Analysis Topic: Interest Rates and the Bond Market
The analysis published under this topic are as follows.
Sunday, February 24, 2008
Colossal Collateral Damage- Financial Tsunami Part V / Interest-Rates / Credit Crisis 2008
By: F_William_Engdahl
The Predators had a ball - The multi-trillion dollar US-centered securitization debacle began to unravel in June 2007 with the liquidity crisis in two hedge funds owned by Bear Stearns, one of the world's largest and most successful investment banks. The funds were heavily invested in sub-prime mortgage securities. The damage soon spread across the Atlantic to a little-known German state-owned bank, IKB. In July 2007, IKB's wholly-owned conduit, Rhineland Funding, had approximately €20 billion of Asset Backed Commercial Paper (ABCP). In mid-July, investors refused to rollover part of Rhineland Funding's ABCP. That forced the European Central Bank to inject record volumes of liquidity into the market to keep the banking system liquid. Read full article... Read full article...
Friday, February 22, 2008
Fed Interest Rate Cuts have Resulted in Surging Commodity Price Inflation / Interest-Rates / Inflation
By: Adrian_Ash
Six Months of Fun, Fun, Fun from the Fed - "...If Bernanke was expecting a 13% rise on Wall Street, he's got a 45% rise in gold instead – plus a real disaster in US Treasury bond yields..."
THIS WEEK marked the six-month anniversary of the Fed's first cut to US interest rates during the current world banking crisis.
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Tuesday, February 19, 2008
The Credit Crash - The Next Shoe to Drop Will Be... / Interest-Rates / Credit Crisis 2008
By: John_Mauldin
As everyone by now knows, there is chaos in the municipal bond market. This week's Outside the Box is from good friend and Maine fishing buddy David Kotok of Cumberland Advisors ( www.cumber.com ).
Briefly, he outlines the problems we are seeing in munis, but then he goes on to warn of the possible next shoe to drop in closed end municipal bond funds. David is one of the smarter advisors I know, and when he points out a problem, I would suggest taking action.
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Friday, February 15, 2008
US Treasury Bonds: Safe Haven or Wealth Cemetery? / Interest-Rates / US Bonds
By: Alex_Wallenwein
You know the spiel. Every time the stock markets drop, the financial press reports that US treasuries benefitted from the move in a “safe haven bid” - whatever that means.
Let's examine how safe US treasuries really are:
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Friday, February 15, 2008
Looming US Treasury Bond Market Crash / Interest-Rates / US Bonds
By: Clive_Maund
Like frightened rabbits scurrying back to the apparent safety of their hutches, investors rattled by the sub-prime shocks and the associated tremors in stockmarkets have been fleeing to the perceived safety of Treasury Bonds and Notes. The bad news is that this time the poacher knows where the rabbits are hiding and rabbit stew is on the menu tonight.
Let's just stop and think about this for a moment - just what is a Treasury Bond? - it is a piece of paper telling you that you are going to receive a fixed sum of US dollars at some designated point in the future.
Thursday, February 14, 2008
Central Banks Other Option, Crossing the Rubicon / Interest-Rates / Credit Crisis 2008
By: Christopher_Laird
Rubicon ( Rubicō , Italian: Rubicone ) is a 29km long river in northern Italy. The river flows from the Appennines to the Adriatic sea through the southern Emilia-Romagna region between the towns of Rimini and Cesena. The river is notable as Roman law forbade its generals from crossing it with an army. The river was considered to mark the boundary between the Roman province of Cisalpine Gaul to the north and Italy proper to the south; the law thus protected the republic from internal military threat. When Julius Caesar crossed the Rubicon in 49 BC, supposedly on January 10 of the Roman calendar, to make his way to Rome he broke that law and made armed conflict inevitable. According to Suetonius he uttered the famous phrase ālea iacta est ("the die is cast").[2] Read full article... Read full article...
Tuesday, February 12, 2008
US Tax Payer to Bail Out Bankers From Default - The Mother of All Rip-offs / Interest-Rates / Credit Crisis 2008
By: Mike_Whitney
Low interest credit and “financial innovation” are a deadly-combo. They've knocked the banking system for a loop, clogged the credit markets with billions of dollars of subprime sludge, and left the real estate market sprawling on the canvas. Still---even though $2 trillion of capitalization has been wiped-out from falling home prices; and even though the financial system is in a terminal state of paralysis---no one has been held accountable. In fact, not one trader, mortgage lender, rating's-agency official, fund manager, or investment banker has been indicted or charged with criminal wrongdoing. Read full article... Read full article...
