Analysis Topic: Interest Rates and the Bond Market
The analysis published under this topic are as follows.
Tuesday, May 20, 2014
May The Interest Rate Rise With You / Interest-Rates / Financial Markets 2014
By: Raul_I_Meijer
If global financial markets cannot set interest rates, they are distorted and dysfunctional by definition. Of course one may argue that they have long been distorted regardless, and there’s plenty merit to that, but without being able to determine interest rates, it is impossible for markets to become functional again, other than through a collapse so severe nobody wants to be seen dead with any paper ‘assets’ anymore. That is the inevitable fork in the road: either you allow interest rates to be – freely – set by markets, or you run head first into a market crash. There are other requirements too, like getting rid of bad debt, restructuring, allowing defaults and throwing out bankrupt zombifies market participants, but none of that will do much good as long as central banks and governments can claim the right of granting themselves the authority to set rates at whim.
Tuesday, May 20, 2014
U.S. Treasury Bonds - The Belgian Connection / Interest-Rates / US Bonds
By: Peter_Schiff
One of the biggest questions at the end of 2013 was how the Treasury market would react to the reduction of bond buying that would result from the Federal Reserve's tapering campaign. If the Fed were to hold course to its stated intentions, its $45 billion monthly purchases of Treasury bonds would be completely wound down by the fourth quarter of 2014. Given that those purchases represented a very large portion of Treasury bond issuance at that time, it was widely assumed by many, me in particular, that the sidelining of such huge demand would push down the price of Treasury bonds. Without the Fed's bid, interest rates would have to rise.Read full article... Read full article...
Sunday, May 18, 2014
Fed to Raise U.S. Interest Rates in 9 Months / Interest-Rates / US Interest Rates
By: EconMatters
James Bullard Speech
The biggest news to come out of Friday`s financial market activity was James Bullard’s thoughts on when he expects the Fed to start raising rates, he believes the Fed will start raising rates sometime near the end of the first quarter of 2015.
He also said, “While first-quarter GDP growth was weak, growth in coming quarters is still predicted to be robust,” according to slides for his speech. He added, “the average quarterly pace of growth in 2014 may still be an improvement relative to 2013.”
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Wednesday, May 14, 2014
Can U.S. $17 Trillion In Debt Survive Higher Interest Rates? / Interest-Rates / US Debt
By: Dan_Amerman
The United States federal government currently has about $17.5 trillion in debt outstanding. What this means is that if the interest rate on that debt were to rise by even 1%, the annual federal deficit rises by $175 billion. A 2% increase in interest rate levels would increase the federal deficit by $350 billion, and if rates were 5% higher, the annual federal deficit rises by $875 billion.
Clearly, the federal government cannot afford substantially higher interest rates.
At the very same time, because of the current extremely low interest rate environment, tens of millions of retirees and long term investors have seen their returns slashed, with potential reductions in their standard of living as well.
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Tuesday, May 13, 2014
PIMCO See's Slow Interest Rate Rise in 'New Neutral' - Video / Interest-Rates / US Interest Rates
By: Bloomberg
Richard Clarida, global strategic adviser at Pacific Investment Management Co., talks about the outlook for the global economy and implications of the "new neutral." Clarida speaks with Bloomberg's Tom Keene, Scarlet Fu and Adam Johnson on Bloomberg Television's "Surveillance." James Lockhart, vice chairman of WL Ross & Co., also joined the discussion.
Friday, May 09, 2014
What the Fed’s Inflation Mania Means For Investors / Interest-Rates / Inflation
By: Graham_Summers
The signs of inflation continue to appear in the economy.
The Fed is ignoring this because the Fed is afraid of deflation… despite food prices, energy prices, healthcare costs, home prices and stocks soaring.
