Analysis Topic: Interest Rates and the Bond Market
The analysis published under this topic are as follows.
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
Friday, October 03, 2014
U.S. Bond Market Fourth Quarter Trade of 2014 / Interest-Rates / US Bonds
By: Chris_Vermeulen
If you have been paying close attention to the stock market, market internals/breadth, and bonds for the past three months, you’ve likely come to the same conclusion that I have.
The US stock market is showing signs of severe weakness with the market breadth and leading indicators pointing to a sharp correction for stock prices.
With fewer stocks trading above their 50 and 200 day moving averages each week, while the broad market S&P 500 index continues to rising, this bearish divergence is a red flag for long term investors.
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Thursday, October 02, 2014
U.S. 30 Year US T-Bonds Voodoo Analysis / Interest-Rates / US Bonds
By: Austin_Galt
There looks to be a solid opportunity arising to get involved on the long side here. Let's investigate taking a top down approach beginning with the yearly chart.
Wednesday, October 01, 2014
“Back Door” Method For The Government To Pay Down The Federal Debt Using Private Savings? / Interest-Rates / US Debt
By: Dan_Amerman
The United States government is currently about $17.5 trillion in debt. To place this number in perspective: if we assume that only the above-poverty line households will be making net contributions towards paying this enormous debt, this means that the national debt equals about $180,000 for each "able to pay" household in the US.
With traditional financial planning, the most common way of dealing with this problem – is to completely ignore its existence. Rather than try to incorporate the effects of this massive debt that could transform interest rates, economic growth and rates of return for decades – most investment plans for individuals simply pretend it doesn't exist.
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Wednesday, October 01, 2014
How stable is the U.S. Bond Market? / Interest-Rates / US Bonds
By: BATR
Seldom does the enormous bond market turn on the fate of a single trader. Well, the news that Bill Gross was leaving Pimco under suspicious circumstances did not go unnoticed. The WSJ writes:
“The yield on the 10-year benchmark Treasury note was hovering around 2.506% immediately before the disclosure that Mr. Gross was leaving the hundreds-of-billions of dollars in Treasurys and other debt he oversaw at Pimco to go to rival firm Janus Capital Group Inc.
Within a half-hour, the yield jumped to 2.546%. While a move of 0.04 percentage point may not seem like much in that period of time, it was perceptible enough in the $12 trillion Treasury market that several traders and strategists attributed it to the news about Mr. Gross.”
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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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Wednesday, October 01, 2014
Using Put Options to Bet on a Junk-Bond Crash / Interest-Rates / Corporate Bonds
By: Submissions
Rick Ackerman writes: Here’s an easy play for those who have never cashed a winning ticket trading put or call options. Specifically, I am going to tell you how to bet on a junk-bond crash without risking your shirt — even if junk bonds continue to defy gravity indefinitely. First, let me assert that straight-up directional plays with stock options almost never win. Your odds are better trying to predict precisely when a shooting star will flash across the night sky. Similarly, if you buy call options with the expectation that a stock is about to surge, your timing had better be perfect, since the options you’ll be buying will be priced to discount any such event. Indeed, to make money on the calls, the move in the underlying vehicle would need to be so steep as to lie well outside the stock’s historical behavior. Moreover, as implied above, you would need to initiate the trade just before the rally takes off, since, if you get in early, time decay will sap the value of your calls quickly. And you can forget about getting aboard after the rally has begun, since option prices will be goosed into the stratosphere mere minutes after the stock lurches higher.
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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Thursday, September 25, 2014
The Specter of Global Debt Default is Once Again Rearing its Head / Interest-Rates / Global Debt Crisis 2014
By: EWI
Editor's note: The following article was republished here with permission from the co-editors of the September issue of The Elliott Wave Financial Forecast, a publication of Robert Prechter's Elliott Wave International, the world's largest financial forecasting firm. From Sept. 25 to Oct. 1, EWI is throwing open the doors to all of its investor services 100% free. Click here to join EWI's free Investor Open House now.
Thursday, September 25, 2014
Federal Reserve Policies Cause Booms and Busts / Interest-Rates / Liquidity Bubble
By: MISES
Richard M. Ebeling writesL Since the economic crisis of 2008-2009, the Federal Reserve — America’s central bank — has expanded the money supply in the banking system by over $4 trillion, and has manipulated key interest rates to keep them so artificially low that when adjusted for price inflation, several of them have been actually negative. We should not be surprised if this is setting the stage for another serious economic crisis down the road.
