Analysis Topic: Interest Rates and the Bond Market
The analysis published under this topic are as follows.
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’!
Saturday, January 05, 2013
Over Due U.S. Treasury Bond Sell-off To Become More Serious! / Interest-Rates / US Bonds
By: Sy_Harding
With my indicators on a sell signal for bonds since August 16, I have been warning about bonds being overbought and in danger of rolling over into a serious correction for several months. And indeed, the 20-year U.S. Treasury bond has already lost 11% of its value just since its late July peak.
Friday, January 04, 2013
U.S. Treasury Bonds, The Worst Investment for 2013 and the Next Decade / Interest-Rates / US Bonds
By: InvestmentContrarian
Sasha Cekerevac writes: One of the biggest investor mistakes by the average retail investor is to be late to cash in on an investment theme. These investor mistakes are not limited to just the stock market, but all types of investments. If we look at investor mistakes by the retail public for buying real estate, most people were bullish at the top of the market and were selling, or were forced to sell, their real estate at the bottom. Buying high and selling low is one of the most common investor mistakes by the majority of the public.
Friday, January 04, 2013
Market Valuation, Inflation and Treasury Yields: Clues from the Past / Interest-Rates / Inflation
By: PhilStockWorld
My monthly market valuation updates have long had the same conclusion: US stock indexes are significantly overvalued, which suggests cautious expectations on investment returns. In a “normal” market environment — one with normal business cycles, Federal Reserve policy, interest rates and inflation — current valuation levels would be a serious concern.
Saturday, December 29, 2012
What Happens When the Bond Markets Turn Against the US? / Interest-Rates / US Bonds
By: Graham_Summers
The US Fed is committed to keeping interest rates low for the simple fact that if interest rates were to rise then the payments on the debt would send the US into an EU-syle debt crisis along with the commensurate intense austerity measures being implemented.
Unfortunately for the Fed, the bond markets may indeed force this in spite of the Fed’s efforts.
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Monday, December 24, 2012
Ben Bernanke's Ghost of QE Past, Present, and Future / Interest-Rates / Quantitative Easing
By: DeviantInvestor
It was the best of times; it might be the worst of times.
Dollar bills glide effortlessly to the ground, dropped from the giant QE machine in the sky. All is quiet, all is calm. There is peace on earth, well, at least in Washington D.C. and on Wall Street. And then with a horrible crash, another Mortgage Backed Security (MBS) explodes and collateral damage spreads far and wide.
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Friday, December 21, 2012
UK Interest Rate Swaps Financial Armageddon, Bankster Mis-Selling Bigger than PPI? / Interest-Rates / Banksters
By: Nadeem_Walayat
Following the multi-billion PPI Mis-selling scandal, just when you thought it could not get any worse, Britain's crime syndicate that is our biggest banks have been revealed to have taken another systematic bite out of thousands of unsuspecting small businesses on a scale that could end up resulting to be as big as that of the mis-selling of PPI insurance.
Thursday, December 20, 2012
U.S. Treasury Bond Yield Operation Twise and QE3 / Interest-Rates / US Bonds
By: PhilStockWorld
Courtesy of Doug Short. I’ve updated the charts below through yesterday’s close. The S&P 500 is now only 1.29% off its interim high of 1,465.77 set on September 14th, the day after QE3 was announced. The interim low since then was 1,353.52, a decline of 7.66% a month later on November 15. The 10-year note closed yesterday at 1.84, which is only 4 basis points off its interim high of 1.88, also set the day after QE3 was announced. The historic closing low was 1.43 on July 25th. With what looks like a Santa Rally in stocks underway, yields have risen to levels last seen about two months ago. What will be particularly interesting is how yields (and equities) fare in the last four market days of 2012 if the various Fiscal Cliff issues are not resolved by the end of this week.
Tuesday, December 18, 2012
Basel’s Capital Curse, Beating the Drums of Bank Recapitalization / Interest-Rates / Credit Crisis Bailouts
By: Steve_H_Hanke
In the aftermath of the financial crisis, the oracles of money and banking have been beating the drums for “recapitalization” — telling us that, to avoid future crises, banks must be made stronger. To accomplish this, governments across the developed world are compelling banks to raise fresh capital and strengthen their balance sheets. And, if banks can’t raise more capital, they are told to shrink the amount of risk assets (loans) on their books. In any case, we are told that one way or another, banks’ capital-asset ratios must be increased — the higher, the better.
Tuesday, December 18, 2012
Hidden U.S. Treasury Bond Market Risks? / Interest-Rates / US Bonds
By: Axel_Merk
While Treasuries are said to have no default risk as the Federal Reserve (Fed) can always print money to pay off the debt, hidden risks might be lurking. As oxymoronic as it may sound, the biggest risk to the economy and the U.S. dollar might be, well, economic growth! Let us explain.
Monday, December 17, 2012
Bernanke’s Balance Sheet Ensures Disaster / Interest-Rates / Quantitative Easing
By: Michael_Pento
As expected, Ben Bernanke officially launched QE IV with his announcement last week of $85 billion dollars worth of unsterilized purchases of MBS and Treasuries. In unprecedented fashion, the Fed also tied the continuation of its zero interest rate policy and trillion dollars per annum balance sheet expansion to an unemployment rate that stays above 6.5%. Now, pegging free money and endless counterfeiting to a specific unemployment figure would be a brilliant idea if printing money actually had the ability to increase employment. But it does not.