Tuesday, May 06, 2014
How to Find Junk Bonds That Don’t Stink / Interest-Rates / Corporate Bonds
By: Casey_Research
By Andrey Dashkov, Research Analyst
Riddle me this: Why would anyone ever buy junk bonds or a junk bond fund? Before we get to the answer, I would like to point something out that seems to be a given, but that astonishingly few investors think about: bonds are debt instruments, so investing in bonds means investing in debt, governmental or corporate.
Monday, April 28, 2014
European Bond Market Sentiment Gauge in Reaches Epic Proportion / Interest-Rates / Euro-Zone
By: EWI
A visual history of complacency and fear as seen by the 10-year spread over German Bunds
The one-two punch 2014 winter storms that battered the southeastern United States left $13.5 million in damages in Georgia alone and thousands of residents displaced due to burst pipes and power outages. I am one of the displaced. Three months after the flood, I'm still living out of suitcases in a hotel while my apartment gets rebuilt.
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Friday, April 25, 2014
Bond Market Investing - Not All Debt Is Created Equal / Interest-Rates / US Bonds
By: Don_Miller
Optimal diversification: We all want it. Diversification is, after all, the holy grail of portfolio management. Our senior research analyst Andrey Dashkov has said that many times before, and he echoes that refrain in his editorial guest spot below.
A brief note before I hand over the reins to Andrey. The last time the market tanked, many of my friends suffered huge losses. They all thought their portfolios were well diversified. Many held several mutual funds and thought their plans were foolproof. Sad to say, those funds dropped in tandem with the rapidly falling market. Our readers need not suffer a similar fate.
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Thursday, April 24, 2014
The Central Banks Have Realized Their Worst Nightmares Are Approaching / Interest-Rates / Quantitative Easing
By: Graham_Summers
Central Bankers will never openly admit that they or their policies have failed. Moreover, they do not rush into sudden tightening (more on this in a moment). But one can begin to notice subtle changes in their language and actions that indicate they have noticed what’s happening in Japan (the failure of the BoJ’s “shock and awe” QE program to generate growth).
Nowhere is this more clear than at the US’s Federal Reserve or Fed. Indeed, starting in August 2013, various Fed officials began questioning the efficacy of QE.
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Wednesday, April 23, 2014
QE Is A Fraud Perpetrated By Made Men / Interest-Rates / Quantitative Easing
By: Raul_I_Meijer
A lot of words are being spent again these days on deflation and the QE measures that are supposed to “cure” it. Paul Krugman, who when it comes to stimulus is a hammer seeing nails only, now has it in for Sweden’s central bank, which he labels monetary sadists for not opening the spigots. But it’s all a hugely deceptive false flag; it’s not an issue of whether you launch QE or not. There’s a third, and much more valid, way of looking at this.
Wednesday, April 23, 2014
G-20 and the US Tell the Bank of Japan to End Quantitative Easing / Interest-Rates / Quantitative Easing
By: Mike_Whitney
It looks like QE is going to end with a whimper instead of a bang.The bigwigs in the G-20 have put the kibosh on Japan’s money printing extravaganza. While most analysts expect the Bank of Japan (BoJ) to announce more “easing” in the days ahead to counter weakening economic data and droopy stock prices; it’s not going to happen. Why? Because the big boys have told the BoJ to knock it the hell off, that’s why? Here’s the scoop from the Japan Times:
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Tuesday, April 22, 2014
Rates are NOT Rising! / Interest-Rates / US Interest Rates
By: Jonathan_Davis
Back in December our firm noted that ‘everyone’ was saying interest rates would soon rise. After all, they said, The Governor of the Bank of England and the Federal Reserve of the US had all but announced it.
We also noted that rates had been falling for getting on for 40 years.
We wondered if those saying higher rates are coming were looking in the wrong places.
