_CB
For the last couple weeks, my attention has been given to the amusement and desperation behind propaganda, bluffs, and the utter desperation of the US Federal Reserve in the orchestrated rumors of a new position wherein they would soon or eventually raise the official interest rate in order to combat the horrendous price inflation brought about by the falling crippled US Dollar. What utter nonsense! To hear that the investment community actually accepted and embraced this notion was laughable on its face, and served as continued evidence that the loose collection of investors, speculators, and observers simply cannot wake up reality despite the events that began last August 2007 when the mortgage debacle ripped the banking system wide open with gaping wounds. The US Fed needs to arrest the falling US Dollar., no doubt. But it cannot. Read full article... Read full article...
Thursday, June 26, 2008
FOMC Stays on Hold, Keeping Its Interest Rate Options Open / Interest-Rates / US Interest Rates
By: Paul_L_Kasriel
The Fed is less worried about a death spiral in real economic activity and more worried about upside risks on inflation than it was at the end of April. This does not mean that the economic downside risks and inflation upside risks are equal in the eyes of the FOMC. In my opinion, the Fed remains more worried about weaker economic activity than it is about a wage-price spiral. Recent data suggest that housing is nowhere near a bottom, capital spending remains weak and the labor markets continue to soften.Read full article... Read full article...
Wednesday, June 25, 2008
Waiting for the Fed's US Interest Rate Decision and Statement / Interest-Rates / US Interest Rates
By: Jennifer_Yousfi
Economists and investors wait with bated breath for the U.S. Federal Reserve to release the statement from the Federal Open Market Committee this afternoon (Wednesday) at 2:15 p.m. EDT.
While it is almost universally expected that the FOMC will vote to hold the Federal Funds rate steady at its current 2.0%, the language in the accompanying statement will be scrutinized for clues about the upcoming August and September meetings.
Read full article... Read full article...
Tuesday, June 24, 2008
Fed Futures Discounting Interest Rate Hikes and Dollar Support / Interest-Rates / US Interest Rates
By: Black_Swan
Today begins a heavily anticipated FOMC meeting. Yeah, we know all the meetings are hyped-up quite a bit, but this one’s a little different. That’s because the head hauncho, Ben Bernanke, has changed his tone.
Coming off a series of rate cuts that’s taken the Fed Funds rate from 5.25% all the way down to 2%, Bernanke is talking like he’s already prepared to start hiking his benchmark rate right back up. His comments over the last few weeks have been aimed most directly at inflation (rather than the potential for further economic weakness). He’s even made clear remarks about the consequences of a weak U.S. dollar.
Read full article... Read full article...
Monday, June 23, 2008
All Eyes on the Fed Signals on US Interest Rates and Inflation / Interest-Rates / US Interest Rates
By: William_Patalon_III
The U.S. Federal Reserve will be in the spotlight again this week - and not because of those speaking engagements that seem to help whipsaw investor emotions. Tomorrow (Tuesday) and Wednesday, central bank Chairman Ben S. Bernanke will meet with his fellow policymakers on the interest-rate setting Federal Open Market Committee (FOMC). Read full article... Read full article...
Thursday, June 19, 2008
Bernanke's Interest Rate Headache / Interest-Rates / US Interest Rates
By: Alex_Wallenwein
The Euro vs Dollar Currency War is back on the front burner. For years, it used to be a cold war, but now it's hot again – and Bernie can't take the heat; it gives him headaches.
Poor Bernie.
Read full article... Read full article...
Tuesday, June 17, 2008
How to Drive Commodity Prices Even Higher / Interest-Rates / US Interest Rates
By: Tim_Iacono
Let's see, the last two rising asset classes didn't really transform into bubbles until the Fed started raising interest rates - I'm warming up to the idea of a higher Fed funds rate.Read full article... Read full article...
Friday, June 13, 2008
ECB Calls Bernanke’s Bluff on Defending the US Dollar / Interest-Rates / US Interest Rates
By: Gary_Dorsch
A new member of the British Parliament once solicited the advice of Benjamin Disraeli, the nineteenth century British prime minister, on whether he should speak up on a controversial issue. “Do you have anything to say that has not already been said?” Disraeli asked him. “No,” the man conceded. “I just want the people whom I represent, and the members of Parliament to know that I participated in the debate.” Read full article... Read full article...
Sunday, June 08, 2008
Signs of the End for Fed US Interest Rate Cuts Are Everywhere / Interest-Rates / US Interest Rates
By: Donald_W_Dony
With inflationary pressures coming out of Pandora's box again, and largely fueled by soaring crude oil prices, is it any wonder that the Fed has stated in its last FOMC meeting in late April that this rate cut was "a close call" and that "any future rate deductions will be closely reviewed". The talk now, coming from Mr. Bernanke, is concern surrounding the low level of the U.S. dollar and inflation. So as the shift in direction has moved 180 degrees from providing stimulus to the financial markets and preventing a recession from taking root to inflation and currency protection. But were there signs of this new direction earlier in the market? From an intermarket perspective, there were plenty of clues by April. Read full article... Read full article...
Wednesday, May 28, 2008
Surging Inflation Ensures US Interest Rates Headed Higher / Interest-Rates / US Interest Rates
By: Martin_Hutchinson
The inflationary reality that we as consumers have been living for months may finally be starting to dawn on the U.S. Federal Reserve.
The minutes of the last policymaking Federal Open Market Committee (FOMC) meeting, released on Wednesday, showed that the Fed's inflation forecast was raised from a range of 2.1%-2.4% to a range of 3.1%-3.4%.
Read full article... Read full article...
Monday, May 19, 2008
Inflation and Interest Rates at Forefront of this Weeks Economic Data / Economics / US Interest Rates
By: William_Patalon_III
You can bet there will be a lot of discussion about interest rates this week, thanks to the release of the producer price index (PPI) report tomorrow (Tuesday) and the U.S. Federal Reserve meeting minutes on Wednesday.
The PPI report will undoubtedly rekindle the inflation-versus-recession debate (with more than a few comments about stagflation thrown in for good measure).
Read full article... Read full article...
