Analysis Topic: Interest Rates and the Bond Market
The analysis published under this topic are as follows.
Monday, March 31, 2008
Picture du Jour: US Long Bonds in Injury Time / Interest-Rates / US Bonds
By: Prieur_du_Plessis
Since the advent of the credit crisis, stock markets, real estate and the US dollar have been the subject of investors' angst. However, two markets – commodities and long bonds – have remained in bullish trends. That, at least, is the way it looked until recently.
The Reuters/Jeffries CRB Index hit a peak on March 13, and I argued in a subsequent post that although a correction was overdue, the long-term trend was still upwards.
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Friday, March 28, 2008
Federal Reserve has Begun Buying Mortgage Securities / Interest-Rates / Credit Crisis 2008
By: Ty_Andros
The lighting strike in the markets that I looked for in last week's edition did indeed occur across many sectors. It was a belly button moment for many as Commodities, Currencies, Stocks and Interest Rates were rocked midweek and I was forced look around to make sure that “nothing had changed”. The mainstream financial press was quick to say about the ordeal, for those who place their faith and portfolios in Wall Street's hands, that things were on the mend, the commodities BUBBLE was popped and that the implosion of “paper” investments was on its way to being resolved. New bull markets in paper assets. I have two words for their suppositions: NO WAY and KEEP DREAMING. A new phase of the unfolding BAILOUT of the G7 financial and banking systems began in the last 10 days. Read full article... Read full article...
Tuesday, March 25, 2008
Precipitous Drop in Eurodollars is not Sustainable / Interest-Rates / US Interest Rates
By: John_Handbury
These days the markets are getting easier to read. For example, today long term Eurodollars got absolutely killed with Sep 2009 contracts down about 35 basis points. According to the experts this was due mainly to the bullish housing report, which showed that existing housing sales are up slightly from January.Read full article... Read full article...
Sunday, March 23, 2008
Credit Crisis The Problem The Solution / Interest-Rates / Credit Crisis 2008
By: Fake_Ben
First, we must understand the problem, which is fractional banking. The problem with fractional banking is that cash ALWAYS has to be less valuable than other alternatives. Otherwise, there is an immediate desire to deleverage (to get into cash), and the whole interconnected banking system, with all its counterparty risk, comes crashing down. We are seeing this problem now. Read full article... Read full article...
Thursday, March 20, 2008
US Alice in Wonderland Monetary Policy / Interest-Rates / Credit Crisis 2008
By: Peter_Schiff
How do you know when you're through the looking glass? A fairly good indication is when the price of gold, which normally moves up in response to monetary easing, instead plummets in reaction to one of the largest rate cuts in Fed history. Apparently, yesterday's 6% drop in gold resulted from the “hawkishness” shown by the Fed in only cutting rates by 75 basis points, rather than the 100 points that many had expected. It is a testament to how low the bar has been set that the Fed can slash rates in the face of a collapsing dollar and soaring commodity prices and still be viewed as hawkish on inflation. Is it just me, or is Ben Bernanke morphing into the Mad Hatter? Read full article... Read full article...
Saturday, March 15, 2008
Beware a Parabolic Rise Culminates in Market Crash / Interest-Rates / Financial Crash
By: Brian_Bloom
If I have learned one thing in the 40 odd years that I have been watching the markets, it is this: Parabolic rises culminate in crashes. It's a biological phenomenon. The crowd stampedes, or the population explodes, or prices rise with geometrically increasing rapidity – to the point where the rate of increase can no longer be sustained. Because thought paradigms don't change readily, behaviour at the individual level does not adapt appropriately to circumstances and, therefore, behavioural modification is “forced” by the environment. The environment is not able/prepared to tolerate the excessive growth – and the growth collapses in on itself. Read full article... Read full article...
Saturday, March 15, 2008
Fed Money Printing to Solve Banking Crisis Leading to Stagflation / Interest-Rates / Stagflation
By: Andy_Sutton
It doesn't matter what newspaper you picked up. I doesn't matter what TV show you watched. Records fell like no time in recent history with perhaps the exception of Carl Lewis running loose at the Olympics in his heyday.
I wonder how much his Gold medals are worth now?
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Friday, March 14, 2008
Central Banks $2.5 Trillion Money Supply Fails to Stop Global Deleveraging / Interest-Rates / Credit Crisis 2008
By: Christopher_Laird
A year or so ago, I wrote a piece discussing that when the world credit bubble (pan financial bubble in markets and assets) unwinds, world governments will be forced to try and support the markets. The prediction was that this will amount to monetization of failing markets. The alternative to monetization would be intolerable financial panics and market collapses, where people lose all their savings. (Monetization is where central banks buy assets to shore them up, thus using the currency to support collapsing markets. This is in the process of happening now in the EU and the US.)
Right now, we are looking at the precipice of a total world financial collapse. When the stock markets finally let go, people will wake up to the reality of world financial bankruptcy. Millions of people will lose much of their retirement savings, in a super world stock crash, and you will again see stories about people refusing to open their 401k statements because they don't want to see how far down they are. That's what happened right after the Tech crash. Well, think of that episode as merely a taste of what is to come.
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Friday, March 14, 2008
Federal Reserve Throwing Everything at the Credit Crisis / Interest-Rates / Credit Crisis 2008
By: Money_and_Markets
Mike Larson writes:
Feds Flying by the Seat of their Pants- Is it just me, or do the Feds seem to be flying by the seat of their pants?
