Analysis Topic: Interest Rates and the Bond Market
The analysis published under this topic are as follows.
Sunday, February 13, 2011
Modern Monetary Theory: The Sophistry of the US Dollar and Debt Monetization / Interest-Rates / Quantitative Easing
By: Jesse
soph·is·try (s f -str ). n. pl. soph·is·tries. 1. Plausible but fallacious argumentation. 2. A plausible but misleading or fallacious argument.
This is a very well written and important piece by Mr. Cullen Roche at his site Pragmatic Capitalism. It does a good job of capturing the essence of modern monetary theory that I like to think of as post-Nixonian fiat, gaining its realization and fruition in Reaganomics and the Greenspan Fed.
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Saturday, February 12, 2011
The Future Public Debt Trajectory, Projections and Drastic Measures / Interest-Rates / Global Debt Crisis
By: John_Mauldin
A Bit of Background
Drastic Measures
The Future Public Debt Trajectory
Debt Projections
This week I find myself in Bangkok, and I must admit to enjoying the experience a great deal, so much so that I am going to preview a portion of my coming book, Endgame, so that I can go back out and play tourist. Next week I get back to my more or less regular schedule, but I think you will enjoy this first portion of chapter six, where we look at an important paper from the Bank of International Settlements on “The Future of Public Debt.” It is not a pretty one. We are watching one of the last great bubbles begin to deflate – the bubble of government and government debt – all over the developed world. This is a serious weight that will be a drag on our growth, and it is interesting to contemplate as I sit in Bangkok, a city that is vibrant and teeming with opportunity.
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Saturday, February 12, 2011
U.S. Treasury Yield Curve Starts to Decline / Interest-Rates / US Interest Rates
By: Donald_W_Dony
After three years of progressive climbing, the U.S. Yield curve is now starting to decline. Yield curves start to fall when short term bond yields rise at a faster pace then long bond yields. This event typically occurs in the first or second year of a bull market.
The economic factors that drive this movement (declining yield curve) can vary from one cycle to the next but the implications are normally the same. They represent growing economic strength.
Friday, February 11, 2011
How to Profit from Rising Interest Rates / Interest-Rates / US Interest Rates
By: Terry_Coxon
Terry Coxon, The Casey Report writes: In the fall of 2008, the Federal Reserve responded to the Lehman bankruptcy by igniting a rapid expansion in the U.S. money supply. It did so because, by its lights, the immediate and obvious menace to the economy was a deflationary collapse, with one giant bankruptcy breeding another. And it went about the task without compromise; the monetary base more than doubled in less than a year, and the public's M1 money supply (checkable deposits plus hand-to-hand currency) jumped by 20%.
Friday, February 11, 2011
U.S. Treasury Bonds Set to Rally / Interest-Rates / US Bonds
By: Joseph_Russo
When planning trips or special events, it is wise to check the weather forecast to make certain that conditions are expected to be suitable for those plans.
Likewise, when planning investments or shorter-term trades, it is also prudent to gain access to a reliable market forecast that is suitable to ones interests, timeframes, and objectives.&
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Friday, February 11, 2011
What Dissension in the Fed's Ranks Means / Interest-Rates / US Interest Rates
By: Mike_Larson
A remarkable thing happened this week. Truly remarkable. But just in case it got lost amid the Egyptian chaos … coverage of the subzero temperatures up north … or the after-analysis of the Super Bowl, I’m going to shout it from the rooftops for you:
A couple of Federal Reserve officials actually stood up and said “Enough is enough!”
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Friday, February 11, 2011
Investors Protect Yourself From the Looming U.S. Muni Bond Market Storm / Interest-Rates / US Bonds
By: Money_Morning
Shah Gilani writes: Let's make one thing perfectly clear: Wall Street analyst Meredith Whitney is not crying wolf. Whitney - who gained fame for correctly predicting the U.S. banking implosion that presaged a global credit crisis - is now warning us about defaults in the $2.9 trillion municipal bond market.
Whitney is being savaged for this latest prognostication, mostly by institutional money managers who resent the way that she's roiled the traditionally sleepy "muni" market.
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Thursday, February 10, 2011
The Euro Dollar Market and Financial Crises / Interest-Rates / US Bonds
By: Christopher_Quigley
Eurodollars are time deposits denominated in U.S. dollars at banks outside the United States, and thus are not under the jurisdiction of the Federal Reserve. Consequently, such deposits are subject to much less regulation than similar deposits within the U.S., allowing for higher margins. The term was originally coined for U.S. dollars in European banks, but it expanded over the years to its present definition: a U.S. dollar-denominated deposit in Tokyo or Beijing would be likewise deemed a Eurodollar deposit. There is no connection with the euro currency or the euro zone. The first Eurodollars were created by deposits made by the Moscow Narodny bank in 1957 to its branch in London to protect Russian State foreign reserves during the cold war.
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Thursday, February 10, 2011
Fed Dual Mandates, the Price of Gold, and Tinfoil Hats / Interest-Rates / Central Banks
By: Mike_Shedlock
As noted in Republicans Attack Dual Mandate, a group of Republicans want to remove the Fed’s employment mandate and have the Fed focus solely on keeping prices stable.
This got me thinking once again about dual or triple mandates, and also the price of gold.
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Thursday, February 10, 2011
Insights from Q&A of Bernanke’s Testimony / Interest-Rates / US Interest Rates
By: Paul_L_Kasriel
Chairman Bernanke's testimony today was a repetition of the February 3, 2011 speech at the National Press Club. He stressed that the unemployment rate was unacceptably high and inflation was low. In Q&A session, Representative Ryan questioned Chairman Bernanke about whether the Fed is monetizing debt. Bernanke explained that "debt monetization" stands for a permanent change in money supply to finance the debt. He went on to add that the Fed plans to reverse course, thus it is not debt monetization. Money supply grew 4.2% from a year ago during the week ended January 24 (see Chart 1), which is hardly indicative of impending inflationary pressures.