Thursday, May 01, 2008
Financial Markets Second-Guessing the Fed / Interest-Rates / US Interest Rates
By: Adrian_Ash
"...'Buy the rumor, sell the news' applies to all markets. Not least when the Fed is committed to reflating housing and stocks..."
"EVEN THE CASUAL OBSERVER can have no doubt that FOMC decisions move asset prices, including equity prices," noted Ben Bernanke, now chairman of the Federal Reserve's Open Market Committee, in a speech of Oct. 2003.
Read full article... Read full article...
Tuesday, April 29, 2008
The Fed's Interest Rate Dilemma: Rescue the US Housing Market, or Feed the Poor? / Interest-Rates / US Interest Rates
By: Martin_Hutchinson
At their two-day meeting that starts today (Tuesday), U.S. Federal Reserve policymakers will have to grapple with a moral choice that is well beyond the pay grade of central bankers - choosing between the financial stability of U.S. homeowners and world hunger.
That's not an exaggeration. Interest-rate policy normally only affects the world economy at the margin, but it has now been so expansionary for so long that the Fed's interest-rate strategy has turned into a moral dilemma of sorts. In short, the central bank's monetary policy will likely determine whether millions of U.S. homeowners lose their homes or millions of the world's poor starve.
Read full article... Read full article...
Monday, April 28, 2008
US Fed Expected to Cut Interest Rates to 2% on Wednesday / Interest-Rates / US Interest Rates
By: William_Patalon_III
U.S. Federal Reserve policymakers will likely cut its key interest rate to 2.0% from 2.25% this Wednesday, which would mark the seventh such move since the central bank launched its rate-reduction campaign in mid-September.
But if the central bank does pare short-term interest rates, it's likely to be the last such move in awhile; the Fed will take a break and give its rate cuts a chance to work their way through the U.S. economic system.
Read full article... Read full article...
Wednesday, April 23, 2008
Further US Interest Rate Cuts Will Do Far More Harm than Good / Interest-Rates / US Interest Rates
By: Mike_Whitney
Last week's stock market blowout added more than 4 percent to the Dow Jones Industrials, but it had no affect on Libor rates. Libor rose steadily from Tuesday through Friday signaling more troubles in the banking system. Libor, which means London Interbank-Offered Rate, is the rate that banks charge each other for loans. It has a dramatic effect on nearly area of investment. When the rate soars, as it did last week, it means that the banks are either too weak financially to lend to each other or too worried about the ability of the other bank to repay them. Either way, it puts a crimp in lending. Banks serve as the transmission point for credit to the broader economy via business and consumer loans. When they're bogged down by their own bad investments or when risks increase; rates go up and the whole process slows to a crawl. When banks are unable to extend credit freely, business activity decreases and GDP shrinks. Read full article... Read full article...
Monday, April 21, 2008
US Interest Rates and Bond Yield Spread- The Full Nine Yards / Interest-Rates / US Interest Rates
By: Captain_Hook
The joke this April Fool's Day was on the short sellers with yet another squeeze higher in stocks. Of course this has not been a problem since last summer as stocks have been (and remain) in a bear market. Unfortunately for short sellers this time around however, this bounce will likely be more robust than previous occurrences in that important cyclical influences have now gone positive, which will act as a tail wind for the bulls in fits and starts (choppy price action) right into the second quarter of next year. In this regard yesterday's violent rise was fuelled by hedge funds officially reversing the sell stocks / dollar and buy commodities / precious metals trade for the new quarter, implying they will endeavor to maintain these positions until June. And it just so happens this is when we are looking for a recovery high in stocks this year, sometime in and around mid-June in a possible double top test after an initial spike here in April, normally a seasonally strong month even in weak years. Of course May should provide some excitement to the downside however, which would bring gold / commodities back to life as the dollar ($) is sold once again. Read full article... Read full article...
Thursday, April 10, 2008
UK Interest Rates to be Cut to 5% Today on Fears of Housing Recession / Interest-Rates / US Interest Rates
By: Nadeem_Walayat
The Bank of England is expected to cut UK interest rates to 5% at today's MPC meeting following a slump in UK house prices that saw a 2.5% fall in March (Halifax:SA). Interest rates were last cut in February 08 which was inline with the Market Oracle forecast as of August 07 and Sept 07 for UK interest rates to fall to 5% by September 2008, this was revised lower to 4.75% in January 2008 , following the US Panic rate cut of 0.75% on 22nd Jan 08 to 3.5%, and subsequent cuts which has taken the US Fed Funds rate down to 2.25%.Read full article... Read full article...
Tuesday, April 08, 2008
Did Greenspan Have to Cut the Fed Funds Interest Rate as Much? / Interest-Rates / US Interest Rates
By: Paul_L_Kasriel
In today's Financial Times , Greenspan is generously given yet another chance to defend his legacy. Greenspan's argument that it was not his doing that set off the U.S. housing bubble reminds me of my two perfect children. When they appeared to err, it was never their fault. Greenspan's main defense lies on the fact that long-term interest rates were falling in the early 2000s due to global factors beyond his control. To start with, let's give him this one. But even if the decline in long rates were beyond his control, did he have to cut the fed funds rate - an interest rate he did control - as much as he did and hold it at the low level as long as he did (see Chart 1)? Read full article... Read full article...
Tuesday, April 08, 2008
Lessons from Japan: Prepare for 0% US Interest Rates / Interest-Rates / US Interest Rates
By: Jim_Willie_CB
The prospect of a US Fed 0% rate becoming a reality has been on my mind since August when the subprime made news hit. In my view, the entire mortgage bond structure would suffer massive losses in a successive of waves, beginning with subprimes, extending to primes, and concluding with commercials. How could housing distress not spread to nearby shopping malls, office complexes, and urban centers? First, USTreasurys would draw huge sums of money, reducing bond yields across the entire set of maturities. Second, the coincident event would be a painful recession. The US financial system would be unable this time to pull the US Economy out of the quicksand. Far too many vicious cycles would kick into gear, unleashing powerful feedback loops. We are seeing them in full glory now. Housing prices and foreclosures, bank write downs with sliding home collateral, US Dollar decline with a slower US Economy, household spending with rising costs, they are work to sustain more pain. Read full article... Read full article...
