Analysis Topic: Interest Rates and the Bond Market
The analysis published under this topic are as follows.
Wednesday, January 15, 2014
Where the Fed Went Wrong When It Decided to Taper QE / Interest-Rates / Quantitative Easing
By: DailyGainsLetter
John Paul Whitefoot writes: The merriment, mirth, and cheer on Wall Street over the holiday season may have been a bit premature; in fact, the optimism about the U.S. economy that ushered in the New Year may have already come to a screeching halt.
In mid-December, the Federal Reserve surprised investors when it announced it was going to start tapering it’s generous $85.0-billion-per-month easy money policy in January to just $75.0 billion per month. The pullback was a surprise, because the Federal Reserve initially hinted it wouldn’t ease its monetary policy until the U.S. unemployment rate fell to 6.5% and inflation rose to 2.5%. At the time of the announcement, U.S. unemployment stood at seven percent and inflation was hovering around historic lows below one percent.
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Sunday, January 05, 2014
Fed Admits It's Clueless How QE Actually Works / Interest-Rates / Quantitative Easing
By: Mike_Shedlock
Inquiring minds are investigating three articles from today, stating opinions of three different Fed governors.
Thursday, January 02, 2014
Behind the Fed’s Magical Curtain: The US Monetary Base and the Impact of Excess Reserves / Interest-Rates / US Federal Reserve Bank
By: Submissions
Kim Collard writes: The Federal Reserves actions since the Global Financial Crisis have been watched and analysed more than at any other time in history. This makes pretty good sense, as its actions have obviously had a profound impact on these markets.
However, I believe all the many and varied analyses of these actions have fallen into a carefully laid perception trap.
Tuesday, December 31, 2013
Quantifornication - Did Bernanke Get It Right? / Interest-Rates / Quantitative Easing
By: Richard_Mills
The Federal Reserve thinks recent economic news from the U.S. is good:
- Jobs are being created
- Consumers are spending money
- Trade & manufacturing growth is strong
So on Dec. 18th 2013, they announced a decelerating QE III environment.
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Tuesday, December 31, 2013
QE Tapering Lessons for 2014 / Interest-Rates / Quantitative Easing
By: Matt_Machaj
In the last Market Overviews (and also to a considerable extent in the last several Premium Updates) we have discussed in detail differences between tapering and tightening. As we have stated, a personal change of the Fed's chairman will not change the essence of its policy. Now we hear that some form of tapering will indeed happen. Despite this we have three varied tools to consider about some forms of backing out from its expansive policies:
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Sunday, December 29, 2013
The QE Taper and the China Power Struggle Credit Squeeze / Interest-Rates / Credit Crisis 2014
By: Raul_I_Meijer
There is a crisis a-brewing in China that evolves around interest rates, with interbank rates as, let’s say, the initial center piece. The underlying cause of the crisis is that both official banks and the shadow banking system seek to escape the restrictions placed on the financial system by the government and the central People’s Bank of China (PBoC), who in essence want to set all interest rates and all policies. At the very moment the regulators recently decided to let markets set some interest rates, a move intended to cool things down, money market rates went up so fast that more action by the PBoC, after an initial refusal, was deemed necessary.
Saturday, December 28, 2013
U.S. Treasury Bond Yields Creeping Higher / Interest-Rates / US Interest Rates
By: PhilStockWorld
Courtesy of Doug Short: What’s New: The 10-year note closed the week at 3.02%, up 17 bps since the close before the latest FOMC minutes were released and the highest since July 25, 2011. The interim closing low was 1.43%, exactly one year later on July 25, 2012.
The latest Freddie Mac Weekly Primary Mortgage Market Survey, released yesterday, puts the 30-year fixed at 4.48%, 117 bps above its all-time low of 3.31% in late November of last year and 10 bps below its interim high reported on August 22nd.
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Friday, December 27, 2013
Why the Fed Will likely NOT Taper QE 2014 Despite December Statement / Interest-Rates / Quantitative Easing
By: Submissions
Georgi Ivanov writes: A largely unnoticed message from the Chinese Central Bank in late November has raised questions about the upcoming tapering of the Federal Reserve’s quantitative easing (QE) initiative, which would mean an end to the monthly $85 billion of fresh money that enter the American monetary system. Signals about the end of the Fed’s stimulus package began in 2012, and were supposed to end in the fall of this year. However, the Bernanke and co unexpectedly announced that the policy shifted gears and QE is now supposed by the middle of 2014.
