Analysis Topic: Interest Rates and the Bond Market
The analysis published under this topic are as follows.Tuesday, September 14, 2010
UK Savers Hopes on Hold as Inflation Fails to Fall / Interest-Rates / Savings Accounts
Inflation figures released today show that the Consumer Price Index (CPI) has remained unchanged at 3.10%, still way above the Government’s 2% target.
To stop their savings pot effectively eroding away, a basic rate tax payer needs to find an account paying 3.88%, while a higher rate tax payer needs to find an account offering 5.17%.
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Tuesday, September 14, 2010
Does the Fed Ultimately Control U.S. Interest Rates? / Interest-Rates / US Interest Rates
In forecasting the consequences of current economic policy, many pundits are downplaying the risks associated with the surging national debt and the rapid expansion of marketable Treasury securities. Their comfort stems from the belief that a staggering debt burden will be manageable as long as interest rates remain extremely low; and, as they believe the Fed is in complete control of setting rates across the yield curve, they see no danger of rates ever rising past the point of comfort. Those who subscribe to this fairy tale forget that, in real life, there are many more hands on the interest rate steering wheel.
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Tuesday, September 14, 2010
Americans Going Out with a Bang, Using Credit Cards They Can’t Pay Back / Interest-Rates / US Debt
Peter Schiff joins the CNBC talking heads panel on Fast Money September 8, 2010. (Video follows excerpts and commentary)
As usual, Schiff is a bull on gold and precious metals commenting that silver “is going a lot higher.” Though he didn’t have a specific number in mind, he sees a likely and continued uptrend that can reach levels much higher than where it is today. “I think silver is going to go, ultimately, fifty dollars an ounce, a hundred dollars an ounce, who knows how high it can go?” forecasts Schiff.
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Monday, September 13, 2010
The Federal Reserve’s Next Moves … / Interest-Rates / Central Banks
We are now entering a period of time that I’ve been warning you about. A time when the majority begins to recognize that the U.S. and European economies are both plunging deep under water, drowning in debt …
While at the same time, leaders in both the U.S. and Europe face political nightmares … financial markets going haywire … gold soaring through the roof … and central banks beginning, yet again, to pull out their big guns.
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Saturday, September 11, 2010
U.S. Monetary System is in Serious Trouble / Interest-Rates / US Bonds
There is no question the US monetary system is in serious trouble and the situation continues to deteriorate. The smug elitist owners of the system are not getting the desired results and there is great consternation among the players. Since 1913 in running US monetary policy the Fed has had one recession after another and two depressions. The second one is the one we are now in. The Fed’s creation was mainly to end recessions and depressions, something obviously they have been quite unsuccessful at.
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Friday, September 10, 2010
Is This Where the U.S. Treasury Bond Market Gets Into Trouble? / Interest-Rates / US Bonds
Bonds prices up, bond yields down. Bonds prices down, bond yields up.
This is an important day for watching bond yields, because the odds are now starting to increase for an upside move on bond yields ... and that would mean down movement on bond prices.
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Friday, September 10, 2010
TLTs Should Hold / Interest-Rates / US Bonds
Let's notice that the iShares 20+ Year Treasury Bond ETF (NYSE: TLT) is testing the 102.00-101.80 area, which represents the lower channel support line off of the April low (87.30), as well as the mid-August upside breakaway gap area.
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Friday, September 10, 2010
Japanese Bonds Teeter on the Brink of a Big Bull Rally / Interest-Rates / International Bond Market
Over recent weeks the JGB has endured a reasonable pull-back, much like other bond markets, as equities staged a rally fuelled by:
- Bernanke’s recent pledge to ease further if the faltering US economic recovery continues to lose traction, and
- A better-than-expected US non-farm payroll report last Friday.
Friday, September 10, 2010
Investor Fixed Income Feeding Frenzy, Bond Markets Hoovering Up Cash / Interest-Rates / US Bonds
More than a decade ago, investors speculated wildly in dot-com stocks. You don’t need me to remind you how that ended.
Then a half-decade ago, investors went hog wild in real estate. That didn’t work out so well, either.
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Friday, September 10, 2010
Making Money from Municipal Waste, Increasing Risk of States Bond Defaults / Interest-Rates / US Debt
Harrisburg, Pennsylvania, is defaulting; Half Moon Bay, California, is disincorporating; and the City of Miami, Florida, declared a "state of fiscal urgency," then broke contracts with workers. Yet, Pennsylvania, California, and Florida municipal bond funds managed by Blackrock are trading at or near 52-week highs.
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Wednesday, September 08, 2010
Investor Shift from U.S. Treasury Bonds and into Gold and Commodities? / Interest-Rates / US Bonds
For the past decade, prices in Japan have been stable or fallen, in an economy where the central bank has pegged its overnight loan rate near zero-percent, and where 10-year bond yields haven’t climbed above 2-percent. Between 1991 and 1995, Tokyo spent $2.1-trillion on public works, in an economy that’s less than half the size of the United States, in order to lift its economy out of a severe downturn caused by the bursting of a real estate and stock market bubble in the early 1990’s.