Tuesday, April 01, 2008
Will Bernanke's Interest Rate Cuts Save the US Economy? / Interest-Rates / US Interest Rates
By: Gerard_Jackson
In the hope of averting a credit crunch and recession Bernanke recently slashed the federal funds rate by 0.75 per cent, bringing it down to 2.25 per cent. Did he do the right thing? Well, Larry Kudlow, NRO's economics editor , certainly thinks so. He eulogised that Bernanke's rate cuts "are vastly more effective than the so-called economic-stimulus rebate plan coming out of Congress and the White House.Read full article... Read full article...
Tuesday, March 25, 2008
Precipitous Drop in Eurodollars is not Sustainable / Interest-Rates / US Interest Rates
By: John_Handbury
These days the markets are getting easier to read. For example, today long term Eurodollars got absolutely killed with Sep 2009 contracts down about 35 basis points. According to the experts this was due mainly to the bullish housing report, which showed that existing housing sales are up slightly from January.Read full article... Read full article...
Wednesday, March 12, 2008
Are US Interest Rates Fated to Rise? / Interest-Rates / US Interest Rates
By: Greg_Silberman
There is one path in investing that is sure to lead to ruin. It's a dangerous path because it lacks one critical ingredient for success – thought! The path we are speaking about is called “following the consensus”. It is both intellectually and emotionally easy to follow a majority of bullish analysts. Unfortunately the ‘consensus' is seldom right and hardly ever leads to BIG profits.
Read full article... Read full article...
Monday, February 11, 2008
The Greatest Danger to the US Economy is the Fed / Economics / US Interest Rates
By: Gerard_Jackson
As I have said a number of times, the real economic problem that confronts the world today -- and that includes the US -- is lousy economics. Bernanke has made it clear that he follows fallacious line that it is the role of central banks to manipulate interest rates. We now have Charles Plosser, Philadelphia Fed President, stating that Bernanke's "aggressive rate cuts" will put the US on a growth trend of about 2.7 per cent by 2009. However, he claims that "if something can tip us into recession, the housing market is the biggest risk". Read full article... Read full article...
Thursday, January 31, 2008
US Fed 0.50% Rate Cut Fails to Boost a Fragile Stock Market / Stock-Markets / US Interest Rates
By: Donald_W_Dony
The aggressive 50bps Fed rate cut and the finishing negative numbers points to the deep fragility of the stock market. As the rate now sits at 3%, this leaves very little room for the Fed to cut any further. This is particularly concerning as the new bear market has potentially 18-30 months of additional downward pressure on the stock market and the economy.Read full article... Read full article...
Monday, January 28, 2008
Fed Rate Cut Ignites a Short-lived Stock Market Relief Rally / Stock-Markets / US Interest Rates
By: Paul_J_Nolte
In this day and age of instant access/analysis and reactions, how can one person have such an effect upon the markets…and it is not the Fed Chief. Could it be that one trader, working for Societe General, create such a mess that the unwinding could push down all the markets around the world and force the Fed here to cut rates by 75 basis points (bp)? Given the relatively unchanged market from the prior week, maybe – however looking at the trading activity for the week, it is a difficult argument to make. As usual, the trading of the week, as well as the news answers fewer questions than it creates, but a few interesting nuggets may be gleaned from some of the very thin data.Read full article... Read full article...
Saturday, January 26, 2008
Fed Following Short-term Money Market Interest Rates Towards US Recession / Interest-Rates / US Interest Rates
By: Anthony_Cherniawski
I have said multiple times in the past that the Federal Reserve doesn't lead with interest rate cuts. It follows. The proof is in the chart to the left, which compares the 3-month Treasury Bill Discount Rate to the Federal Funds Rate (blue) and the Fed Discount Rate (red). What this indicates is that there is more room to cut interest rates next week.
But this chart has a darker message , too. The flight to safety in short-term money market funds is a leading economic indicator of a recession.
Read full article... Read full article...
Thursday, January 24, 2008
UK Interest Rate 2008 Forecast Cuts to 4.75% by September 2008 / Interest-Rates / US Interest Rates
By: Nadeem_Walayat
The US Fed's emergency 0.75% interest rate cut to 3.5% following the global stock market plunge on fears of a looming US recession now increases the probability of a near certain cut in UK interest rates at the February MPC Meeting, rather than at the originally forecast March MPC meeting. Whilst the US has made deep cuts in interest rates from a peak of 5.25% to 3.5%, the UK has only cut rates by 0.25% from a peak of 5.75% to 5.50% with the expected February cut to take rates to 5.25%. Read full article... Read full article...
Friday, December 21, 2007
An Investors View of US Fed Interest Rates and Liquidity Moves / Interest-Rates / US Interest Rates
By: Hans_Wagner
Reading the Fed's Tea Leaves
The Federal Reserve has indicated they want to be more transparent with the markets, believing that it will be better for all market participants. Before the Federal Open Market Committee (FOMC) meeting on December 11, 2007 several of the members of the Fed spoke before various groups seeking to explain their thoughts about the economy and interest rates. As a result many economists and investors felt the Fed would take the necessary steps to help the U.S. economy avoid a recession by lowering the Fed Funds rate 0.25% to 0.50% and lowering the discount rate at least 0.50% to help provide the liquidity many banks need. Then we learned they only lower the Fed Funds and Discount rate by 0.25%. The U.S. markets fell dramatically.
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...
Sunday, December 09, 2007
Why US Interest Rate Cuts if GDP is Growing by 5%? / Economics / US Interest Rates
By: Andy_Sutton
Overall, the Federal Reserve must be given decent marks for keeping up appearances in the wake of the onset of the largest credit crisis in US history. For the situation is now ubiquitous, wreaking havoc in virtually every market. True to form, the Fed has continued to modify its statements, perceptions all in an attempt to manage the public's confidence in the fact that yes, they are still in control of the economy. There have been, however, an increasing number of discrepancies and important issues emerging over the past several weeks and some startling but expected developments.Read full article... Read full article...