Friday, February 08, 2008
US Treasury Bond Market - The Mother of all Bubbles / Interest-Rates / US Bonds
By: Peter_Schiff
In contrast to the dismal forecasting record of mainstream economists over the last few years, the forecasts that I have made regarding the dollar, oil, commodities, precious metals, global stock markets, inflation, and the U.S. economy have all come to pass. In addition, unlike the top economic oracles on Wall Street and in Washington, I can also point to similar accuracy in predicting the bursting of growing bubbles, first with technology in the late 1990's, and more recently with real estate. However, my long-standing prediction about the fate of the bond market has fared much worse. I still do believe this prediction was not wrong, but simply premature. Read full article... Read full article...
Friday, February 08, 2008
ECB Smoke and Mirrors to Mask Explosive Money Supply Growth Fueling Inflation / Interest-Rates / ECB Interest Rates
By: Gary_Dorsch
European Central Bank chief, Jean "Tricky" Trichet, likes to operate behind a veil of "Smoke and Mirrors" in managing the Euro zone's monetary policy, which is designed to fool most people, most of the time. Most importantly, "Tricky" Trichet, has fueled the fastest growth in the Euro M3 money supply in history, running at three times the rate of the ECB's original guidelines, deemed consistent with low inflation.
So it shouldn't have been a surprise to learn that inflation in the Euro zone hit an all-time high of 3.2% in January, and far above the ECB's inflation target of 2 percent. Euro zone producer price inflation picked up to an annual 4.3% in December, led by higher food and energy costs. Trichet and his band of propaganda artists have given plenty of lip service to fighting inflation in recent months, but behind the veil of "Smoke and Mirrors", haven't lifted a finger to put empty words into action.
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Thursday, February 07, 2008
European Central Bank (ECB) Monetary Policy Interest Rate Decision Statement / Interest-Rates / ECB Interest Rates
By: ECB
Ladies and gentlemen, the Vice-President and I are very pleased to welcome you to our press conference. Let me report on the outcome of our meeting, which was also attended by Commissioner Almunia.
On the basis of our regular economic and monetary analyses, we decided at today's meeting to leave the key ECB interest rates unchanged. This decision reflects our assessment that risks to price stability over the medium term are on the upside, in a context of very vigorous money and credit growth. The current short-term upward pressure on inflation must not spill over to the medium term. The firm anchoring of inflation expectations over the medium and long term is of the highest priority to the Governing Council, reflecting its mandate.
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Thursday, February 07, 2008
UK Interest Rates Cut to 5.25% - Will Not Help the Housing Market / Interest-Rates / UK Interest Rates
By: Nadeem_Walayat
The Bank of England is expected to cut UK interest rates by a quarter point to 5.25% following on from data confirming a weakening housing market and economy. The rate cut would be inline with the
Market Oracle forecast as of August 07 and Sept 07 for UK interest rates to fall to 5% by September 2008, this was revised lower to 4.75% in January 2008, following the US Panic rate cut 0.75% on 22nd Jan 08 to 3.5% which was later followed by a further 0.5% cut to 3% Read full article... Read full article...
Wednesday, February 06, 2008
Reasons Why the US Bond Market is Wrong on Inflation / Interest-Rates / Inflation
By: Michael_Pento
There is no shortage of market gurus on Wall St. who will tell you that inflation is low. The main evidence for their argument stems from the relatively low rates on Treasury bond yields and the narrow spreads on inflation protection securities know as TIPS. Whereas I believe the currently low yields on Treasury debt to be explainable, it is very dangerous to draw the wrong conclusion about inflation from bonds' elevated prices. Read full article... Read full article...
Tuesday, February 05, 2008
Bank of England Interest Rate Policy Targets UK House Price Inflation / Interest-Rates / UK Interest Rates
By: Adrian_Ash
"...Rising inflation in the cost of living didn't stop the Old Lady cutting interest rates in 2001, 2003 or 2005. Why change now...?"
WILL THE BANK of ENGLAND cut UK interest rates this Thursday?
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Monday, February 04, 2008
US Interest Rate Cuts Will Not Help Falling House Prices / Interest-Rates / US Housing
By: Money_and_Markets
Mike Larson writes: The Federal Reserve stepped up this week and gave Wall Street what it wanted — another half-percentage point cut in interest rates. That brings the federal funds rate down to 3%, the lowest level since the middle of 2005.