Wednesday, February 09, 2011
U.S. Debt, Fifty Ways to Leave Your Lender / Interest-Rates / US Debt
By: Casey_Research
Terry Coxon, The Casey Report writes: It was Otto von Bismarck who explained that “politics is the art of the possible.” We can thank him for that much, but he didn’t tell the whole story. I’ll give you the rest of it. Politics is the art of the possible fictions you can get away with.
Politics is mostly dissembling, and the dissembling is mostly about dodging personal responsibility for the messes governments make. It works out that way because making messes is most of what governments do. So when we ponder how the U.S. government will go about defaulting on its debts, a good way to approach the question is to consider how a default might be presented.
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Wednesday, February 09, 2011
Mythology and Official Nonsense Used to Justify QE2 / Interest-Rates / Quantitative Easing
By: Jim_Willie_CB
With the advent, then the continuation of the Quantitative Easing exercise in hyper-inflation and capital destruction, the US Federal Reserve has perhaps taken its deeply damaged reputation as a central banker and decimated it into shreds. They have lost the respect of the world, more so outside the nation's borders than inside. The financial sector and politicians seem unable to stop showing deep reverence for the post, even licking the Chairman's boots whenever he appears before the USCongress. Recent hints of contempt in WashingtonDC are encouraging. He has not made a single correct forecast on major items.
Wednesday, February 09, 2011
Ben Bernanke and The Confidence Men / Interest-Rates / US Debt
By: Jeff_Berwick
Barack Obama, Ben Bernanke and other government officials always talk about the importance of "confidence" to the economy. But that is because they are confidence men (aka. conmen) playing a confidence game (congame).
Wednesday, February 09, 2011
Special Delivery Message from the U.S. Bond Markets! / Interest-Rates / US Bonds
By: Brian_Bloom
What happened on the bond markets today was very significant from a technical perspective.
Pure logic dictates that if investors are expecting “inflation” in the future, then the gap between long dated yields and short dated yields would be GROWING. Money in the future will be worth less than money today. Therefore the price of future money needs to be higher in order to compensate. The unarguable technical fact is that the markets signed off today that the gap between short and long yields is NARROWING. Expectations of inflation cannot be the reason for such a development.
Wednesday, February 09, 2011
Muni Bonds: Matt Taibbi's Antidote to Meredith Whitney / Interest-Rates / US Bonds
By: Janet_Tavakoli
The credit-worthiness of specific muni bonds, particularly non-general obligation project bonds, has become a hot topic since "AAA" bond insurers imploded, partly due to mispriced risk premiums on protection they wrote on value-destroying CDOs for Wall Street banks.
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Tuesday, February 08, 2011
Chinese Puzzle, U.S. Debt Holdings / Interest-Rates / US Debt
By: Professor_Emeritus
Position papers of professorfekete #4, February 7, 2011
There is really just one question about China, the Western mindset's "enigma wrapped in mystery". How could the Chinese have made the colossal mistake of investing their hard-earned savings in the debt of the U.S. government -- to the tune of $ 1 trillion, the largest sum one country has ever loaned another in all history. (There is only one other puzzle greater than this: How could the U.S. government in good faith allow its debt to accumulate in Chinese hands? But we leave that question for another occasion to discuss.) U.S. debt is easy to buy but hard to get rid of. The harder, the larger are the sums involved.
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Tuesday, February 08, 2011
U.S. Low Interest Rates and High Deficits Aren't Helping Jobs Growth / Interest-Rates / US Interest Rates
By: Money_Morning
Martin Hutchinson writes:
When the government released its latest jobs report last week, economists were initially cheered because it showed that the nation's unemployment level had dropped much more sharply than anyone expected.
But that cheer immediately turned into concern when the report also revealed that the U.S. economy created only 36,000 new jobs in January. That's so far below the norm for this stage of an economic recovery that it would take us 10 years to put back to work all the folks who have lost their jobs since 2007.
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Tuesday, February 08, 2011
Meredith Whitney Is Right About Munis, And her Critics are Con men / Interest-Rates / US Bonds
By: LewRockwell
Mark R. Crovelli writes: Imagine for a second that you are a financial analyst, financial advisor, institutional investor, or trader who specializes in municipal bonds. Your goal, presumably, is to determine which municipalities in the United States are creditworthy enough to justify lending money to them.
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Tuesday, February 08, 2011
UK Fixed Mortgage Interest Rates Hit 6 Month High / Interest-Rates / Mortgages
By: MoneyFacts
Average mortgage rates today stand at their highest level in six months as lenders pass on rising funding costs to borrowers.
The cost to lenders of raising funding on the swap rate market has soared in recent months. At the end of November, the two-year swap rate stood at 1.35%, today it stands at 1.98% - 47% higher.
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Monday, February 07, 2011
Global Credit Crisis Contagion On the Verge Again / Interest-Rates / Credit Crisis 2011
By: Captain_Hook
Apparent disparities and idiosyncrasies between Western economies and China (at center of the emerging market model) continue to grow more profound, which will eventually end badly by popping the larger global credit bubble for good this time. This is of course not to say that our ambitious and greedy bankers and their crony politicians will disappear overnight, however if the serial bubbles in stocks, bonds, and anything that moves are popped, they will definitely have a great deal less currency to work with moving forward.