Monday, November 12, 2007
Interest Rates, Budget Surpluses and Other Economic Fallacies / Economics / US Interest Rates
By: Gerard_Jackson
One only has to read the financial pages of any newspaper to fully experience the poverty of economic thought that pervades the media. It is important to understand that what is considered by the media as sound economics is — bye and large — merely a reflection of the economic thinking that dominates the Treasury and the Reserve Bank. Terry McCrann — Herald Sun finance writer — is an excellent example of what I mean. I want to make it clear, however, that I am not picking on McCrann. I am only trying to clear the economic waters that the likes of McCrann have inadvertently muddied.Read full article... Read full article...
Saturday, November 03, 2007
The US Fed, The Discount Interest Rate and Market Manipulation / Interest-Rates / US Interest Rates
By: Tim_Wood
In the wake of the recent Fed meeting and the worldwide attention that it seems to gather these days, I want to address once again the Fed and the Discount rate, but I also want to address manipulation.
First of all, I want to readdress the fact that despite popular opinion, the Fed follows the lead of the short-term credit markets. My Trend Indicator on my Fed model turned down in June, before the first rate cut occurred.
Read full article... Read full article...
Wednesday, October 31, 2007
US Fed Interest Rate Cut as Housing Bust Continues to Slow Economy / Interest-Rates / US Interest Rates
By: Nadeem_Walayat
In line with market expectations the Fed cut US interest rates by 0.25% to 4.5% in an attempt to support the crumbling US housing market which continues to put a downward pressure on the US economy.Read full article... Read full article...
Wednesday, October 31, 2007
Stock Market Reaction to US Fed Interest Rate Cut of 25 Basis Points / Stock-Markets / US Interest Rates
By: Mike_Paulenoff
For whatever it is worth, the "gurus" on CNBC seem to think that the Fed signaled a pause in its accommodation policy (all of two cuts and 75 bps) because of the statement that "the rate cut taken to forestall harm to the broader economy."Read full article... Read full article...
Wednesday, October 31, 2007
What is the VIX Directional Tendencay Indicator Prior to US Interest Rate Annoucement and Market Risk Analysis / Interest-Rates / US Interest Rates
By: Marty_Chenard
In this update, we will cover : 1.) What the VIX Directional Tendency Indicator is saying prior to Bernanke's announcement today. 2.) Part 2 of the Study on: What our Inverse Data Study is saying about market conditions and risk levels.
1.) The VIX (Volatility Index) is telling an interesting story as we wait for Bernanke's decision this afternoon.
Read full article... Read full article...
Tuesday, October 30, 2007
Are US Interest Rates Going to Fall on Wednesday? The Markets Certainly Thinks So / Interest-Rates / US Interest Rates
By: Donald_W_Dony
When the last Fed rate cut occurred, it set off a rapid chain reaction in all of the four markets; currencies, commodities, bonds and stocks. For example, the Canadian dollar jumped to par with the U.S. greenback, gold broke out of its 12-month consolidation, U.S. bonds reversed their three year slide and utilities started to climb again. Will the Fed cut the rates again at the next meeting on Wednesday? The markets are certainly suggesting that. Read full article... Read full article...
Wednesday, October 24, 2007
Banking Stocks Breakdown Signals Next US Fed Interest Rate Cut / Interest-Rates / US Interest Rates
By: Jim_Willie_CB
In late summer, my perceived strong signal for the September rate cut proved accurate. It was the dire condition of the Wall Street broker dealer stock index, the XBD. My contention all along has been that the official USFed rate cut was motivated by Wall Street giant banker interests, whereby the actual rescue stimulus was disguised and thoroughly devious. In reality it was a mammoth subsidy for Wall Street firms. They stood first in line at the Discount Window. No obvious recession was evident in the USEconomy, except for a housing retreat (better labeled a rout). Read full article... Read full article...
Saturday, October 20, 2007
Asset Class Behavior Following Fed Interest Rate Cuts - Part 2 of 4 / Interest-Rates / US Interest Rates
By: Chris_Ciovacco
"The dollar has been sliding since the Fed last week cut interest rates by a larger-than-expected half percentage point. Since then, disappointing U.S. economic data have stoked expectations that another rate cut is on the way. Lower interest rates, used to jump-start an economy, can weaken a currency as investors transfer funds to countries where their deposits and fixed-income investments bring higher returns.As the dollar sinks, consumers find imported products— Australian wines, Japanese cars or Chinese toys — are more expensive. "- Associated Press -09/28/2007 Read full article... Read full article...
Tuesday, October 02, 2007
US Interest Rates Headed For 3.75% Over the Next 12 months / Interest-Rates / US Interest Rates
By: John_Mauldin
We are in a world far different than the one I learned about in economic text books. As I have written, the shadow banking system of hedge funds and CDOs, CLOs, PIPES, etc. have created a new financing economic reality far different than the traditional banking system was just 20 years ago. Does the Fed have the tools in its toolkit to deal with the new reality? Read full article... Read full article...
Monday, October 01, 2007
NOLTE NOTES Was the Fed Too Hasty to Cut Interest Rates ? / Interest-Rates / US Interest Rates
By: Paul_J_Nolte
What a quarter – from the heights to the depths and back again, the quarter ended with the SP500 up a modest 1.5%, barely above the rate earned on bonds with a lot less gray hairs. Yields fell during the quarter, with short rates falling a full percentage point, while long-term bonds dropped a quarter percent. The news last quarter has been splashed all over the media – from liquidity crisis to real estate blues to just maybe a recession. But the money management business is never about what was done yesterday – what are y'all doing for me lately?Read full article... Read full article...
Monday, October 01, 2007
Why the Fed's US Interest Rates Policy Will Fail / Interest-Rates / US Interest Rates
By: Gerard_Jackson
It was only it was last August that I told readers not to be surprised if the fed cuts the funds rate. (US financial markets rocked — what is really happening ). Lo and behold, on September 18 the fed cut by 50 bps, reducing the funds rate to 4.75 per cent. The cut immediately ignited share prices, with the Dow Jones industrial average surging by 335 points. The only surprising thing is that anyone was actually surprised. That the first effect of a credit expansion is usually felt on the stock market seems to have eluded the commentariat 1 .Read full article... Read full article...
