Analysis Topic: Interest Rates and the Bond Market
The analysis published under this topic are as follows.
Sunday, August 05, 2012
How to Prepare for the U.S. Treasury Bond Market Apocalypse / Interest-Rates / US Bonds
By: Investment_U
Alexander Green writes: The Wall Street Journal made an interesting observation recently, “Treasury bonds are priced for the end of the world.”
It was a news article, not an opinion piece. But it happens to be the viewpoint of virtually every investor with half a brain – or a modicum of common sense. A few months ago, for instance, the world’s best-known investor, Warren Buffett, wrote in his annual letter to shareholders, “Right now bonds should come with a warning label.”
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Thursday, August 02, 2012
Super Mario Draghi's Diabolic Spiral / Interest-Rates / Eurozone Debt Crisis
By: Raul_I_Meijer
Mario Draghi did a press conference today. "Everyone" was eagerly awaiting it, and nobody seemed to understand it makes no difference what he says. At least, that is, from the point of view of saving the euro, or Spain, or Italy, or the eurozone. Draghi let slip a dumb remark last week at what was essentially no more than an Olympic cocktail party, and now he's supposed to make it all come true. But he didn't say anything of substance then or now, because he doesn't have anything of substance to offer.
Thursday, August 02, 2012
Unintended Consequences of Well-Intended Policies / Interest-Rates / US Debt
By: Casey_Research
Dr. Lacy Hunt for Casey Research writes:In the early 1960s, when JFK was in the White House and William McChesney Martin was Fed chairman, Keynesian economics was in full bloom. One of its major tenets is the Phillips Curve, which posits a stable inverse relationship between the rate of inflation and the unemployment rate. Yale professor James Tobin and others argued that the social outcome could be improved by a more activist monetary and fiscal policy. Specifically, they contended that the unemployment rate could be lowered while only resulting in slightly higher inflation.
Thursday, August 02, 2012
Pimco Bill Gross - Draghi Disappoints with Lack of ECB Policy Moves / Interest-Rates / ECB Interest Rates
By: Bloomberg
Bill Gross, co-CIO of PIMCO, appeared on Bloomberg TV’s “In the Loop” with Betty Liu and said that Mario Draghi disappointed investors by not offering concrete policy steps: "we were hoping for, at least temporarily, some type of specific effort on the part of the central banks."
Gross also responded to Jeremy Siegel's comments on Bloomberg TV earlier today that Gross doesn't know economics by suggesting that he "hasn't even read my piece, let alone understood it." Gross said that Siegel “belongs back in his Ivory tower.”
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Thursday, August 02, 2012
Euro-zone Quarantining PIIGS Against Catching Spanish Flu / Interest-Rates / Eurozone Debt Crisis
By: Gary_North
The Greek crisis was merely the warm-up act for the main show: the default of Spain and its much-denied departure from the euro.
That departure will leave holders of Spanish bonds with IOUs in euros that will be paid interest in pesetas.
These bond-holders include French banks, German banks, and assorted pension funds. The owners of those institutions will take significant hits on their net worth.
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Thursday, August 02, 2012
Audit the Out of Control Fed, Restore “Free Markets for Free People” / Interest-Rates / Central Banks
By: Gary_Dorsch
When will the Fed’s folly and madness come to an end? Perhaps next year, we’ll begin to see big changes at the Federal Reserve, including the sacking of Fed chief Ben Bernanke, and his henchmen of addicted money printers, who have tossed aside the notion of “Moral Hazard,” a long time ago, and instead, are engaging in “financial repression” in the bond markets, and the rigging of the stock market, much to the chagrin of believers in free markets. However, in order for this shake-up at the Fed to occur, the Republican Party would have to beat the odds, by capturing the White House, and majorities in both chambers of Congress.
