Analysis Topic: Interest Rates and the Bond Market
The analysis published under this topic are as follows.
Wednesday, February 06, 2013
The United States of Debt Addiction / Interest-Rates / US Debt
By: GoldSilver
mybudget360.com writes: 16 point 7 trillion dollars. That is our current national debt. 12 point 8 trillion dollars. That is the amount households carry in mortgage and consumer debt. We are now addicted to debt to lubricate the wheels of our financial system. There is nothing wrong with debt per se, but it is safe to say that too much debt relative to how much revenue is being produced is a sign of economic problems. At the core of our current financial mess is how we use debt as a parachute for any problem. We’ve been masking the shrinking of the middle class by allowing households to take on too much debt for a couple of decades. The results were not positive. Too this degree, we have now created a massive moral hazard economy where savings are punished into oblivion. There is very little incentive to put your money in a bank account yielding zero percent interest when real inflation is eating away at your money like a hungry wolf. So what do people do? Well many simply cannot save and therefore choose to go into debt to finance cars, housing, and education with very little down. Where does this debt addiction lead us?
Saturday, February 02, 2013
US Private-Sector Debt Deleveraging: Where Are We? / Interest-Rates / US Debt
By: John_Mauldin
I was just in Greece with Christian Menegatti, and we had a good conversation about the piece he has sent along as today’s OTB. The case Christian and his coauthor David Nowakowski lay out regarding an incipient turnaround in US deleveraging (and therefore in economic growth prospects) is in some ways truly outside the box – I certainly wouldn’t call it the consensus view at this point. But they make the argument about as strongly as it can be made; so, if nothing else, they give us a solid piece of work off of which we can bounce counterarguments.
For new readers: I often feature pieces in Outside the Box that make us think and that don’t reflect my personal bias or opinion. The point is that, if you only read what you agree with, you will miss the important changes and associated opportunities when they happen. And note that this piece is from Christian, who is head of research at Roubini Global Economics – not exactly a hotbed of bullishness. (By the way, Nouriel will be at my conference this year, more on which in a few weeks.)
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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.
Wednesday, January 30, 2013
Major Bond Markets Top, Bond Yields Poised to Start Rising / Interest-Rates / US Bonds
By: EWI
Our long term outlook for interest rates on U.S. Treasury securities has been a contrary opinion for many years. Most commentators have been expecting either economic expansion or Fed-induced inflation to push bond yields higher. Conqier tje Crash predicted that long term rates on AAA-rated bonds would fall much further as the monetary environment shifted form lessening inflation to outright deflation.
Wednesday, January 30, 2013
Will the Fed End QE Summer 2013? / Interest-Rates / Quantitative Easing
By: Money_Morning
Jeff Uscher writes: Amid all of the hoopla over the Standard & Poor's 500 Index touching 1,500 on Friday, it seems few people noticed that the yield on 10-year U.S. Treasury bonds has risen to within a couple of basis points of 2%. That is nearly 30 basis points higher than it was one month ago and 10 basis points higher than one year ago.
It seems as if the bond market is beginning to price in higher inflation at the long end of the yield curve, and that is something that has got to be worrying the Fed.
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Tuesday, January 29, 2013
Why Are Yields on U.S. Treasuries Rising All of a Sudden? / Interest-Rates / US Bonds
By: Profit_Confidential
Michael Lombardi writes: Could U.S. debt be reaching a breaking point?
In the chart below of the U.S. 10-year Treasury, it looks like yields on U.S. bonds have bottomed out and are rising again.
As the chart below shows, in June of 2012, the U.S. 10-year Treasury note traded close to $135.00. Now 10-year Treasury prices have broken below $131.00—a decline of almost three percent.
Thursday, January 24, 2013
New Cracks Appear in the Eurozone From Cyprus / Interest-Rates / Eurozone Debt Crisis
By: InvestmentContrarian
Sasha Cekerevac writes: For the past few months, the eurozone financial crisis has significantly subsided, at least on the surface. However, because of the fragility within the eurozone, it won’t take much for a new financial crisis to be sparked.
