Analysis Topic: Interest Rates and the Bond Market
The analysis published under this topic are as follows.
Thursday, December 16, 2010
How to Reduce the U.S. National Debt Without Raising Taxes or Cutting Spending / Interest-Rates / US Debt
By: Submissions
Michael Sekora writes: Discussions about deficits and debt reduction inevitably center on whether and how to reduce government spending or increase tax rates. Proponents of increasing taxes argue over what level tax rates should be increased to and for which segments of the population. Proponents of decreased spending debate which federal programs should be trimmed or eliminated altogether. But this choice is a classic false dichotomy. If we grow the economy enough, we won’t have to rely on massive tax hikes or spending cuts.
Thursday, December 16, 2010
Quantitative Easing Unintended Consequences, Rising Interest Rates / Interest-Rates / US Interest Rates
By: John_Mauldin
Correct me if I'm wrong, but I seem to remember that one of the reasons for QE2 was to lower rates on the longer end of the US yield curve. Clearly, that has not happened? Today we look at come of the unintended consequences of monetary policy, turn our eyes briefly to consumer debt, and wonder about deflating incomes. There are a lot of very interesting things to cover. (This letter will print long, but there are a lot of graphs. Usual amount of copy.)
Wednesday, December 15, 2010
Chinese Take-Out Of The U.S. Economy, Debt Crisis Triggering Reserves Conversion into Gold and Silver / Interest-Rates / US Debt
By: Jim_Willie_CB
The Chinese really must think the American strategy and behavior to be braindead and self-destructive. The US helped them assemble a manufacturing industry, replaced US income with debt, and finally faces the Grim Reaper in a national episode of systemic failure. The US leadership is as stupid and mindless as the population is driven by compulsive consumption over the cliff, as the nation faces ruin. The Jackass warning has been for five years that the Chinese experiment would end in tragedy, and that when a preponderance of USTreasury debt is owned by foreigners, especially a single foreign nation, the Untied States will lose its sovereignty.
Wednesday, December 15, 2010
U.S. Treasury Bond Interest Rates Rising Steeply / Interest-Rates / US Interest Rates
By: Richard_Shaw
Contrary to Bernanke's goal of lowering interest rates by the QE II intervention, rates have been rising. In fact, they have begun to rise steeply as of late, with corresponding decline in bond prices. The following two charts for the 10-year Treasury bond illustrate the situation (top chart yield, bottom chart price). Better cash than bonds right now - or high quality, high yield growth US equities.
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Wednesday, December 15, 2010
U.S. Bond Market Investment Strategy For 2011 / Interest-Rates / US Bonds
By: Money_Morning
Martin Hutchinson writes:
For those seeking greater safety, bonds will be the wrong place to look in 2011.
To understand why, we need to look back more than 25 years - to a time when economic conditions were very different than they are today.
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Wednesday, December 15, 2010
The Fed’s Final Days, The Temple Of Paper Money Is Under Seige / Interest-Rates / Central Banks
By: Darryl_R_Schoon
In 2008, America suffered a massive economic heart attack. Its doctors, thought to be the world’s best, believed the US to be in good health, having recovered from a similar though smaller crisis in 2000.
But America hadn’t recovered. In fact, the Fed’s palliative for the 2000 crisis, i.e. lower interest rates, soon created an even larger crisis, i.e. the 2002-2006 US housing bubble whose collapse caused global credit markets to contract and investment banks to fall, necessitating government intervention on such a massive scale it led to today’s sovereign debt crisis as private losses were absorbed onto public balance sheets; and, now, in 2010, the crisis continues to fester and spread.
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Wednesday, December 15, 2010
Muni Bond Funds Blood Bath, Will it Continue? / Interest-Rates / US Bonds
By: Mike_Shedlock
Inquiring minds are watching a huge selloff in Municipal Bond Funds. Here are a few charts.
Wednesday, December 15, 2010
FOMC Policy Statement, Fed on Watch-and-Wait Mode / Interest-Rates / US Interest Rates
By: Asha_Bangalore
The Fed is essentially on a watch-and-wait mode. The asset purchase plan of $600 billion of longer-term Treasury securities, known as QE2, was left intact and the program is set to expire in June 2011. The Fed made small modifications to the November policy statement. The pace of economic recovery is now seen as "insufficient to bring down unemployment" vs. a more amorphous description in November that output and employment conditions are "slow." The Fed upgraded its view about consumer spending and depicted it as "increasing at a moderate pace," while in November, the Fed saw consumer spending as "increasing gradually." The retail sales report of November (see discussion below) justifies this modification. The Fed indicated in November that "housing starts continue to be depressed," which is now revised to read as the "housing sector continues to be depressed."
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Monday, December 13, 2010
December 14 FOMC Meeting, Interest Rate Surprises Are Unlikely / Interest-Rates / US Interest Rates
By: Asha_Bangalore
The last FOMC meeting for 2010 is likely to end without any surprises. The Fed is expected to maintain the current band (0%-25%) for the federal funds rate. There has been significant criticism about the $600 billion purchase of Treasury securities to provide an extra lift to economic activity and bring about a lower unemployment rate. The Fed projected lower interest rates and a depreciation of the dollar as a result of the second round of purchases of securities, termed as QE2. However, yields have risen since the announcement of QE2 on November 3. The 10-year Treasury note yield closed at 3.32% on December 10, the highest since June 10, 2010 (see Chart 1). Mortgage rates have risen close to 40bps since November 3 (see Chart 1). Read full article... Read full article...