Tuesday, September 25, 2007
The Federal Reserve's Interest Rate Cut Does Not Help Americans / Interest-Rates / US Interest Rates
By: Axel_Merk
In our assessment, the Federal Reserve's (Fed's) interest rate cut was wrong. Forget about the “moral hazard” of whether the cut would plant the seeds for further bubbles. Lowering interest rates is wrong because it will do few any good, but cause many a lot of harm.Read full article... Read full article...
Tuesday, September 25, 2007
Stock Market Returns After Interest Rate Cuts / Stock-Markets / US Interest Rates
By: Hans_Wagner
On September 18, 2007 the U.S. Federal Reserve lowered the Federal Funds rate and the Discount rate by 0.50% and the stock market leapt up by 2.9% for the day. Many investors were surprised by the Fed's move and wished they had been fully invested in the market. So, will the market continue up as a result of the move by the Fed? It turns out that there are a couple of studies that we might use to give us some guidance. Read full article... Read full article...
Friday, September 21, 2007
Fed Panics! - Era of Global Financial Market Instability / Stock-Markets / US Interest Rates
By: Mike_Whitney
Wall Street loves cheap money. That's why traders were celebrating on Tuesday when Fed chief Ben Bernanke announced that he'd drop interest rates from 5.25% to 4.75%. The stock market immediately zoomed upward adding 336 points before the bell rang. The next day the giddiness continued. By mid-morning the Dow was up another 110 points and headed for the stratosphere. Everyone on Wall Street loves Bernanke. He brings them candy and sweets and lets the American worker pay the bill. Read full article... Read full article...
Wednesday, September 19, 2007
Fed's Half-point Cut Sign of Desperation! Next ... / Interest-Rates / US Interest Rates
By: Money_and_Markets
Martin Weiss writes: Yesterday, in our Monday issue of Money and Markets , we told you about the massive and unanimous pressures on Fed Chairman Ben Bernanke to cut interest rates by a half point — the desperate demands of home builders, the panicky screams from mortgage lenders and the wailing cries from Wall Street.Read full article... Read full article...
Tuesday, September 18, 2007
Fed Cuts US Interest Rates to 4.75%, Dollar plunges, Stocks Soar / Interest-Rates / US Interest Rates
By: Sarah_Jones
The US interest rates were cut by 0.5% to 4.75%. The market was already pricing in expectations for 0.25%.
US Stocks rallied strongly on the news with Dow Jones Index rallying more than 300 points on the news to above 13,700 into the last hour of trading.
Read full article... Read full article...
Monday, September 17, 2007
Net Commericials and the FOMC Interest Rate Meeting / Interest-Rates / US Interest Rates
By: James_West
Everybody is anticipating next week's FOMC decision on federal funds target rate, due this Tuesday, Sept. 18. As of last Friday, according to the 30-day Federal Funds futures, there is a 42% probability of a 25-basis point rate decrease versus a 58% probability of a 50-basis point rate decrease. In other words, a rate-cut is priced into the market already. The only question is: will the Fed cut by 25-basis points or 50-basis points. From the Funds futures, we are leaning towards a 50-basis point cut, but only slightly.Read full article... Read full article...
Monday, September 17, 2007
Bernanke's No-Win Interest Rate Decision / Interest-Rates / US Interest Rates
By: Money_and_Markets
Martin Weiss and Mike Larson write: We feel sorry for Ben Bernanke. He didn't create the sputtering, explosion-prone tanker truck he's trying to maneuver.
Nor did he get any training on how to shift gears.
But he's certainly getting plenty of not-so-subtle prods and catcalls from a diverse group of back-seat drivers.
Read full article... Read full article...
Monday, September 17, 2007
Bernanke and US Interest Rates - Between A Rock And A Hard Place / Interest-Rates / US Interest Rates
By: Captain_Hook
Bernanke is an academic, and he acts like one, relying on the safety of flawed models all too often. And all too often, it could be argued this is keeping him behind the curve in terms of official measures, looking at backward indicators in setting future policy. Greenspan on the other hand operated more like he came from the school of hard knocks (like a streetwise gangster), where some (neocon types) would argued he had a real feel for what need be done, and was customarily ahead of the curve in official policy measures, or backroom deals for that matter, whatever would get the job done. Read full article... Read full article...
Saturday, September 15, 2007
Tightening Money - US Interest Rate Cut Not a Done Deal / Interest-Rates / US Interest Rates
By: Brian_Bloom
Its one thing for the Central Bank to “liquefy” the commercial banks, it's another for the commercial banks to on-lend their cash.
Right now, the commercial banks are so nervous about what is unknown regarding the depth of the sub-prime mortgage debacle that they are not even lending to each other. That's why the Libor rate (London Interbank Offer Rate) has spiked.
Read full article... Read full article...
Tuesday, September 11, 2007
Would You Rather Have a Interest Rate Cut or a Strong Economy? / Interest-Rates / US Interest Rates
By: Hans_Wagner
Many investors seeking to beat the market are expecting a Federal Funds rate cut on September 18, 2007 as the Fed Funds Futures market is predicting at least a 25 basis point decrease. Also, it is likely that the rate cut has already been factored into the stock market. Recently, instead of focusing on the strength of the economy and the level of inflation, investors have become so enthralled with a rate cut that they are acting irrationally. When there is good economic news the market goes down. On the other hand the market goes up when the news is considered bad for the economy.Read full article... Read full article...
Monday, September 10, 2007
Fed Expected to Cut Interest Rates As US Recession Looms / Interest-Rates / US Interest Rates
By: John_Mauldin
This week in Outside the Box, good friend Paul McCulley of PIMCO fame addresses the important topic of fed fund easing. Paul addresses the predicament the current Fed finds itself in on account of not wanting to bail out those who took excessive risk in what he dubs the "shadow banking system," - comprising an alphabet soup of levered non-bank investment conduits, vehicles, and structures. The crux of the matter as Paul highlights is that the 50bp discount rate reduction still remains a penalty to the Fed Funds rate, hence simply not an attractive source of funding for real banks, who have access to the Fed funds rate. Read full article... Read full article...