There are new questions arising about the future of the eurozone, and these begin not with the giant nations of that union, but with tiny Cyprus.
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Wednesday, January 23, 2013
Pulling the Pin on Japanese Government Bonds Grenade / Interest-Rates / Japanese Interest Rates
By: Michael_Pento
Japan has already suffered through a quarter century's worth of an economic malaise because they have refused to allow the free market to work its reconciliation magic. Their reliance on government borrowing and spending to rescue the economy has proven to be a miserable failure. Because of this fact, Japanese politicians have succeeded to increase the debt to GDP ratio to 237%, which should have already caused a collapse in Japanese Government Bonds (JGBs) and the Yen.
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Friday, January 18, 2013
U.S. Treasury Bond Market Forecast 2013, The "Bloated" Bubble / Interest-Rates / US Bonds
By: Gordon_T_Long
The Fiscal Cliff theater was great 'off Broadway' drama, but the real show for traders took center stage Sunday December 16th in Japan. The curtain went up for the newly elected Prime Minister of Japan as the star actor in the unfolding global fiat currency drama.
Japan’s incoming leader Shinzo Abe's opening line was to vow to ram through full-blown reflation policies to pull his country out of slump and drive down the yen, warning Japan's central bank not to defy the will of the people. The profound shift in economic strategy by the world’s top creditor nation with a quadrillion Yen debt, could prove powerful for the global economy as a new variant of the "carry trade" seen earlier this decade, but potentially on a much larger scale.
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Thursday, January 17, 2013
Bond Market Math / Interest-Rates / US Bonds
By: Fred_Sheehan
This is the year for stocks. So one would gather from the media. The Wall Street Journal offered a lukewarm endorsement on Monday, January 15, 2012, with the headline: "Investors Flock to Stocks - So Far."
The diffident prediction opens: "As 2013 gets underway, one of the biggest questions in financial markets is again bubbling: Will this be the year that investors dump bonds and return to stocks?" The question may have surprised some readers. The S&P 500 has risen 120%, or, at a 21 percent-a-year pace since March 2009. How did stock prices more than double since investors have dumped stocks and bought bonds? A second question: what might we expect of stock market returns if investors stop taking money out of the market and put it in - 40% a year?
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Wednesday, January 16, 2013
The Fiscal Cliff Deal Just Made U.S. Bonds Even More Risky in 2013 / Interest-Rates / US Bonds
By: Money_Morning
Martin Hutchinson writes: It was shaping up to be another be another strong year for U.S. Treasury Bonds right up until the moment it looked like a fiscal cliff deal would be reached.
Since then, 10-year notes yields have been on the rise jumping by as much as 23 basis points since New Year’s Eve. Now you have to wonder whether or not the bond bubble has suddenly sprung a leak.
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Wednesday, January 16, 2013
U.S. Debt Ceiling: Why Platinum and Gold Are Not the Answer / Interest-Rates / US Debt
By: Eric_McWhinnie
In the last press conference of his first term, President Barack Obama warned Congress that it must raise the debt ceiling to avoid disastrous side effects. He goes on to claim that failure to raise the ceiling could cause delays in Social Security benefits and checks for veterans. As usual, the two political parties are not expected to resolve their bickering before the last possible moment, which is creating a debate over bandaid solutions. However, ridiculous platinum coins and the nation’s gold reserves appear to be off the table.