Thursday, August 02, 2012
U.S.Fed Fails to Offer Stimulus, But Assures Support if Necessary / Interest-Rates / Economic Stimulus
By: Asha_Bangalore
The two-day FOMC meeting concluded without any change in monetary policy. Expectations had ranged from a possible change in language to extend the exceptionally low interest rate period to 2015 from the current late 2014 stipulation to a reduction in interest on excess reserves or another round of purchases of long term assets. Hopes were not entirely dashed as the Fed expressed a strong willingness to provide monetary policy support if economic conditions weaken. The Fed’s message runs as follows:
Wednesday, August 01, 2012
Looking at the Real Math's Behind Spain's Debt Crisis / Interest-Rates / Eurozone Debt Crisis
By: Graham_Summers
As you know by now, I keep stating that Spain is going to be the straw that breaks the EU’s back. The country is facing a regional, banking, and soon to be sovereign crisis all at once.
Spain’s Catalonia suspends social service payments
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Monday, July 30, 2012
LIBOR, Lies and Derivatives / Interest-Rates / Banksters
By: Raul_I_Meijer
Three weeks, ago, I wrote LIBOR was a criminal conspiracy from the start. An avalanche of articles have been written on LIBOR since, and I think an update is in order, which also gives me a chance to delve a little further into the bold statement in that title.
It's not that I'm a big fan of using terms like conspiracy, not at all, but then again, neither am I a fan of constantly being lied to.
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Sunday, July 29, 2012
Opacity and Credit Default Swaps No Access for Spain Denver, Maine, and Carlsbad / Interest-Rates / Global Debt Crisis 2012
By: John_Mauldin
Rick: How can you close me up? On what grounds?
Captain Renault: I'm shocked, shocked to find that gambling is going on in here!
– From the classic scene in Casablanca, made in 1942
The latest scandal du jour seems to be about what is now called LIBORgate. But is it a scandal or is it really just business as usual? And if we don’t know which it is, what does that say about how we organize the financial world, in which $300-800 trillion, give or take, is based on LIBOR? This is actually just the second verse of the old song about derivatives, which is a much larger market. Which of course is a problem that was not solved by Dodd-Frank and that has the potential to once again create true havoc with the markets, whereas LIBOR can only cost a few billion here and there. (Sarcasm intended.)
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Friday, July 27, 2012
Uncovering the Darkest Secret of the Financial System / Interest-Rates / Eurozone Debt Crisis
By: Graham_Summers
As noted in yesterday’s piece concerning how and why Europe could bring about systemic risk, EU banks are likely leveraged at much, much more than 26 to 1.
Indeed, considering how leveraged and toxic US banks’ (especially the investment banks’) balance sheets became from the US housing bubble, the chart I showed you should give everyone pause when they consider the TRUE state of EU bank balance sheets.
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Thursday, July 26, 2012
US Treasury Bonds False Safe Haven, GOLD is the True Sanctuary / Interest-Rates / US Bonds
By: Jim_Willie_CB
As preface, consider that the USTreasury 10-year yield went below 1.4% this week. Some unenlightened celebrate the asset appreciation and point to a successful asset in performance in an otherwise dismal financial market. The Jackass said in the June 6th public article "USTBonds: Black Hole Dynamics" that such a success is a marquee billboard message of economic meltdown and systemic failure. As the rally continues, possibly the onliest rally outside of corn and soybeans in yet another disaster, people should focus on whether the systemic collapse will occur before the 10-yield hits 1.0% in my warning. Focus on four major points:
Wednesday, July 25, 2012
Horse-Whipping Interest Rates to Zero / Interest-Rates / US Interest Rates
By: Rob_Kirby
Note how we barely see the hand of the ‘mystery’ rider [Geithner]. Note the conduit [crop] through which the force is applied. Now note the animal that does the heavy lifting…
Interest Rate Swaps and the Long End of the Interest Rate Curve
The rest of the world has been a net seller of U.S. Treasuries for a number of years now. It has been the U.S. Treasury – exercising / implementing Imperialist U.S. monetary policy through the trading desks of the magnificent five [J.P. M., BofA, Citi, Goldy and MS] – IN THE LONG END OF THE INTEREST RATE CURVE by selling tens upon tens of Trillions of Interest Rate Swaps [IRS] – deals between the banks [payers of fixed] with the Exchange Stabilization Fund [ESF] brokered by the N.Y. Fed trading desk. This is what has kept things “appearing somewhat normal” in the long end of the interest rate curve.