Monday, September 10, 2007
Fed September Meeting is Bernanke's Test / Interest-Rates / US Interest Rates
By: David_Urban
The September Federal Reserve meeting becomes a major test for Bernanke's reign as chairman. Wall Street responded positively to the discount rate cut but now the addict that we described earlier will be looking for its next fix. It wants it drug and that drug is liquidity. Since the cut, central banks worldwide have injected more than $300 billion dollars of liquidity into their banking systems through repurchase agreements and other arrangements. This tells me that the problems are not over. They have only moved the liquidity crisis to the backburner hoping, like in March, it corrects itself.Read full article... Read full article...
Sunday, September 09, 2007
Housing Market Impact on the US Economy, Should the Fed Cut Interest Rates? / Interest-Rates / US Interest Rates
By: John_Mauldin
In this issue:
The Shocker in the Employment Numbers
Should the Federal Reserve Cut Interest Rates?
Will A Cut Make Any Difference?
How Housing Woes Hurt the Rest of the Economy
Home Again, Home Again
The unemployment numbers came in today, and if you look under the hood of the data, it is worse than the headline loss of 4,000 jobs. Should the Fed cut the interest rates in two weeks? Will it make a difference? Are we headed into recession (as predicted here in my January 2007 forecast issue)? When do we see a bottom in the housing market? Are we there yet? We look at all this and more. It should make for an interesting letter, if I can get my jet-lagged body to cooperate.
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Saturday, September 08, 2007
Will the Fed Continue to Cut US Interest Rates? / Interest-Rates / US Interest Rates
By: Tim_Wood
It seems like the hot debate on the upcoming Fed meeting is whether or not they will cut the discount rate. Given that we had a cut in August, I'm not sure if we will see another cut in September. But, I can tell you that at present the charts do in fact say that we have entered into an environment in which rates will continue to be cut over the longer-term. Here's why.Read full article... Read full article...
Wednesday, September 05, 2007
Fed Wants Mortgage Lenders to Ease Terms and Delay Foreclosures / Interest-Rates / US Interest Rates
By: Adrian_Ash
Hit to the Head with a Two-by-Four
"...The Fed wants mortgage lenders to ease their terms and delay foreclosures. Yet it's just capped new lending at six state-chartered banks, hoping to restore their 'financial soundness'..."
BUSY DOING NOTHING about asset-price bubbles until after they burst, the Federal Reserve has still been chiding no end of miscreant banks, foreign firms, lenders and brokerages about fraud and money-laundering since the Dot Com Bubble burst.
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Friday, August 31, 2007
Gold Prices & Leasing Rates Jump as Bush Moves to Rescue Sub-Prime Housing / Interest-Rates / US Interest Rates
By: Adrian_Ash
Treasury Bond Holders Face Surge in Supply
SPOT GOLD PRICES rose strongly throughout the Asian and early London sessions on Friday, gaining nearly $5 per ounce to reach a new high for the week, as President Bush announced a rescue package for subprime US home buyers.
Effectively offering to nationalize the mortgage market for low- and no-income borrowers, Bush's bail-out plan is likely to force a steep increase in US bond issuance. The "safe haven" of choice for large investment institutions during the turmoil in this month's credit markets, Treasury bonds now risk serious, long-term inflation.
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Friday, August 24, 2007
US Fed - Write Some Checks! Bail 'Em Out! / Interest-Rates / US Interest Rates
By: Adrian_Ash
"There are more tears shed over answered prayers than over unanswered prayers..." - Teresa of Ávila, patron saint of headache sufferers
BE CAREFUL what you wish for. The entire US Treasury market is betting the Fed will cut rates in September. Goldman Sachs expects rates to finish the year at 4.5%, fully 75-points lower from here.
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Thursday, August 23, 2007
Desperate Measures For US Fed As Treasury Yields Scream for a Interest Rate Cut / Interest-Rates / US Interest Rates
By: Jim_Willie_CB
The US financial system is experiencing a combination of a heart attack (fibrillation from absent trade recycled surpluses), a massive hairball (subprime debt securities) working through the bank arteries, and a realization (like Wiley Coyote in cartoons) that no terra firma lies beneath the economic feet as the depths below are vividly apparent. Massive money printing constitutes a heart attack, now a crescendo since the Constitutional violation on gold backed currency. The mortgage bonds simply cannot work through the banking system, with hairballs leading to constipation and unspeakable intra-bank distrust. For ten years the USEconomy has relied upon rising stocks or rising home properties to sustain an entire economy, from a structural foundation of inflating assets. For any central bankers or leading economists working as policy maker counselors, this is a purely heretical strategy. Read full article... Read full article...
Wednesday, August 22, 2007
Fed President Lacker Resists Talk of Fed Funds Rate Cut as US Economy Flirts With Recession / Interest-Rates / US Interest Rates
By: Paul_L_Kasriel
Richmond Fed President Lacker is the first Fed official to speak publicly about the recent discount rate cut, liquidity issues and the prospects for FOMC federal funds rate policy. I would assume that his comments were cleared by Fed Chairman Bernanke before being delivered to us. Lacker could have saved his breath about discount policy and liquidity challenges. What enquiring minds really want to know is whether the FOMC intends to cut its federal funds rate target at or before its September 18 meeting.Read full article... Read full article...
Tuesday, August 21, 2007
Black Monday for Bond Yields / Interest-Rates / US Interest Rates
By: Adrian_Ash
"...Monday this week marked the biggest move in Treasury bond yields since Black Monday in Oct. 1987 destroyed more than one-fifth of the US stock market's value..."
REMEMBER HOW INFLATION was the investment world's biggest single worry back in...oh...back in June?
Anyone snapping up 10-year US Treasury bonds back then is now looking clever. Very. Ten weeks ago, the 10-year yield touched a half-decade high of 5.32%. On Monday night in New York it closed below 4.65%.