Today I want to take a closer look at the Fed's action, to find out what it will — and won't — do. Let's start with ...
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Thursday, January 31, 2008
Interest Rate Cuts WIll fail to Build Trust Between Financial Institutions / Interest-Rates / Credit Crisis 2008
By: David_Urban
A little more than a week ago a lone trader was able to rack up 4.9 billion euros in losses from trading in ‘plain vanilla' DAX futures. At the time of the discovery by SocGen officials, the losses were less than 2 billion euros. When the futures were sold off, the market crashed setting off a worldwide chain reaction which climaxed in the Federal Reserve cutting interest rates by 75 basis points. Read full article... Read full article...
Wednesday, January 30, 2008
US Fed Printing Money to Avoid Immediate Banking Collapse = Higher Long-term Rates / Interest-Rates / Credit Crisis 2008
By: Paul_Lamont
Two Billionaires Describe Our Outlook - Financial speculator and billionaire, George Soros states in his FT.com commentary : “the current crisis is the culmination of a super-boom that has lasted for more than 60 years.” In June's Higher Rates Reflect Default Risk we described the end of the last credit boom: “In 1928, the U.S. Treasury Bond similarly broke out of the channel and rose to a higher yield. This coincided with the end of ‘easy' money which forced the deleveraging of the economy and concluded with the financial crisis of 1929-1932.” Compare the two Treasury Bond Yield charts below. In 2005-2006 higher bond rates “broke out of the channel” and inflicted damage on the housing market. This marked “the end of ‘easy' money.” Similarly since 2006, there has also been a flight to quality. Read full article... Read full article...
Wednesday, January 30, 2008
Bond Insurers Failures to Break 200 Year Old System - The Great Credit Unwind of 2008 / Interest-Rates / Credit Crisis 2008
By: Mike_Whitney
"The current crisis is not only the bust that follows the housing boom, it's basically the end of a 60-year period of continuing credit expansion based on the dollar as the reserve currency. Now the rest of the world is increasingly unwilling to accumulate dollars.'' ' George Soros, World Economic Forum in Davos, Switzerland. `
Global market turmoil continued into a second week as stock markets in Asia and Europe took another tumble on Monday on growing fears of a recession in the United States. China's benchmark index plummeted 7.2% to its lowest point in six months, while Japan's Nikkei index slipped another 4.3%. Equities markets across Asia recorded similar results and, by midmorning in Europe, all three major indexes---the UK FTSE “Footsie”, France's CAC 40, and the German DAX---were all recording heavy losses. It's now clear that Fed Chairman Bernanke's 'surprise' announcement of a 75 basis points cut to the Fed Funds rate last Tuesday has neither stabilized the markets nor restored confidence among jittery investors.
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Saturday, January 26, 2008
Fed Following Short-term Money Market Interest Rates Towards US Recession / Interest-Rates / US Interest Rates
By: Anthony_Cherniawski
I have said multiple times in the past that the Federal Reserve doesn't lead with interest rate cuts. It follows. The proof is in the chart to the left, which compares the 3-month Treasury Bill Discount Rate to the Federal Funds Rate (blue) and the Fed Discount Rate (red). What this indicates is that there is more room to cut interest rates next week.
But this chart has a darker message , too. The flight to safety in short-term money market funds is a leading economic indicator of a recession.
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Friday, January 25, 2008
Wise Bears Sell US Municipal Bonds And US Treasury Bonds / Interest-Rates / Financial Crash
By: Richard_Gorton
I. Today saw a rally came from the Federal Reserve cutting the central bank interest by 0.75%. My investment motto is: "In a bull market be a bull, and in a bear market be a bear: in a bull market, one buy on dips, and in a bear market, one sells pops and rallies". Special thanks to Stockcharts.com for the free us.eage of charts provided herein; all comments are mine, not theirs, or those of any one else.
I recommend that one buy gold as it is in a bull market going 'sooner or later much, much higher'.
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Friday, January 25, 2008
Impact of US Current Account Deficit on Emerging Markets - From Credit to Money, Part I / Interest-Rates / Emerging Markets
By: Adrian_Ash
"...Wouldn't life be much simpler for everyone if the US raised interest rates and didn't spend more than it had overseas...?"
ONE U.S. DOLLAR used to buy nearly four Brazilian Reals at the start of 2003.Today it buys fewer than half as many. Which you might think implies higher travel, energy and food costs to come for US consumers.
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