Analysis Topic: Interest Rates and the Bond Market
The analysis published under this topic are as follows.
Wednesday, December 21, 2011
ECB Stealth QE Euro 489 Billion Money Printing to Prevent Eurozone Banking System Collapse / Interest-Rates / Eurozone Debt Crisis
By: Nadeem_Walayat
The ECB's first ever long term Refinancing Operation (LTRO) that had been estimated to provide upto Euro 350 billion to Europe's bankrupt banks in the form of cheap 1% 3 year loans, instead a huge Euro 489 billion was borrowed by 523 banks in a rush to grab cheap money that amounts to QE in all but name regardless of ECB propaganda.
Wednesday, December 21, 2011
European Credit Crunch – Another Excuse For Silver Downdraft? / Interest-Rates / Eurozone Debt Crisis
By: Dr_Jeff_Lewis
It's clear that Europe's debt problems can now be wrapped up into the term credit crunch. In light of operations by the Federal Reserve, the amount of money available for credit appears to be shrinking, while risk premiums demanded by banks are thickening.
On Monday, the 3-month LIBOR-OIS spread rose to a record of .49%, a gain of nearly 11% in just one trading day. This important measurement shows the universal health of the banking system as determined by the LIBOR rate and the overnight indexed swap. The OIS rate is a generally strong indication of money market interest (investors who want little risk, but also little reward) and their favor or disfavor for particular investments.
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Monday, December 19, 2011
European Debt Crisis Explained, the Back Door Bazooka Solution / Interest-Rates / Eurozone Debt Crisis
By: Chris_Ciovacco
The concept of a “back-door bazooka” is based on a recent policy change made by the European Central Bank (ECB). Reuters summed up the pros and cons of the stealth bazooka concept this way:
Read full article... Read full article...Instead of unlimited bond buying, the ECB will offer banks this week an opportunity to borrow money for three years for the first time, extending the current one year maximum ceiling for refinancing. France hopes banks will use the money to buy euro zone bonds, and ease the upward pressure on yields, but Italy’s Unicredit bank said last week this “wouldn’t be logical” for banks under pressure to reduce risk and rebuild capital.
Monday, December 19, 2011
The Status Of QE3 / Interest-Rates / Quantitative Easing
By: Tony_Pallotta
Aside from countless banks calling for QE3 which one has to wonder if their analysis may be slightly biased for personal gain the question remains will we see QE3.
The November 2010 FOMC statement which launched QE2 made it clear why the Fed was expanding their balance sheet by $600 billion.
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Saturday, December 17, 2011
EU Banking Crisis: Towards the "Leveraged Breakup" of Euroland? / Interest-Rates / Eurozone Debt Crisis
By: Bob_Chapman
The Fed’s third quarter audit data shows a total system debt of 355% and of GDP, in spite of so-called de-leveraging. It is down from the second quarter’s 375% of GDP, but up from 264% a dozen years ago. Financial sector borrowing fell almost 50% in the quarter but non-financial debt increased while financial debt fell – a push so to speak. Unfortunately most of the debt growth emanated from Washington. That growth was $557 billion, of at a 14.1% annualized rate. Of course, what the federal government is doing is the antithesis of what they should be doing. Will these borrowings and debt continue, of course they will.
Friday, December 16, 2011
France Triple A Debt Rating Downgrade, G7 Government Debt Facts and Projections / Interest-Rates / Eurozone Debt Crisis
By: Asha_Bangalore
The possibility of Standard &Poors downgrading France’s triple A debt rating is the latest source of market anxiety among several other factors. Standard &Poors put 14 eurozone countries on negative watch earlier in the month. Today, Christian Noyer, the head of the central bank of France, expressed strong reservations about ratings agencies. It is helpful in this context to look at recent trends of government debt as a percent of GDP of major advanced nations.