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Thursday, April 17, 2014
Amazing Story From Japan - Bond Market Liquidity Dries Up / Interest-Rates / Credit Crisis 2014
By: John_Rubino
Here’s something you don’t see very often: For a day and a half this week, the Japanese government’s benchmark 10-year bonds attracted not a single successful private sector bid. At today’s artificially-depressed yields, no one wants this paper — except of course the Bank of Japan, which is buying up the bonds with newly-created yen. As the Gulf Times noted:
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Wednesday, April 16, 2014
Glaring Q.E. Failure Spotted - Money Velocity Is Falling Rapidly / Interest-Rates / Quantitative Easing
By: Jim_Willie_CB
Sometimes pictures are far more effective in communicating an important point. They are extremely effective in undermining respect and confidence, when in the cartoon format. A sequence of graphics struck the cognitive circuits recently. Long explanations will not serve well. The US Federal Reserve has been printing money since 2011 to cover USGovt debt securities in a frenetic manner. They have lost control. They call it stimulus, when it is actually the opposite. It does assist the speculators with nearly zero cost money to borrow, but one must be a club member to win loan grants.
Tuesday, April 15, 2014
The Real Purpose Of QE - It’s Not Employment / Interest-Rates / Quantitative Easing
By: Darryl_R_Schoon
Free markets are a function of supply and demand whereas capital markets are a function of credit and debt
The bankers’ ponzi-scheme – which began with the distortion of free markets in 1694 when the Bank of England began issuing debt-based paper banknotes alongside the Royal Mint’s gold and silver coins – is coming to an end.
The bankers’ wildly successful and long-running scheme, dependent on the uneasy equilibrium between credit and debt, has now been irrevocably destabilized. Aggregate levels of debt are now so high that credit—no matter how cheap and available—cannot restore the balance.
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Monday, April 14, 2014
Get Your Share of an Extra Trillion Euros Money Printing / Interest-Rates / Eurozone Debt Crisis
By: Money_Morning
Peter Krauth writes: When Gutenberg introduced the printing press to Europe, he never could have imagined this.
Like so many revolutionary inventions, it's proven a doubled-edged sword.
The U.S. Fed has begun winding down its latest QE program (for now), and the baton's already been passed to Japan with its own massive easing campaign.
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Thursday, April 10, 2014
They Snuck In Eurobonds Through The Backdoor / Interest-Rates / Eurozone Debt Crisis
By: Raul_I_Meijer
The headlines are great, but then so is the headfake. “Greece makes ‘triumphant’ return to the markets in €3 billion bond sale”, says the Guardian. CNBC speaks of a “voracious appetite” for Greek bonds, but does question whether it’s justified. Still, at first glance it certainly looks like the Greeks have been welcomed back into the fold of civilized people:
Greece, the country once held responsible for sparking the sovereign debt crisis, managed to attract €20 billion ($27.7 billion) of offers for a new five-year bond and is set to sell €3 billion at a yield of 4.95%.
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Thursday, April 10, 2014
Interest Rate Hikes on the Horizon? Not Likely / Interest-Rates / US Interest Rates
By: Matt_Machaj
Recent weeks were not bad for those gold investors’ hearts filled with golden hopes. The price of gold depends on many factors, but past patterns can give us important hints and suggest which of them are to be carefully studied and properly comprehended. If history were to teach us anything about gold’s past market values it would most primarily be the following: watch out for the feds! Wise observation of government policies is the main driving force for what is happening in the gold market (surely along with supply factors in the longer run). As we discussed a month ago, this is the main reason for the observed correlation between the gold price and the interest rates. Not because interest rates per se are always casually linked to the gold price. But because interest rates are a reflection of current government policies.
Monday, April 07, 2014
Rising Interest Rate Realities / Interest-Rates / Stock Markets 2014
By: Michael_Pento
The entire global economy now clings precariously to one crucial phenomenon. That is, how much longer can the central banks of the developed world artificially suppress interest rates at near zero percent?
The violently-negative market reaction to Janet Yellen's comments during her first press conference was a clear indication of how vulnerable the stock market is to the eventual reality of rising interest rates. All Ms. Yellen did was remind investors that the Fed Funds Rate would have to be moved up from zero percent -- probably beginning in the middle of next year. That was enough to send the major averages cascading downward faster than you could say the words "flash trading."