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Tuesday, December 24, 2013
Ben Bernanke's Spoonful of Sugar / Interest-Rates / Quantitative Easing
By: Peter_Schiff
The press has framed Ben Bernanke's valedictory press conference last week in heroic terms. It's as if a veteran quarterback engineered a stunning come-from-behind drive in his final game, and graciously bowed out of the game with the ball sitting on the opponent's one-yard line. In reality, Bernanke has merely completed a five-yard pass from his own end zone, and has left Janet Yellen to come off the bench down by three touchdowns, with no credible deep threats, and very little time left on the clock.
The praise heaped on Bernanke's swan song stems from the Fed's success in initiating the long-anticipated (and highly feared) tapering campaign without sparking widespread anxiety. So deftly did the outgoing chairman thread the needle that the market actually powered to fresh all-time highs on the news.
Monday, December 23, 2013
QE Tapering vs. Tightening Issue Continued / Interest-Rates / Quantitative Easing
By: Matt_Machaj
Last week all (investors') eyes were on the Fed, and the Fed delivered. A small (if you can call $10 billion "small", but it is on a relative basis) form of tapering of the Quantitative Easing program was announced and markets reacted to it. It turned out that our assumptions about investors' expectations were correct - they were expecting to see no tapering and they were surprised by it.
As mentioned previously, even though tapering and tightening are often viewed as synonyms, they are exactly the same thing. Let's discuss this more thoroughly.
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Monday, December 23, 2013
Small Pullback in Money Printing = Big Spike in Interest Rates? / Interest-Rates / US Interest Rates
By: Profit_Confidential
Michael Lombardi writes:
Quietly, without much fanfare or news, the bellwether 10-year U.S. Treasury hit a yield of 2.9% this past Friday—double what it yielded in June of 2012. (Source: Treasury.gov, last accessed December 20, 2013.)
Yes, the Federal Reserve only slightly pulled back on its money printing program and interest rates are already spiking.
Monday, December 23, 2013
The Ben Bernanke Economic and U.S. Debt Balance Sheet / Interest-Rates / US Debt
By: Raul_I_Meijer
Ben Bernanke announced a cut in QE by $10 billion a month this week, the financial press can’t stop talking about it and – what they call – “analyzing” it, and I still, after 8 years of Ben in the chair don’t know what puzzles me most: the quantity of attention paid to all things Bernanke, or the quality of it. I mean, I know why the press do it, but I have trouble understanding why they can’t constrain themselves.
If a financial system is as dependent on public money injections as today’s one, there is a very real risk that this market has in fact stopped functioning, and that what we’re watching are zombified movements that can continue only thanks to those money injections, which are in their manipulative character, frankly, more reminiscent of what one would expect to see in communist nations than anything else.
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Saturday, December 21, 2013
The Fed Will Still Provide Massive QE in 2014 - But / Interest-Rates / Quantitative Easing
By: Sy_Harding
The Federal Reserve announced this week that it will provide $75 billion of quantitative easing (QE) in January, a massive amount, and will provide large though diminishing amounts of additional stimulus for months thereafter.
Yes, that is what it said, even though the headline news was that it will begin tapering back QE in January, by providing $75 billion rather than the $85 billion it has been providing monthly this year. If it continues to taper at the same pace it will provide an additional $65 billion of stimulus in February, $55 billion in March, and so on.
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Saturday, December 21, 2013
The Great QE Taper Caper / Interest-Rates / Quantitative Easing
By: Andy_Sutton
Let’s do a little flashback this week and then look at some things and try to make some sense of what happened yesterday as the Great Taper Caper unfolds. We go back to March 3rd, 2009. Ben Bernanke was in front of Congress. He was allegedly under oath. He was asked directly by Senator Bernie Sanders this important question: “Will you tell the American people to whom you lent $2.2 trillion of their dollars?” Bernanke gave a one-word answer – “No”.