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Wednesday, July 25, 2012
Fiat Currencies from Nullifying to Negative Nominal Interest Rates / Interest-Rates / US Interest Rates
By: Axel_Merk
The once unthinkable might become policy: negative nominal interest rates. Investors should care as they may be increasingly punished for not taking risks. Yet masochistic investors believe they may be the prudent ones given the risks lurking in the markets. What are investors to do, and what are the implications for the U.S. dollar and currencies?
Wednesday, July 25, 2012
Eurozone Continues to Unravel / Interest-Rates / Eurozone Debt Crisis
By: Ian_R_Campbell
Things continue to unravel in the Eurozone. Here is a quick overview of some of the events that have taken place over the past few days (in order of importance as I see things):
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Tuesday, July 24, 2012
The Relationship Between High Total Public Debt and Interest Rates / Interest-Rates / US Debt
By: John_Mauldin
The relationship between high total public debt and interest rates is controversial (to some); and in today’s Outside the Box Van Hoisington and Dr. Lacy Hunt of Hoisington Investment Management tackle the subject head-on, in their “Quarterly Review and Outlook” for Q2 2012. They bring important new evidence to the debate, citing three academic studies (including an April 2012 paper coauthored by Rogoff and Reinhart) and an historical retrospective that focuses on the debt-disequilibrium panic years of 1873 and 1929 in the US and 1989 in Japan. In their view, the onus of responsibility for the “Panic of 2008” falls on the sometimes-slumping shoulders of the Federal Reserve, for making money and credit too easily available, and then “[failing] to use regulatory powers to check the unsound lending and the concomitant buildup of non-productive debt.”
Monday, July 23, 2012
Soaring Spanish Bond Yields Another Hit to Growing Eurozone Debt Crisis / Interest-Rates / Eurozone Debt Crisis
By: Money_Morning
Diane Alter writes:
Investors today (Monday) have been selling on news that Spain might need more bailouts as its 10-year yield reached a record high.
Spanish bond yields reached a record high of 7.56% and the latest unemployment rate sits at a miserable 24.6%.
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Monday, July 23, 2012
Eurozone Debt Crisis Won't Be Fixed by "Bailout Lite" / Interest-Rates / Eurozone Debt Crisis
By: Money_Morning
Dr. Kent Moors writes:
The market red ink this morning (Monday) around the globe is the result of a usual suspect - Spain.
These days, if someone even sneezes in Madrid, Barcelona, or Córdoba (one of my favorite places, actually), investors go into intensive care all over the world.
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Saturday, July 21, 2012
The Libor Interest Rate Manipulation Scandal In Full Perspective / Interest-Rates / Market Manipulation
By: Paul_Craig_Roberts
The article about the Libor scandal, coauthored with Nomi Prins, received much attention, with Internet repostings, foreign translation, and video interviews. To further clarify the situation, this article brings to the forefront implications that might not be obvious to those without insider experience and knowledge.
The price of Treasury bonds is supported by the Federal Reserve’s large purchases. The Federal Reserve’s purchases are often misread as demand arising from a “flight to quality” due to concern about the EU sovereign debt problem and possible failure of the euro.
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Saturday, July 21, 2012
European Contagion Turns Into Domino / Interest-Rates / Eurozone Debt Crisis
By: Raul_I_Meijer
One day after the EU finally sanctioned the €100 billion bailout for Spain's banking system, for which the sovereign will remain on the hook, according to German finance minister Schäuble, who said there was no way the banks would be bailed out directly, developments were fast and furious.