Wednesday, September 24, 2014
US Government - The World’s Largest Subprime Debtor / Interest-Rates / US Debt
By: David_Howden
Lehman Brothers filed for Chapter 11 bankruptcy protection six years ago this month. The event has become famous as the spark that ignited the global financial crisis. Since that date, millions have lost their jobs and livelihoods, and countless others have seen their futures evaporate before their eyes, sometimes permanently.
At the heart of the crisis of 2008 was a common cause acknowledged by almost all commentators. Borrowers now infamously known as “subprime” (or more politely, “non-prime”) were the main reason behind the meltdown. As financial institutions extended loans to those with less than stable means to repay their debts, the foundation of the financial world was destabilized.
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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 20, 2014
The End of Fed Tapering and Government Funding / Interest-Rates / Quantitative Easing
By: Alasdair_Macleod
Last year markets behaved nervously on rumours that QE3 would be tapered; this year we have lived with the fact. It turned out that there has been little or no damage to markets, with bond yields at historic lows and equity markets hitting new highs. This contrasts with the ending of QE1 and QE2, which were marked by falls in the S&P 500 Index of 9% and 11.6% respectively. Presumably the introduction of twist followed by QE3 was designed at least in part to return financial assets to a rising price trend, and tapering has been consistent with this strategy.
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Thursday, September 18, 2014
A New Fed Playbook for the New Normal / Interest-Rates / US Bonds
By: Peter_Schiff
While many economists and market watchers have failed to notice, we have entered a new chapter in the short and checkered history of central banking. This paradigm shift, as yet unaddressed in the textbooks, changes the basic policy tools that have traditionally defined the sphere of macroeconomic decision-making.
Wednesday, September 17, 2014
Are Government Bonds Really ‘Safe’? / Interest-Rates / US Bonds
By: Peter_Schiff
By Dickson Buchanan Jr., Director of International Development:
One of the striking ironies of our modern economy is that government bonds are considered safe-haven investments, while gold is a “barbarous relic” to be avoided at all costs. Since the 2008 financial collapse, the bond market has been on a tear, thanks to the Federal Reserve’s endless interest rate suppression. This has only served to reinforce the traditional notion that government bonds are “safe.”Read full article... Read full article...
Wednesday, September 17, 2014
Why Money Is Worse Than Debt / Interest-Rates / Fiat Currency
By: GoldSilverWorlds
Francis Schutte writes: Everybody has to spend energy, has to work for his living. This is true for Government as well as for the billionaires and for the ordinary employee. Nothing – except for sunshine and air – comes for free. Note that today, sometimes people even pay for sunshine (vacation) and air (airports in Venezuela).
Not hard to understand that today’s fairy tale of “Free Fiat Money” will have a bad ending…or is it? Few people seem to realize the dramatic situation we are in, and that the denial is fed by the propaganda sold by politicians through the mainstream media. The 4th generation (see Galbraith’s Age of Uncertainty) doesn’t seem to be mentally able to grasp the seriousness of the situation the world is in.
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Tuesday, September 16, 2014
The Truth Behind the Dangerous "Helicopter Money" Delusion / Interest-Rates / Quantitative Easing
By: Money_Morning
Peter Krauth writes: Seeking out major trends and power shifts in the global economy is the part of my work that I enjoy most.
It's a lot of work, and needless to say, it involves constant research.
That's why a piece I recently read in Foreign Affairs absolutely shocked me...
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Tuesday, September 16, 2014
Central Bank Balance Bullying: Investor Implications / Interest-Rates / Central Banks
By: Axel_Merk
"Bullying" by the Fed, ECB, Bank of England and Bank of Japan has been in place for up to six years, forcing not-so-mighty central banks, savers and investors to deal with the consequences. Understanding the dynamics may help investors to navigate what's ahead.
First, let's get one thing straight: it matters little what you; we; or anyone in the blogosphere thinks policy makers should do. We are bystanders that have to deal with the consequences of their actions. The cheapest action undertaken by policy makers is to coerce the markets with verbiage. Their words matter, as they control the printing presses. Having said this, if the words are not followed by action, at some point, the markets may call their bluff.
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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?