There are a couple of problems with all this obviously, but let’s get the more subtle ones first. This is yet another golden opportunity to point out who really runs the show from a monetary perspective. Those ‘dollars’ aren’t even dollars. That is the first problem. They are ‘not-so-USFed’ notes. They are debt. They don’t belong to the people, rather they hang like a millstone around the collective neck of We the People. Second problem, why was Bernanke allowed to leave that hearing without being charged, at a minimum with obstruction? Because the banksters run the show, that’s why. Those hearings everyone pays such rapt attention to are theater.
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Friday, December 20, 2013
Ben Bernanke Tapers, Tinkers and then Leaves / Interest-Rates / Quantitative Easing
By: Ashraf_Laidi
Fed Chairman Bernanke tapers by $10 bln, tinkers with forward guidance and leaves Janet Yellen with the possibility of an inflation target.
By reducing monthly purchases of agency mortgage-backed securities and long term treasuries by $10 bn, the Federal Reserve has successfully integrated the price stability component of its dual Forward Guidance into traders' psyche by further delinking tapering of asset purchases from tightening conditions in the bond market.
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Tuesday, December 17, 2013
Burning Money at the Rate of $113 Billion a Month; How Can They Stop Printing? / Interest-Rates / Quantitative Easing
By: Profit_Confidential
Michael Lombardi writes:
In the month of November, the U.S. government registered a budget deficit of $135 billion. Over the course of the month, it spent $318 billion and only took in $182 billion. So far for the fiscal year 2014, which began in October, the U.S. government has registered a budget deficit of $227 billion; that’s an average of $113.5 billion a month so far this fiscal year. (Source: Department of the Treasury; Bureau of Fiscal Service, December 11, 2013.)
Monday, December 16, 2013
Bernanke Seeing the Difference Between QE Tapering and Tightening / Interest-Rates / Quantitative Easing
By: Matt_Machaj
On November 19th at National Economists Club Annual Dinner Bernanke gave a speech which could be seen as a sort of testimony or farewell (probably one of many coming soon). The message he has sent was in perfect compliance with what was being communicating to the public. Firstly he offered a “forward guidance”, which was to reassure us that low short term interest rates are here to stay for the longer term. The possible boundary line, as we repeatedly heard, is lower unemployment and/or significantly higher inflation rate. Until then we are still in the ZIRP – zero interest rate policy – scenario.
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Thursday, December 12, 2013
Taper Quantitative Easing Interest Rates Derivatives Reality Check / Interest-Rates / Quantitative Easing
By: Dan_Amerman
The potential "tapering" of quantitative easing can be likened to a lessening of chemotherapy treatments when a cancer patient's symptoms change. It means one thing if the patient is being cured. It means something quite radically different when there has not been a cure, and the underlying cancer remains as bad as ever.
We are told that quantitative easing (QE), a.k.a. "cheap money", exists for the purpose of stimulating economic growth and corporate profits, and is thereby helping the United States and other nations that are struggling with persistent and deep-rooted economic and unemployment problems. If this were the whole truth, then QE is a temporary and technical fix, a mere "accommodative policy" that can be stepped down and then eliminated altogether once markets improve and economies no longer need assistance.
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Wednesday, December 11, 2013
Investors You’re Getting Robbed / Interest-Rates / Learn to Trade
By: Investment_U
Alexander Green writes: A Note From the Editorial Director: We received a question recently from a regular Investment U reader on a subject that comes up too often: The costs he’s paying his broker. He writes:
“I recently had a very frustrating conversation with my broker. I wanted to know how much I’m paying in fees and commissions to work with him. And I couldn’t get a straight answer! I still don’t have it sorted out. Is this a common experience? Should I fire him?”
Tuesday, December 10, 2013
10-Year U.S. Treasury Note Trades Near 6%; If Taper Is For Real / Interest-Rates / US Bonds
By: Michael_Pento
The most important question for investors at this time is to determine how high interest rates will rise; if indeed the Fed's artificial suppression of yields is truly about to end. To accomplish this we first must consider where yields last were outside of central bank debt monetization, a recession and the Eurozone debt crisis. Then, we need to factor in the increased risks to inflation and solvency, in order to arrive at an appropriate estimation for the level of interest rates during 2014.