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Tuesday, January 15, 2013
Japan Godzilla, France the Next Greece Whilst US Plays Debt Crisis Games / Interest-Rates / Global Debt Crisis 2013
By: John_Mauldin
“There are decades when nothing happens and there are weeks when decades happen.” – Vladimir Ilyich Lenin
"People only accept change when they are faced with necessity, and only recognize necessity when a crisis is upon them." – Jean Monnet
"If something cannot go on forever, it will stop." –Herbert Stein
As we begin a new year, we again indulge ourselves in the annual (if somewhat futile) rite of forecasting the year ahead. This year I want to look out a little further than just one year in order to think about the changes that are soon going to be forced on the developed world. We are all going to have to make a very agile adaptation to a new economic environment (and it is one that I will welcome). The transition will offer both crisis and loss for those mired in the current system, which must evolve or perish, and opportunity for those who can see the necessity for change and take advantage of the evolution.
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Friday, January 11, 2013
Gargantuan and Growing: The U.S. Debt Figure You've Probably Never Heard Of / Interest-Rates / US Debt
By: EWI
The widely reported $16.1 trillion federal debt is a drop in the bucket
Financial transparency is a must for U.S. publicly traded companies. But if the federal government had to abide by those same regulations, more Americans would know that the often-reported $16.1 trillion federal debt doesn't come close to the truth about the nation's liabilities.
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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.
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Wednesday, January 09, 2013
Can Banks Really Just Create Money? / Interest-Rates / Global Financial System
By: Paul_Tustain
It's the banks, not their customers, who actually wind up owing each other money...
OBSERVERS of Fractional Reserve Banking have noticed that your deposit into a bank can cause the bank to offer new loans well above and beyond the size of your deposit.
Those watchers often object on the grounds that this is new money which shouldn't have been created.
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Wednesday, January 09, 2013
Kamikaze Monetary Policy as BOJ Prepares to Launch More Zeros / Interest-Rates / Japanese Interest Rates
By: Michael_Pento
It is an unfortunate truth that Keynesian counterfeiters with their Kamikaze monetary and fiscal policies have taken over the developed world. Politicians and central banks in the United States and Europe have decided to cement firmly in place their addictions to debt, inflation and artificially produced low interest rates. But Japan has now leapfrogged into the lead of those nations that believe prosperity can be brought about by loading up on government debt and increasing the number of zeros being printed by their central bank.
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Wednesday, January 09, 2013
Financial Ticking Time Bomb 2013, Japan the Greece of Asia / Interest-Rates / Global Debt Crisis 2013
By: InvestmentContrarian
Sasha Cekerevac writes: While many eyes are focusing on Europe and America when it comes to the next financial crisis, one sector that people aren’t focusing on is the bond market in Japan. Many investors might not realize it, but Japan might be the next financial ticking time bomb.
How does a financial crisis in the bond market affect the average person? On a basic level, the bond market prices move based on supply and demand, which affect interest rates. With greater demand in the bond market, this pushes up prices and lowers interest rates. A lower interest rate obviously helps prevent a financial crisis from occurring, as it takes less money to pay off the debt—much like a credit card interest rate being reduced.
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Wednesday, January 09, 2013
Federal Reserve May Pause Quantitative Easing / Interest-Rates / Quantitative Easing
By: BATR
An obscure report that the Federal Reserve may suspend the monetization of purchasing Treasury Bonds has the smell of disinformation. The perennial efforts to lift economic spirits with the beginning of a New Year often are packed with wishful thinking. Quantitative Easing is being treated as a useful tool for turning on and off the spigot of liquidity infusion. In reality, the results of the massive origination of debt created monies fundamental purpose is to save the commercial banks from insolvency.
Wednesday, January 09, 2013
Global Debt Crisis Explained / Interest-Rates / Global Debt Crisis 2012
By: Submissions
Liam Fisher writes: "The global debt crisis is continuing, largely unabated. While significant
measures are being put into place by governments around the world, there
is little tangible effect being had on deficits that are continuing to
pile up. Indeed, there is only limited agreement amongst economists on the
severity of the debt crisis and its implications for the people of the
world or the best ways to go about rectifying the problem. Some advocate
drastic austerity measures and strict fiscal conservatism, while others
take a more Keynesian approach that sees deficit spending as a way out of
recession.