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Wednesday, September 08, 2010
Investors Searching for Yield: At Any Cost? / Interest-Rates / US Bonds
In an environment with historically low interest rates, fixed income investors have been pouring money into longer-duration securities, substituting 3 and 6 month T-Bills with 10-year Treasures or bond funds. To an extent, this should not be so surprising: the Federal Reserve’s (the Fed) extraordinary monetary policies have resulted in extremely low yields at the short end of the yield curve. Investors seeking yield have been forced out the yield curve or into increasingly risky investments in an attempt to gain higher investment returns. However, this is not a strategy without risks, both at the individual investor level and for the economy as a whole. Are the Fed’s monetary policies, combined with the government’s decision to issue increasing levels of longer duration debt, having the unintended consequence of stoking the fire for further financial stress?
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Tuesday, September 07, 2010
I Guarantee You'll Lose Money in The U.S. Treasury Bond "Comfort Trap" / Interest-Rates / US Bonds
Tom Dyson writes: You'll sleep soundly at night. Your neighbors won't laugh at you. Your pulse won't budge. But if you make this trade, I guarantee you'll lose money...
One year ago, I opened an essay with the paragraph above. Then I showed you why a certain trade was a foolish proposition, even though it appeared to be a "no brainer."
Saturday, September 04, 2010
Quantitative Easing QE2, Debt Created Out of Thin Air, Banking Crisis Worsens / Interest-Rates / Quantitative Easing
In a futile attempt to keep the economic and financial system afloat, QE2 is underway. It began in early June as banks changed the rules for awarding loans. Their efforts over the past few months have only met with moderate success. Banks had cut back lending by some 25% over the past 16 months mainly to small and medium-sized companies. In the process the economy slowed down markedly and unemployment shot up to levels not seen since the 1930s. These first attempts to restart a sliding economy have so far not met with success. It was not long after that the real decision makers at the Fed that QE2 was going to be needed. We saw the marshalling of financial and economic forces and the tell tale sign of a stock market moving upward for unexplained reasons. That tipped us to QE2.
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Friday, September 03, 2010
Moving into Bonds: From Frying Pan to Fire / Interest-Rates / International Bond Market
David Galland and Kevin Brekke, Casey Research writes: The other day, I came across an article that said, while individuals may be moving their money out of equities, they have been moving into bond funds - and in a big way.
It's called jumping from the frying fan into the fire.
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Friday, September 03, 2010
How to Profit From the “Widow-Maker” Trade, Shorting U.S. Treasury Bonds / Interest-Rates / US Bonds
Keith Fitz-Gerald writes: Although we're in the midst of a U.S. Treasury bond bubble so big that pundits are calling for investors to short the government paper, resist the urge to jump in with both feet.
Doing so right now is nothing more than a "widow-maker" trade that will test both your patience and your pocket book. And yet, "shorting" the U.S. Treasury bond market is an opportunity you can't afford to pass up - so long as you execute the trade correctly.
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Friday, September 03, 2010
Exhaustion Gap on Yields Chart! / Interest-Rates / US Bonds
Summary: The charts are signalling an important change in market attitudes to risk – and by implication, the Fed’s attitude to risk. If yields are to rise from here it will be because investors in treasury bonds are expecting to incur capital losses. Why would this be? This article comes to the conclusion that we are heading for a period of tight capital markets. If money is tight, credit will be tight. If credit is tight, then, to borrow money will require the borrower to pay higher rates of interest to compensate the lender for his higher level of risk. If credit is tight, consumer demand will, at best, not grow and, at worst, fall. In the former case, we can expect a steady-as-she-goes outcome. In the latter case, the result will be a slow down in economic activity and a so-called “double dip” recession.
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Thursday, September 02, 2010
Blowing Bubbles, U.S. Treasury Bonds / Interest-Rates / US Bonds
Common sense is the knack of seeing things as they are, and doing things as they ought to be done – C.E. Stowe
The American media is officially obsessed with sensational terminology when describing the financial markets these days. Nothing trends, it either explodes higher or melts down. We have “flash crashes”, a “new normal” and the frightening “double dip”. We also see bubbles about to burst everywhere.
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Wednesday, September 01, 2010
Government Debt Defaults and Inflation Are the Norm, Not the Exception / Interest-Rates / Global Debt Crisis
The past 15 years have certainly been exciting for investors. During the second half of the 1990s we experienced one of the largest stock market bubbles of all times … and its bursting. Then, only a few years later, one of the biggest real estate bubbles … and its bursting.
In the aftermath of these events the world stumbled into the most severe economic downturn since the Great Depression of the 1930s. And the banking system came to the brink of a total collapse.
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Wednesday, September 01, 2010
US Must Displace Global Treasury Bonds Activity / Interest-Rates / US Bonds
Extremely low Treasury rates have been a boon for the Federal Government's bottom line, but they haven't helped attract any global interest in US debt. Instead, nations around the world are cutting back on their Treasury positions, internalizing the financing of new debts and deficits.
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