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Tuesday, August 21, 2007
Why The Fed's Interest Rate Cut Did Not Come As A Surprise / Interest-Rates / US Interest Rates
By: John_Mauldin
This week's Outside the Box is from good friend and South African partner Dr. Prieur du Plessis of Plexus Asset Management. Prieur suggests that we should not be surprised at last week's rate cut, as it is consistent with past rate cut cycles when viewed from the fact that banks are tightening up on their lending standards to both consumer and commercial borrowers. There are a number of very original graphs here with some very interesting analysis that is truly Outside the Box. John Mauldin, Editor
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Monday, August 20, 2007
Lower US Interest Rates from the Fed are Not Likely / Interest-Rates / US Interest Rates
By: Hans_Wagner
Everyone seeking to beat the market from James Cramer to Wall Street big wigs are crying out for the U.S. Federal Reserve to lower the Fed Funds rate, the rate banks can borrow from each other. They believe that it will save the markets and help the firms recover from the mis-pricing of so many mortgage loans. However the Fed is not likely to lower rates in the near terms since inflation still looms on the horizon. After all fighting inflation is one of the primary missions of the Fed. Read full article... Read full article...
Sunday, August 19, 2007
Prime Interest Rates and the Market Value of Gold / Interest-Rates / US Interest Rates
By: Greg_Silberman
Before the Feds Emergency rate cut on Friday the bias was to higher rates across the board. For example the Australian Reserve Bank increased prime interest rates by 0.25% and even now after the stock market pummeling, continues to warn of more to come. This article explains why interest rates are about to go higher at exactly the WORST possible time.The question foremost on investors minds is whether a turbulent stock market warrants halting interest rate increases or, in the case of the US, decreasing rates to resuscitate the Real Estate and credit markets.
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Friday, August 17, 2007
US Interest Rate Cut - Relief is Spelt B-E-N / Interest-Rates / US Interest Rates
By: Brady_Willett
Yen carry is blowing up, global stock prices are in mini-crash mode, and the financial meltdown is threatening to spark an economic meltdown. Having gingerly danced with rhetoric and liquidity injections in recent days, the Fed started to boogie this morning. Here is the statement in its entirety:Read full article... Read full article...
Thursday, August 16, 2007
Effective Fed Funds Rate Cut to 4.75% - Well, bless Poole's Beautiful Hide! / Interest-Rates / US Interest Rates
By: Adrian_Ash
ONLY A "CALAMITY" would justify an interest-rate cut now, says St. Louis Federal Reserve chief William Poole.
In which case, he either liquidated his personal stock investments before June...or the guy's got some real hide.
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Wednesday, August 15, 2007
Ben, If You're Going to Cut US Interest Rates... / Interest-Rates / US Interest Rates
By: Tim_Iacono
Federal Reserve Chairman Ben Bernanke pays pretty close attention to the inflation statistics, so he's probably already figured out that if he's going to cut short-term rates this year, he ought to do it in the next two months.
Just in case he hasn't figured it out already, maybe this explanation will assist in what will likely be a difficult decision-making process.
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Monday, July 30, 2007
Yield on US 10-Year Note Going Lower / Interest-Rates / US Interest Rates
By: Mike_Paulenoff
The yield of the 10-Year Treasury note climbed from 4.73% in March to 5.32% in June, at which point it had surged to a six-year resistance line, implying the potential for much higher rates. It then reversed in a big way and plunged to 4.74% into today's low, mostly in response to flight-to-safety concerns.
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Thursday, June 21, 2007
Bond Convexity From Mortgages Means Higher Interest Rates / Interest-Rates / US Interest Rates
By: Jim_Willie_CB
The cancer that is mortgage bonds does not linger in isolation. Everything in the bond world is connected to almost everything in the bond world, at least within the US sphere of speculative madness. The financial credit market is a confusing jumble of speculation, risk reducing hedges, and leveraged insanity found mainly in the hedge fund arena. Mortgages are causing problems from their bond hedge schemes, both on the loan portfolio side and the bond security side. Always one should consider both, and never are they inseparable. The only separable aspect is who the loser is nowadays.Read full article... Read full article...
Monday, June 18, 2007
Are Most Economists Naive? / Economics / US Interest Rates
By: Tim_Iacono
The conclusion that most economists are naive, sometimes dangerously so, is something that has been hinted around at here for years, but now that the Wall Street Journal seems to concur, maybe it's time to stop asking the question and just say it.
Most economists are naive.
Or, maybe they're just too optimistic. Actually, in many cases, the two adjectives describe the same phenomenon - the willingness to suspend belief that something bad is likely to happen (or is already happening) due to a lack of real-world experience.
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Thursday, June 14, 2007
US Interest Rates and Inflation - Until is Now: How Fear becomes Risk / Interest-Rates / US Interest Rates
By: Paul_Petillo
How high can the markets go I asked last week, running the risk that as soon as a signed that article, it was almost guaranteeing that the markets would fall. How precipitously was unknown. The risk that everyone knew was built into the markets months ago became fear seemingly overnight.
The bond markets, acting as the canary in the coal mine have begun to choke on its own ambivalence. Regarded as the barometer of economic strength and weakness, fixed income has remained somewhat benign as the Dow set records almost daily.
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Saturday, June 09, 2007
US Interest Rate Spike and What to Do About It / Interest-Rates / US Interest Rates
By: Roger_Conrad
The 10-year Treasury note yield is again more than 5 percent. And while the benchmark is off its high for the day—it reached 5.24 percent at one point—the fallout has at last reached the rest of the income investment universe.
The Dow Jones Utility Average is now down about 9.1 percent from the all-time high of about 537 that it set in late May. The typical US real estate investment trust (REIT) is down 13.5 percent, and many bond funds are showing similar carnage, particularly those with the highest duration—i.e., leverage to interest rates.
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Friday, June 08, 2007
US Interest Rates Conundrum Unwind or Glut Rewind? / Interest-Rates / US Interest Rates
By: Brady_Willett
The U.S. economy slowed to a crawl in 1Q07 and the U.S. housing market is, by many accounts, years away from a meaningful rebound. With this in mind, why are long-term U.S. interest rates spiking higher and why have mortgage rates risen in each of the last four weeks to rest at 10-month highs?Read full article... Read full article...
Tuesday, June 05, 2007
US T-Bond Yield Hits Resistance, A potential problem for the Fed? / Interest-Rates / US Interest Rates
By: Marty_Chenard
In case nobody is watching, the 30 Year Bond Yield is about to test its 8 year resistance for the second time. This is something to keep a close eye on, because 30 year yields and mortgage rates go hand in hand. See the long term chart below.