Friday, December 16, 2011
European Banks are 'Insolvent' Amid Euro-zone Debt Crisis / Interest-Rates / Eurozone Debt Crisis
By: Bloomberg
Michael Platt, founder of the $30 billion hedge fund BlueCrest Capital, spoke to Bloomberg Television's Erik Schatzker and Stephanie Ruhle in his first-ever live TV interview.
Platt said that most of the banks in Europe are insolvent and the situation in the region is "completely unstable." On investing in illiquid assets, Platt said he "would not touch them with a barge pole" and that "the major opportunities will come post-blowout."
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Monday, December 12, 2011
Latest Eurozone Debt Crisis Plan "Another Grand Illusion" / Interest-Rates / Eurozone Debt Crisis
By: Money_Morning
David Zeiler writes:
As European leaders celebrated a tentative agreement to accept tougher budgetary rules among its members, critics expressed doubts the plan would cure the two-year-old Eurozone debt crisis.
Last week's highly anticipated two-day summit resulted in 26 of the 27 European Union (EU) nations - the United Kingdom objected - agreeing to create a new treaty that would require members to keep budget deficits to within 0.5% of gross domestic product (GDP) in good economic times and within 3% of GDP in bad times.
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Monday, December 12, 2011
Another Euro Zone Crisis, Another Backdoor Taxpayer Bailout? / Interest-Rates / Eurozone Debt Crisis
By: EconMatters
Exactly 20 years to the day after the creation of the European Union (EU) and the Euro currency, German Chancellor Angela Merkel successfully secured an historic agreement from all 27 current members of the EU, except Britain, forging a deeper economic integration in the euro zone on Friday, 9 Dec.Read full article... Read full article...
Sunday, December 11, 2011
The U.S Debt Crisis, A Look Beyond the Paradigms / Interest-Rates / US Debt
By: Andy_Sutton
Co-Authored by Gregory Olson, CEO – GRO Enterprises : One of the traps all analysts fall into from time to time is their inability to see the forest through the trees. We are all guilty of this from time to time, and those who would deny this simple reality only set themselves up to miss important changes in the paradigms in which they operate. Perhaps the most famous example of this happened in the life and times of Christopher Columbus. We’re sure you recall the mental model of that time; that the Earth was flat. Many very wise people in Columbus’ day felt he was going to sail the Nina, the Pinta, and the Santa Maria right off the edge of the Earth. And there are many other classic examples as well.
Friday, December 09, 2011
Stop Hyperventilating about Federal Debt: USA Is Heading for Party-Time Again / Interest-Rates / US Debt
By: Andrew_Butter
An interesting component of the current atmosphere of angst in America is collective amnesia. Everyone seems to forget:
1: There was a very expensive war. Whether the war was in fact “necessary” so as to Keep America Safe, is debatable. But putting that to one side, it most certainly did not generate a return on investment in the form of looting and pillaging…which always used to be the main justification for going to war in the old days, and that in the cold light of debt servitude, arguably remains the only fiscally-responsible reason for going to war…ever…so long as you win!
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Friday, December 09, 2011
The European Central Bank Provides Temporary Support to Banks / Interest-Rates / Credit Crisis 2011
By: Asha_Bangalore
The European Central Bank (ECB) provides temporary support to the economic bloc with its actions today. The ECB lowered the policy rate 25bps to 1.00%, expanded the range of eligible collateral for loans extended to banks, increased the maturity of loans to 3 years from the current maturity of 13 months to alleviate funding problems, and lowered reserve requirements to 1.0% from 2.0%. These steps are necessary measures to ease pressures in the banking sector and prevent a severe credit crunch.
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Thursday, December 08, 2011
U.S. Twin Deficits, Phony Money for Worthless Promises / Interest-Rates / US Debt
By: Gary_North
There are two deficits that we hear about most: the federal government's deficit and the balance of payments of the United States. They are linked, but they are very different in their effects.
The federal deficit is seen by Keynesians as mostly a benefit and by Austrians as mostly a liability, and for the same reason: higher government spending.