Monday, December 13, 2010
Higher Long-Term U.S. Treasury Yields Ahead / Interest-Rates / US Bonds
By: Mike_Paulenoff
The eventuality of higher longer-term Treasury yields in the weeks and months ahead appears to be relentlessly marching towards us now. Time to start monitoring the UltraShort 20+ Year Treasury ETF (TBT) for the next entry window on the long side.
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Monday, December 13, 2010
Wall Street Gives Uncle Sam Too Much Credit / Interest-Rates / US Bonds
By: Michael_Pento
Despite the fact that the S&P is up over 80% in the last 21 months, US financial firms are currently tripping over each other in their zeal to raise their S&P 500 and GDP targets for 2011. JPMorgan's chief US equities strategist, Thomas Lee, came out on December 3rd with a target of 1425 on the S&P for 2011, which would be a 15 percent gain. Barclays Capital last Thursday released a 1420 estimate. Not to be outdone, Goldman Sachs also recently released its forecast, and it sees a more-than-20 percent increase next year, to 1450. Meanwhile, PIMCO's idea of a "new normal" has translated into a 2011 GDP forecast raised from 2-2.5% to 3-3.5% due to "massive" government stimulus.
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Saturday, December 11, 2010
European Monetary System Crisis, Euro Zone on the Edge of Collapse / Interest-Rates / Global Debt Crisis
By: Bob_Chapman
Believe it or not the euro zone and European Union crisis is still in the formative stages.
The bailout packages arranged for Greece and Ireland are not to bail out those two countries, but to bail out the European banks that lent to them and bought their bonds when it was imprudent to do so. They knew, because they control the governments that the public of the solvent governments would bail them out. Thus, the governments of Ireland and Greece with Portugal and Spain to follow will be showered with an Anglo-American style bailout.
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Friday, December 10, 2010
U.S. Interest Rates Surge as Fed, Congress Crush Debtholders / Interest-Rates / US Bonds
By: Mike_Larson
Washington, 0. The bond market, 1.
That’s the score folks, in case you haven’t been keeping track. The Federal Reserve Chairman said his $600 billion “QE2″ program would lower interest rates. Instead, rates have done nothing but rise since investors got wind of the Treasury buying plan.
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Thursday, December 09, 2010
How a Dull Investment can be a Great Investment / Interest-Rates / US Bonds
By: EWI
I spent my childhood discussing the stock market at the dinner table. My dad was a stock broker, and he loved to "tell the story" of the stocks he recommended to customers -- a story that included critical information about the industry, the products, earnings, and the outlook for the future. Most children might find it dull, but I was mesmerized.
Thursday, December 09, 2010
U.S. Treasury Bond Market’s Perception of Economic Recovery Path is Strongly Bullish, But Mind the Hurdles / Interest-Rates / US Bonds
By: Asha_Bangalore
The 10-year Treasury note yield has climbed from a recent low of 2.41% (October 6-8, 2010) to 3.27% as of this writing. The 86 bps increase in yield in a short span reflects the market's assessment of likely improvements in economic conditions during the months ahead and the impact of a projected increase in supply of Treasury debt as a result of the compromise tax deal President Obama announced yesterday.
Wednesday, December 08, 2010
Bernanke Will continue Printing Money as the Federal Deficit Explodes Higher / Interest-Rates / US Debt
By: Claus_Vogt
The “grand compromise” between the Obama administration and Congressional Republicans to extend the Bush era tax cuts will have two extremely severe repercussions:
First, it means that the federal deficit will EXPLODE beyond the worst estimates of the most pessimistic deficit prognosticators. And in response, interest rates are already soaring, with 10-year Treasury yields jumping nearly a quarter of a point just yesterday!
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Wednesday, December 08, 2010
What's Up At the Fed? / Interest-Rates / Quantitative Easing
By: Dr_Jeff_Lewis
The last week was a full Federal Reserve soap opera, full of events and action that should appear suspicious to most anyone.
First, the Federal Reserve complies with a request to release information about its emergency lending and monetary policy actions during the financial crisis, at which point it is found the Fed was willing to hand cash to just about anyone. Next, Bernanke comes out on 60 Minutes, a very popular and watched program, to discuss quantitative easing three. Has the chairman gone mad?
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Wednesday, December 08, 2010
Japan Collection Call on U.S. Debtors / Interest-Rates / US Debt
By: David_Galland
Hello, is this Japan I'm speaking to?
Yes. (tentative). May I ask who's calling?
It's the ACME collection agency. We're calling today because of your outstanding obligations.
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Wednesday, December 08, 2010
Debunking Bernanke’s QE Not Money Printing Myth / Interest-Rates / Quantitative Easing
By: Axel_Merk
In his interview with “60 Minutes”, Federal Reserve (Fed) Chairman Ben Bernanke suggested it is a myth that quantitative easing implies printing money. With all due respect, Mr. Bernanke, if it looks like a duck and quacks like a duck, it is a duck!
Bernanke argues his policies do not amount to printing money, as neither currency in circulation, nor money supply has increased. This analogy is a bit like giving a loaded gun to a kid, then telling your friends that it’s not a deadly weapon because the shots that have been fired haven’t killed anyone. Granted, we are exaggerating here because, after all, it’s only money we are talking about. Yet, printing money may destroy one’s purchasing power and thus one’s life’s savings.
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Monday, December 06, 2010
The Federal Reserve's Secret Set of Books Hiding $9 Trillion Off Balance Sheet Transactions / Interest-Rates / Central Banks
By: Richard_Daughty
I have been grudgingly getting to work every day and on-time since, unfortunately, it looks like my incompetence, stupidity and sheer lazy worthlessness is going to produce another losing quarter, and the rumor is that the Board of Directors is looking for heads to roll.