The concern is that home building is in a slump and many are speculating that we might be at a bottom ... ready to turn around. If the 30 year yield jumps up, then that would effect how large a home someone could afford, and it would mean that home sellers would get less for their homes in the longer term ... and fewer homes would sell.
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Tuesday, May 22, 2007
The Decoy of the Falling US Dollar Revisited / Currencies / US Interest Rates
By: Professor_Emeritus
I have received the following letter from a reader of my column:
Mr. Fekete:
I have been reading your work for a number of years and always look forward to your thoughts, particularly when they run counter to conventional wisdom. In your latest piece you suggest that the falling dollar (or rising yen) actually strengthens the yen carry trade. My chartwork argues otherwise, and your logic escapes me. I would welcome clarification of one particular paragraph of yours, especially on the last sentence that, I believe, is central to your analysis. You wrote:
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Friday, May 11, 2007
FOMC - The Prospects for the US Interest Rates and the Dollar / Interest-Rates / US Interest Rates
By: Julian_DW_Phillips
The Fed's Open Market Committee yesterday repeated its assessment from March 21st that persistent inflation remains the predominant policy concern. Interest rates were held at 5.25%. The Fed has just said, "inflation is a predominant risk" but did not raise interest rates, and indicated that it is not likely to do so, as it pointed to lower growth and the ongoing housing price problems.
The impression given is that it will react to higher inflation but will not pre-empt it. The dangers of inflation with falling growth [stagflation] are now apparent. This is gold positive and $ negative as the Trade deficit will continue at excessive levels in a climate that could discourage the investment of surplus $ [Asian nations in particular] back into the States.
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Monday, April 30, 2007
The Bernanke Bluff on US Interest Rates / Interest-Rates / US Interest Rates
By: Paul_Petillo
Ben Bernanke, the Federal Reserve chairman seems to be holding his ground when it comes to short-term interest rates – at least in the short-term. His recent testimony before the Congressional Joint Economic Committee offered no additional insight into how the chairman thinks. His testimony before legislators offered no hint as to what he would do with rates in light of some troubling economic news.Read full article... Read full article...
Thursday, April 05, 2007
A Fixed Interest Income Bond Market Shock Looms / Interest-Rates / US Interest Rates
By: Michael_Pento
First it was the NASDAQ stocks in 2000, then real estate prices, and now the third leg of this asset price correction is at the threshold. Recent salvos from China and our own commerce secretary may be the catalysts for this correction.
We have been in a multi-decade bull market in bond prices. From September of 1981 to June of 2003 the yield on the two year Treasury note fell from 16.46% to 1.23%. Likewise from October '81 through June '05 the 30 year bond has declined from 14.68% to 4.29%. Since then, the two and thirty year yield has risen to 4.5% and 4.85% respectively. According to Bloomberg, treasuries are now 1.56 percentage points lower than the 6.21% average of the past 20 years. That means even if you discard the high rates of a quarter century earlier into your calculation, treasuries yields are still about 32% below average!
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Monday, April 02, 2007
Nolte Notes - What if ? Trade War with China ?, War with Iran ? Still expect lower US interest rates / Interest-Rates / US Interest Rates
By: Paul_J_Nolte
Former Speaker of the House, Tip O'Neil said that all politics is local. However, today the focus is trained upon everywhere but within our boarders. The hostage “situation” in Iran, the rumblings of protection legislation directed at China as well as the ongoing debate about the war in Iraq. What we need is a good debate about a new stop light in the middle of town! The impact upon the financial markets has been to take their eyes off the economy and play many “what-if” games – what if the hostage crisis lingers in Iran, what will be the impact upon our oil supply.Read full article... Read full article...
Thursday, March 29, 2007
Cross Currents For US TBonds and Interest Rates / Interest-Rates / US Interest Rates
By: Jim_Willie_CB
Volatility for US Treasury Bonds has risen markedly in the last several months. A rise in such bond yields creates a favorable background for gold prices. A fall in such bond yields leads to strong competition for gold as safe haven, in a manner which actually supports the USDollar.
Gold takes great advantage of rising bond yields. Cross currents point to both higher yields and lower yields, thus more volatility. Uncertainty abounds.
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Thursday, March 22, 2007
Fed Signalling US Interest Rate Cuts that may Not happen / Interest-Rates / US Interest Rates
By: Peter_Schiff
Don't Uncork the Champaign Just Yet - By omitting a few key words from their most recent statement, the Fed led Wall Street to the premature conclusion that the next move in interest rates will be down. With the economy clearly headed for recession, there is no doubt that the Fed would like nothing more than to do just that. However, given that it wants to pretend otherwise, and considering the damage it would do to the already shaky U.S. dollar, an actually rate cut seems highly suspect.Read full article... Read full article...
Friday, March 09, 2007
Fed Signaling Future US Interest Rate Cuts - Gold to benefit / Interest-Rates / US Interest Rates
By: Jim_Willie_CB
In a series of public messages, the US Federal Reserve has issued some statements recently which telegraph an increasingly likely official interest rate cut. These guys will cut rates, but only when kicking and screaming, since they have displayed extreme reluctance at every opportunity.
They know the damage to the US Dollar certain to follow. They speak through their usual mouthpieces, but this time with the added impact of Sir Alan Greenspan, serial bubble engineer extraordinaire. One must connect the dots, a task now routine among my methods, putting to practice the motto “think like a thief” in order to properly gauge the enemy. Why? Because the integrity of the US financial system, economic management, and leadership is as low as a snake's belly slithering in the grass.
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Wednesday, September 20, 2006
Federal Reserve holds interest rates / Interest-Rates / US Interest Rates
By: Sarah_Jones
The U.S. Federal Reserve on Wednesday held its benchmark interest rate steady for a second straight meeting, saying that while inflation risks remain, they should abate as economic growth slows. The Federal Open Market Committee's decision to hold the overnight federal funds rate target at 5.25 percent -- the level hit in June after 17 straight increases -- was widely expected. But it was not unanimous. Read full article... Read full article...