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Sunday, December 16, 2012
QE4, The Fed's Fantastic Failure / Interest-Rates / Quantitative Easing
By: Clif_Droke
Question: When is an unprecedented economic event tantamount to a non-event? Answer: When another Fed intervention is announced.
The U.S. Federal Reserve bank announced this week the commencement of a new round of Treasury purchases to the tune of $45 billion a month to replace the expiring Operation Twist. This is in addition to the recently launched QE3 program that committed the Fed to buying $40 billion a month in mortgage-backed securities. The grand total of these central bank interventions amounts to some $1 trillion a year in government debt markets.
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Sunday, December 16, 2012
Sorting Out a Decade of Debt, Investment Conclusions / Interest-Rates / US Debt
By: John_Mauldin
In today's Outside the Box I bring you two pieces that, at first glance, may not seem to have much to do with each other. First, Bill Gross, PIMCO managing director, runs down the fierce structural headwinds that our hard-pedaling global economy faces over the next decade. I am going to deal at length with not only his GDP projections for the rest of the decade but those of Grantham and others in the last two Thoughts from the Frontline of this year. This is a challenging environment for traditional portfolio construction, but it’s par for the course as we slog through the secular bear market I was first writing about in 1999.
Saturday, December 15, 2012
U.S. Caught in a Alarming Trap of Continuum of Deficit Spending / Interest-Rates / US Debt
By: David_Galland
Late at night on November 6, along with John Mauldin, Doug Casey and a group of partygoers in a café here in Cafayate, we watched on a small television as Obama's contract was renewed by a majority of the mob. As was the case with many readers, I suspect, my initial reaction was disbelief.
While I try not to pay a lot of attention to the careers of individual politicians, but rather prefer to monitor the carnage they inflict on the world in the collective, I sincerely believed that Obama's steady transgressions against commonsense economics, individual liberty and the rule of law would see him unceremoniously turned out.
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Friday, December 14, 2012
Fed QE Policy Means U.S. Treasury Issuing Debt For Free, Money for Nothing / Interest-Rates / Quantitative Easing
By: Bloomberg
PIMCO's Bill Gross told Bloomberg Television's Betty Liu on "In the Loop" today that the Federal Reserve's latest round of monetary stimulus will enable Treasury to issue debt for no cost.
Gross said, "what really happens, and this is critically important, is that the Treasury issues bonds and the Fed buys them and then it remits interest to the Treasury...It basically means that the Treasury is issuing debt for free...Inflation is one of the complications."
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Wednesday, December 12, 2012
Why Printing Money Is So Easy for the Fed / Interest-Rates / Central Banks
By: InvestmentContrarian
George Leong writes: The Federal Reserve is busy looking at what to do next to try to keep the economic renewal on track, as the central bank meets for the last time this year. The Fed also understands its impact will be hindered by the ongoing battle in Congress regarding the pending fiscal cliff.
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Wednesday, December 12, 2012
U.S. Fiscal Cliff Dynamics Explanation: Household Budget and Family Debt Comparison / Interest-Rates / US Debt
By: DK_Matai
Politicians around the world intuitively understand the importance of translating complicated policy and complex laws into language that non-experts, ie, average voters can understand easily. When it comes to US budget numbers and negotiations, financial complexity can be extremely challenging. Many Americans and non-Americans don’t know how many zeros there are in one “trillion,” much less what a trillion dollar deficit means in terms of the world's largest economy and its overall impact on the global financial markets. In a recent poll question, for example, American respondents were given five multiple-choice answers for the question “how many thousands are [there] in a trillion” and just 21 percent answered correctly, barely more than what one would expect if everyone guessed randomly!
Tuesday, December 11, 2012
U.S. National Deficit / Interest-Rates / US Debt
By: Fred_Sheehan
"Under current law, the Treasury is technically allowed to mint as many coins made of platinum as it wants and can assign them whatever value it pleases. Under this scenario, the U.S. Mint would make a pair of trillion-dollar platinum coins. The president orders the coins to be deposited at the Federal Reserve. The Fed moves this money into Treasury's accounts. And just like that, Treasury suddenly has an extra $ trillion to pay off its obligations for the next two years - without needing to issue new debt. The [current $16.4 trillion national debt] ceiling is no longer an issue." - Brad Plumer, Washington Post, December 6, 2012, "Could the 'Platinum Coin Option' Solve the U.S. Debt Crisis?"
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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.
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Sunday, December 09, 2012
U.S. Treasury Bond Market Yields Update / Interest-Rates / US Bonds
By: PhilStockWorld
Courtesy of Doug Short. I’ve updated the charts below through today’s close. The S&P 500 is now 3.25% off its interim high of 1,465.77 set on September 14th, the day after QE3 was announced. The interim low since then was 1,353.52, a decline of 7.66% a month later on November 15. The 10-year note closed today at 1.64, which is 24 basis points off its interim high of 1.88, also set the day after QE3 was announced. The historic closing low was 1.43 on July 25th. The latest Freddie Mac Weekly Primary Mortgage Market Survey puts the 30-year fixed at 3.34 percent, three basis point above its historic low set two weeks ago.