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Wednesday, December 07, 2011
The Risk of Sovereign Debt / Interest-Rates / Eurozone Debt Crisis
By: David_Howden
With a 50 percent haircut recently given on the Greek sovereign-debt question, investors are increasingly asking what the real risk of sovereign debt is. It would appear that investors underpriced the risk inherent in sovereign debt, especially that of Europe's periphery. One might even go so far as to say that investors made foolish choices in the past and are now getting their just deserts.
Tuesday, December 06, 2011
Quantitative Easing by the European Central Bank - A Matter of Time? / Interest-Rates / Quantitative Easing
By: Asha_Bangalore
German Chancellor Merkel and French President Sarkozy announced a “comprehensive” agreement today pertaining to new rules to enforce fiscal discipline among members of the eurozone. Essentially, elements of the Maastricht economic criteria (3.0% budget deficit and 60% debt-to-GDP ratio) that had to be met in order to belong to the Euro Club are being enforced once again under new guidelines. An active audit committee to monitor national budgets to prevent profligacy is not part of the agreement, instead member states will be responsible and each will have to enshrine debt limits in their constitution. The European Court of Justice will have the authority to rule if members are not compliant and sanctions will be put in place by a vote of the European Council if members do not meet the fiscal thresholds. Giving new life to old rules, is that a big step?
Saturday, December 03, 2011
European Central Bank Loans Are Just 'Chump Change' / Interest-Rates / Credit Crisis 2011
By: Bloomberg
Stephen Roach, non-executive Chairman of Morgan Stanley Asia, spoke with Bloomberg Television's Betty Liu about Europe's crisis, the banking system in China and the U.S. economy.
On the European proposal to channel central bank loans through the IMF, Roach said that "this is not a bazooka" and "200 billion is chump change."
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Saturday, December 03, 2011
It’s Time To Dump U.S. Treasury Bonds / Interest-Rates / US Bonds
By: Sy_Harding
First let’s make sure we understand the basics of bonds.
Bonds are a form of debt. When a company or a government needs to borrow money it can borrow from banks and pay interest on the loan, or it can borrow from investors by issuing bonds and paying interest on the bonds.
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Friday, December 02, 2011
Central Banks’ Latest Move Shows Desperation / Interest-Rates / Credit Crisis 2011
By: Washingtons_Blog
The coordinated swap line bailout by the Federal Reserve, the Bank of Canada, the Bank of England, the Bank of Japan, the European Central Bank, and the Swiss National Bank- and China’s reduction of reserve requirements by .5% – shows desperation. (For background on swap lines.)
Thursday, December 01, 2011
Coordinated Central Bank Action Temporary Fix, Not Panacea for Europe’s Sovereign Debt Woes / Interest-Rates / Global Debt Crisis
By: Asha_Bangalore
The Federal Reserve, Bank of Canada, Bank of England, the Bank of Japan, the European Central Bank, and Swiss National Bank announced coordinated actions to provide liquidity support to the global financial system. Today’s announcement involves a reduction in cost at which banks in foreign countries can borrow dollars from their central banks. The central banks lowered the price on the existing temporary U.S. dollar liquidity swap line by 50 basis points such that the new rate will be U.S. dollar over night indexed swap (OIS) rate plus 50 bps instead of U.S. dollar OIS rate plus 100 bps. In addition, the Bank of England, the Bank of Japan, the European Central Bank, and the Swiss National Bank will continue to offer three-month tenders until further notice. This arrangement will be effective as of December 5, 2011 and will remain in place until February 1, 2013.
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Wednesday, November 30, 2011
Central Banks Tackling Liquidity, Policy, Geopol and Solvency / Interest-Rates / Central Banks
By: Ashraf_Laidi
Today's coordinated central bank liquidity injections coincide with liquidity concerns (USD LIBOR nearing the highs of June 2010 at 0.53%); policy concerns (EFSF & austerity deadlock), geopolitical concerns (storming of UK Embassy in Tehran) and solvency concerns as signaled by implicit (voluntary) default from Greece.
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