Analysis Topic: Interest Rates and the Bond Market
The analysis published under this topic are as follows.
Sunday, May 04, 2008
Fed Expands Term Auction Facility For Junk Mortgage Backed Debt / Interest-Rates / Government Intervention
By: Mick_Phoenix
Welcome to the Weekly Report. This week we look at moral hazard and I show you how it's about to unleash forces that no Central Bank or Government can control and we look at next weeks trend indicators and targets.
I have spoken about moral hazard before, especially in relation to the current actions carried out by the Federal Reserve and the Bank of England after the bailouts of Bear Stearns and Northern Rock. To avoid moral hazard arising strict controls have to be placed upon the facilities that are created and the use of the assets supplied from those facilities. A failure to control the results of centralist intervention will encourage the very behaviour that caused the original problem.
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Friday, May 02, 2008
Ben Bernanke is No Paul Volcker / Interest-Rates / Inflation
By: Peter_Schiff
With what many have described as a flash of monetary discipline worthy of Paul Volcker, Ben Bernanke reduced short-term interest rates this week to a mere 2%, apparently turning a deaf ear to those on Wall Street who wanted more. But now that the dollar-crushing side effects of cheap money are widely understood, there is, in reality, little pressure remaining for steely-eyed Ben to resist.Read full article... Read full article...
Friday, May 02, 2008
Greenspan's Bond Market Conundrum Bites Back / Interest-Rates / US Bonds
By: Adrian_Ash
"...If Washington and the US consumer can't borrow cheap at the long end, then they'll just go to the short end for cheap money instead..."
WHAT'S A CENTRAL BANKER to do?
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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.
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Thursday, May 01, 2008
US Fed Interest Rate Cutting Policy Exporting Stagflation to Europe / Interest-Rates / Stagflation
By: Jennifer_Yousfi
The U.S. Federal Reserve reduced the benchmark U.S. lending rate by a quarter point - from 2.25% to 2% - yesterday (Wednesday), and then hinted that it will take a break from one of its most-aggressive rate-cutting campaigns in decades.
"The substantial easing of monetary policy to date, combined with ongoing measures to foster market liquidity, should help to promote moderate growth over time and to mitigate risks to economic activity," the policymaking Federal Open Market Committee (FOMC) said in the statement announcing the interest-rate move. Central bank policymakers also said that "recent information indicates that economic activity remains weak" before going on to say "uncertainty about the inflation outlook remains high" and noted that the Fed would continue to monitor both economic growth and inflation closely.
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Wednesday, April 30, 2008
Will the Fed's Interest Rate Rollercoaster Ride Save the US Dollar? / Interest-Rates / US Dollar
By: Michael_Pento
Why we Americans ever abdicated our financial freedom to a group of 12 unelected individuals who sit on the Federal Open Market Committee, is beyond me. That being said, we are stuck with a system that allows an unaccountable and unconstitutional institution dictate the appropriate level of interest rates instead of the free market. Our founding fathers made it clear that they wanted money to consist of only gold and silver. They did this so as to guarantee that the money supply had intrinsic value and would be limited in nature. This would also allow bank interest rates to be a function of savings vs. demand, not a matter of decree. Because of the above situation, we have been forced to endure a dizzying ride of interest rate gyrations that have created severe imbalances in our economy. Read full article... Read full article...
Wednesday, April 30, 2008
Credit Crisis IS Over, the Old Inflation Crisis Returns / Interest-Rates / Inflation
By: Adrian_Ash
"...Is the foreign US bond-buyer now going on strike, just when the Treasury needs him to pay for tax rebates, investment bank bail-outs, and the first raft of post-Election housing aid...?"
CRISIS OVER then; the Fed has worked its magic! And things will only get better from here.
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Wednesday, April 30, 2008
US Fed Selling Treasuries as Federal Budget Deficit Doubles / Interest-Rates / US Bonds
By: Paul_L_Kasriel
In the 20 weeks ended April 23, the Federal Reserve's outright holdings of U.S. Treasury securities had fallen by $231 billion, which is an annualized decline of $600.7 billion (see Chart 1). Up until recently, the Fed has rarely been a net seller of U.S. Treasury securities (see Chart 2). Of course, the reason the Fed has become such a large net seller of U.S. Treasury securities is that it is now providing about 14% of total reserve credit via the discount window, the Term Auction Facility (TAF) and the Primary Dealer Credit Facility (PDCF) (see Chart 3). If the Fed does not want the fed funds rate to trade below its target rate, it has to drain reserves to offset the reserve injections via the discount window, TAF and PDCF.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.
