Analysis Topic: Interest Rates and the Bond Market
The analysis published under this topic are as follows.
Thursday, August 11, 2011
Why a U.S. Debt Default Will Be a Good Thing / Interest-Rates / US Debt
By: Money_Morning
Martin Hutchinson writes:
Now that Standard & Poor's has finally slashed its U.S. credit rating, it's more apparent than ever that a U.S. default is imminent.
So if you're at all panicked by S&P's decision to downgrade the country's top-tier credit rating - and the resultant freefall in U.S. stock prices - brace yourself: It's going to get a lot worse before it gets better.
But make no mistake, it will get better.
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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Thursday, August 11, 2011
China Downgrades U.S. Treasury Bonds to A+, Is Anybody Listening? / Interest-Rates / US Bonds
By: Gary_Dorsch
Of the big-3 credit rating agencies, only the S&P rating agency had the courage and fortitude to speak the truth, about the severe deterioration of America’s financial status. S&P shocked the political establishment in Washington, by following through with its threat to downgrade US Treasury debt to AA+ on the evening of August 5th. S&P added that the US Treasury debt could be downgraded further, if the crooked and inept politicians in Washington haven’t taken any meaningful moves to cut the size of its mounting debt.
Wednesday, August 10, 2011
The Ice is Cracking, Get off the Sovereign Debt Late Before the Great Default Hits / Interest-Rates / Global Debt Crisis
By: Gary_North
Ice skaters who go out onto lakes or large ponds are told from their early years not to skate on thin ice. The sound of cracking ice is a signal to skate toward the shore.
On Friday, August 5, 2011, the world heard the ice crack. Late in the day, Standard & Poor's downgraded American government debt by one point: from AAA to AA+.
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Wednesday, August 10, 2011
Marc Faber: Long-term U.S. Treasury Bond Market is a Bubble, Buy Gold / Interest-Rates / US Bonds
By: Bloomberg
Marc Faber, publisher of the Gloom, Boom & Doom report, appeared on Bloomberg Television's "Street Smart" with Bloomberg TV anchors Carol Massar and Matt Miller today.
Speaking on the phone from Thailand, Faber said that the markets are very oversold, the Fed is "underestimating the severity of the economic downturn" and that gold is the best investment right now.
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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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Wednesday, August 10, 2011
Trichet's Secret "Dragon Transfer" to Italy and France Becomes the "New Italy" / Interest-Rates / Global Debt Crisis
By: Mike_Shedlock
Last week, ECB president Jean-Claude Trichet sent a secret letter to Silvio Berlusconi, Italy's Prime Minister demanding various labor reform actions from the Italian government. Leaks of that letter have appeared in Italian media, but there has been no comment on the letter in the US although there has been some discussion of announced Italian labor reforms.
Wednesday, August 10, 2011
Bankrupt Los Angeles, Harbinger for America / Interest-Rates / US Debt
By: Douglas_French
In a piece for the Wall Street Journal, Joel Kotkin tells of the demise of Los Angeles. No, you won't see Snake Plissken or Rick Deckard racing through the City of Angels just yet. But the city's political machine is doing all it can "to leave behind a dense, government-dominated, bankrupt, dysfunctional, Athens by the Pacific," explains Kotkin.
Tuesday, August 09, 2011
Trend-Ending Pattern in U.S. Treasury TBTs / Interest-Rates / US Bonds
By: Mike_Paulenoff
Purely from a near-term pattern perspective, the most recent down-leg in the ProShares UltraShort 20+ Year Treasury (TBT) from 28.43 to this morning's low at 26.69 appears to be carving out a falling wedge formation, which usually is a "trend-ending" pattern -- in this case, a down-trend ending pattern.
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Tuesday, August 09, 2011
S&P’s Downgrade of U.S. Sovereign Debt – Some People Actually Pay Them for these Opinions? / Interest-Rates / Credit Crisis 2011
By: Paul_L_Kasriel
S&P stated the obvious after the U.S. markets closed on August 5 – the projected growth in U.S. public debt is on a long-term unsustainable path. Rather than paying S&P for this opinion, all you need to do is look at some past CBO projections and you would have arrived at the same opinion years ago. For example, in December 2007, CBO published the chart immediately below showing its projections of U.S. public debt held by the public as a percent of nominal GDP under two scenarios. The first scenario, the “extended-baseline” scenario, assumed that the federal spending and revenue budgetary legislation that was on the books as fiscal 2007 would prevail over the next 75 years.
Monday, August 08, 2011
S&P U.S.Debt Downgrade, Don't Shoot the Messenger / Interest-Rates / Credit Crisis 2011
By: Axel_Merk
Don't shoot the messenger. The downgrade of U.S. government debt by S&P is the result of policies pursued over many years that rely on the U.S. being the world's reserve currency. Policy makers have forgotten that the status must be earned; it's not a birthright.
Monday, August 08, 2011
El-Erian: U.S. Very, Very Long Way from Debt Default Risk / Interest-Rates / Credit Crisis 2011
By: Bloomberg
Mohamed El-Erian, co-CEO of PIMCO, spoke to Bloomberg Television’s Betty Liu and Erik Schatzker this morning regarding the S&P downgrade and its impact on the markets and economy.