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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.
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Sunday, April 27, 2008
Bank of England Mortgage Backed Securities Pricing System / Interest-Rates / Credit Crisis 2008
By: Mick_Phoenix
Welcome to the Weekly Report. This week we look ahead to the new pricing system for Mortgage Backed Securities and Asset Backed Securities created by the Bank of England, developments in bonds and yields and why the Federal Reserve is central to current yield changes. We ask if the credible policies are leading to increased inflation expectations and look for global reaction. We update the long term trend update for the Dow, FTSE and Gold.Read full article... Read full article...
Saturday, April 26, 2008
US Bond Investors Finally Waking Up to the New Reality of Massive Inflation! / Interest-Rates / US Bonds
By: Money_and_Markets
Mike Larson writes: When the nation's most prominent bond investor, the man who is managing the world's largest bond fund, stops believing in U.S. government debt, it's time to stand up and take notice.
Bill Gross, the blackjack player-turned-bond king, whose words alone can spark rallies and selloffs in the $43-trillion bond market, has actually started betting against U.S. Treasury Bonds!
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Friday, April 25, 2008
Government Intervention Distorts Market Prices and Results in Inflation / Interest-Rates / Market Manipulation
By: Peter_Schiff
Those unfamiliar with marketplace dynamics may not recognize how government activity has created price distortions across our economy. But when these chains fail to restrain the market, the underlying forces become easier to see.
Much as government mandated easy credit propelled home prices to bubble levels, similar forces pushed college tuitions up to the stratosphere. Both systems are currently breaking down along similar lines.
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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...
Tuesday, April 22, 2008
US Fed Takes Money From Main Street to Give to Wall Street / Interest-Rates / Credit Crisis 2008
By: Ned_W_Schmidt
U.S. Federal Reserve has forgotten the most essential rule. They should first do no harm. In a rush to bailout the bankers from their self inflicted mortgage mess, Federal Reserve has seriously distorted the U.S. monetary system. In this week's graph are plotted the year-to-year dollar change for several Federal Reserve balance sheet items. Read full article... Read full article...
Tuesday, April 22, 2008
LIBOR Interbank Market Stays Frozen Despite Bank of England £50 Billion Bailout / Interest-Rates / Credit Crisis 2008
By: Nadeem_Walayat
This weeks Bank of England and UK Treasuries unprecedented near 'panic' action to prevent a string of Northern Rock type Bank Busts has so far failed to have any impact on the interbank market. The spread between the official LIBOR rate and the base rate remains at credit crisis extremes.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...
Monday, April 21, 2008
Bank of England Throws £50 billion of Tax Payers Money at the Banks / Interest-Rates / Credit Crisis 2008
By: Nadeem_Walayat
The credit crisis is forcing the Bank of England to morph the Collaterised
Mortgage Backed Securities Market into the Collaterised UK Government Bond Backed Mortgage Market. In effect the Bank of England is swapping 100% guaranteed Government Bonds for illiquid, un-priceable Mortgage backed junk securities. Thus allowing the banks to offer Government Bonds as security on the Interbank Market. Read full article... Read full article...
Sunday, April 20, 2008
Fed Interest Rate Cut Could Spark Bond Market Panic Selling / Interest-Rates / US Bonds
By: Mick_Phoenix
Welcome to the Weekly Report. This week I have to highlight conditions in the bond markets as a priority, we maybe about to endure a bust of quite large proportions. I will also look at some longer term stock market indicators, confirmation that the Bank of England will follow the US and show why the current rally in stocks is due to a visit from an old friend, as readers at Livecharts.co.uk will know only too well.
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Friday, April 18, 2008
Federal Reserve Notes Backed by Worthless Mortgage Bonds- Who Will Bail Out the Fed? / Interest-Rates / Credit Crisis 2008
By: Andy_Sutton
The silence has been deafening. Since that fateful weekend in the middle of March when they almost lost control, things have been eerily quiet. In fact, today, the DOW finds itself up over 200 points in the face of another $5 Billion in losses at Citigroup. The losses have been spun as positive with most in the financial press saying in essence that we should be happy because it could have been a lot worse. Many have now even boldly called a bottom in the losses stemming from the subprime mortgage crisis. Haven't we heard this before?