El-Erian said that the S&P downgrade is perhaps not yet the “Sputnik moment” and that the costs and risks of any new QE have gone up. Excerpts from the interview ca be found below, courtesy of Bloomberg Television
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Monday, August 08, 2011
U.S. Debt Downgrade Drama / Interest-Rates / US Debt
By: George_Maniere
Well we’ve done it. It’s official. The partisan bickering in Congress has managed to snatch defeat from the mouth of victory. I have written that I find it incredibly ironical that if S&P had done their job properly in the years of 2000 – 2007 we would not find ourselves in this economic morass. When the banks were selling these toilet paper mortgages, toxic assets and bundling them together as CDO’s who was stamping them “AAA”? S&P. S&P is a culpable for the collapse of the economic system as any of the greedy bankers. In my opinion they are more to blame. It was their job to make sure that this kind of greed and arrogance would not be tolerated. Instead they were willing co-conspirators in this fraud that was perpetrated on the ill educated middle class. Read full article... Read full article...
Monday, August 08, 2011
When Risk-Free Becomes Risk-Certain, Repercussions of the S&P Announcement / Interest-Rates / Credit Crisis 2011
By: Jeff_Berwick
Late Friday evening, Standard and Poor's was the first US credit ratings agency to actually whisper that, possibly, the emperor has no clothes.
The emperor, in fact, has been standing there naked for years. All one has to do is look at the growth in US Government debt and that fact is clear.
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Monday, August 08, 2011
Bill Gross of PIMCO on U.S. Debt Downgrade / Interest-Rates / Credit Crisis 2011
By: Bloomberg
Bill Gross, who runs the world's biggest bond mutual fund at Pacific Investment Management Co., appeared on Bloomberg Television's "Downgrade: A Special Report" live Sunday night special with Bloomberg's Tom Keene. Gross said the U.S. has "enormous" problems and that the dollar is vulnerable. He also said “his hat is off” to S&P for “demonstrating some spin.”
Monday, August 08, 2011
U.S. Credit Rating Downgrade, We Are Not AAA / Interest-Rates / Credit Crisis 2011
By: Vitaliy_Katsenelson
I have received many emails and a few calls from friends, asking one question: What are the consequences of the downgrade? So I decided to put my thoughts on paper. I break up the consequences into three categories: fundamental (the impact on the economy), emotional (the short-term impact on the market), and political (will it change anything in Washington DC?).
Monday, August 08, 2011
The U.S. Should Downgrade S&P / Interest-Rates / Credit Crisis 2011
By: EconMatters
The biggest news last week (other than the $2.5-trillion that got wiped off global stock markets) is that Standard & Poor’s made good on its tough talk and downgraded the United States long-term credit rating one notch from AAA to AA+. S&P also has kept the outlook at “negative” meaning the U.S. has little chance of regaining the top rating in the near term.
Sunday, August 07, 2011
U.S. Downgrades S&P / Interest-Rates / Credit Crisis 2011
By: Brady_Willett
U.S. Treasury Securities are no longer risk-free. This news comes after Standard and Poor’s cut the triple-A rating it has awarded the U.S. since 1941 (Moody’s has been in the AAA camp since 1917). Given the U.S.’s status as the world’s reserve currency printer – not to mention the safe haven flows arriving in the U.S. due to the recent upheaval in Euroland - the immediate impact of the downgrade is highly uncertain. However, what can be said is that should Moody’s or Fitch also cut, capital may be required to exit U.S. debt due to restrictive ownership covenants. This ominous prospect could quickly come into play should another financial crisis arise and/or the U.S. economy slip back into recession. After all, Moody’s warned last week that it may cut if lawmakers do not enact larger debt reduction plans (an increasingly difficult undertaking with the markets and economy weakening), and Fitch is set to complete its U.S. ratings review by the end of August.
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Sunday, August 07, 2011
U.S. Debt downgrade doesn't mean what you think / Interest-Rates / US Debt
By: Submissions
Sam Houston writes: The U.S. Treasury borrows money by issuing bonds. Because it has a massive spending problem and can't live within its means it runs a perpetual and ever expanding deficit. The deficit is financed by issuing more bonds. This process is currently going parabolic as the U.S. debt load is expanding at an alarming rate. See the chart below.
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Saturday, August 06, 2011
Currency Wars and Quantitative Easing / Interest-Rates / Central Banks
By: CentralBankNews
The past week in monetary policy saw 12 central banks reviewing monetary policy settings, with 2 expanding asset buying programs, and just 3 adjusting interest rate levels. Those that adjusted interest rates were: Pakistan -50bps to 13.50%, Uganda +100bps to 14.00%, and Turkey -50bps to 5.75%; Switzerland also adjusted its interest rate target range downward to halt gains in the Swiss franc. Meanwhile those that held rates unchanged were: Botswana 9.50%, Uzbekistan 12.00%, Australia 4.75%, Japan 0.10%, Romania 6.25%, Russia 8.25%, EU 1.50%, UK 0.50%, and the Czech Republic 0.75%.