Is it just me, or was Washington completely blind sided by the magnitude of this housing and mortgage crisis ... and now, they're trying desperately to play catch up?
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Wednesday, March 12, 2008
Are US Interest Rates Fated to Rise? / Interest-Rates / US Interest Rates
By: Greg_Silberman
There is one path in investing that is sure to lead to ruin. It's a dangerous path because it lacks one critical ingredient for success – thought! The path we are speaking about is called “following the consensus”. It is both intellectually and emotionally easy to follow a majority of bullish analysts. Unfortunately the ‘consensus' is seldom right and hardly ever leads to BIG profits.
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Wednesday, March 12, 2008
Credit Overdose! Requiem for a Departing Economic System / Interest-Rates / Credit Crisis 2008
By: Alex_Wallenwein
Continued US Fed liquidity injections like the Fed's previous "Term Auction Facility" (TAF) and today's novel "Term Securities Lending Facility" (TSLF) will only serve to overdose the economy with exactly what ails it: too much credit. This will further boost the price of everything - and in particular, of gold and silver.
The following headline and byline appeared this morning, March 11. 2008, on MarketWatch.com: "Fed's Latest Fix Does the Trick - Wall Street applauds as Fed intercedes, not with fresh rate cut but with a further push to inject funds into the economy."
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Friday, March 07, 2008
Global Credit and Debt Market Crisis- CNBC They Still Don't Get It! / Interest-Rates / Credit Crisis 2008
By: Peter_Schiff
Prior to my last appearance on CNBC in October 2007, I had made more than 50 appearances on the network over the prior two years. In those segments, I repeatedly exposed the superficiality of our prosperity, described the American economy as a “house of cards”, pointed out that borrowing and spending were a ticking time bomb rather than a viable plan for long term economic health, and explained how investors could prepare for the tough times ahead. At the time, those forecasts were met with ridicule and led to my being nicknamed “Dr. Doom”. Now that these predictions have come to pass, most on CNBC now claim that no one saw it coming!Read full article... Read full article...
Friday, March 07, 2008
Central Bankers Meet in Switzerland to Discuss Global Financial Crisis / Interest-Rates / Credit Crisis 2008
By: Adrian_Ash
The Ghost of Gold at the Central Bank Banquet
"Never shake thy gory locks at me...If thou canst nod, speak too."
Macbeth to Banquo's ghost, who's sitting in his chair ( Macbeth Act III, Scene iv)
THIS WEEKEND in Basel, Switzerland, central bankers from the G-10 group of rich nations meet up for one of their regular hoe-downs.
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Thursday, March 06, 2008
UK Interest Rates Expected to be Kept on Hold at 5.25% / Interest-Rates / UK Interest Rates
By: Nadeem_Walayat
The Bank of England
is expected to keep UK interest rates on hold at 5.25% at today's MPC meeting despite economic data confirming a weakening housing market and economy. Rates were last cut in February 08, which was inline with the Market Oracle forecast as of August 07 and Sept 07 for UK interest rates to fall to 5% by September 2008, this was revised lower to 4.75% in January 2008 , following the US Panic rate cut of 0.75% on 22nd Jan 08 to 3.5%, which was later followed by a further 0.5% cut to take US interest rates to 3%. Read full article... Read full article...
Wednesday, March 05, 2008
US Treasury Bonds vs. the CRB Point to Bond Market Collapse / Interest-Rates / US Bonds
By: Michael_Pento
From 1980 until the spring of 2002, 10-year Treasury note yields held a positive correlation with the CRB index. Since 2002, however, there has been a dramatic divergence between Treasury yields and commodity prices. This trend is unsustainable in the long term because bond yields must eventually reflect rising inflationary pressures and at some point offer a positive real after-tax return.
There can be only two possible conclusions reached when viewing this disparity, shown in the chart below. One is that commodity prices are no longer an indication of inflationary pressures, a ridiculous contention that cannot be taken seriously. After all, the CRB Index contains 19 commodities that include precious metals, base metals, agriculture and energy, broad measures of the pricing pressures that exist in today's economy.
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Monday, March 03, 2008
Credit Crisis Presents A Great Buying Opportunity? / Interest-Rates / Credit Crisis 2008
By: John_Mauldin
This week we look at yet another rather obscure credit market that is in essential lockdown as the subject of your Outside the Box. My London partner Niels Jensen, head of Absolute Return Partners, has written a very interesting piece on the leveraged loan and bank loan markets, which are now upside down and getting more so in the recent weeks. This situation cannot continue, as what are clearly inferior products are selling for more than there high class cousins. Read full article... Read full article...
Friday, February 29, 2008
Loss of Confidence in the US Fed / Interest-Rates / Inflation
By: Peter_Schiff
Hear Me Now - Believe Me Later - Having neither the will nor the means to confront our major economic challenges, Washington is instead hanging its hopes on words alone. This week, despite the clearest signs yet that the dollar is in critical condition, President Bush and Treasury Secretary Paulson tried to provide reassurance by once again invoking the name of the mythical “strong dollar policy”. Meanwhile across town, with the latest crop of inflation figures pointing to the greatest price surges in a generation, Fed Chairman Ben Bernanke tried to do the Administration one better by insisting that inflation expectations remained “well anchored”, and that stagflation was nowhere in sight. Read full article... Read full article...
Sunday, February 24, 2008
Colossal Collateral Damage- Financial Tsunami Part V / Interest-Rates / Credit Crisis 2008
By: F_William_Engdahl
The Predators had a ball - The multi-trillion dollar US-centered securitization debacle began to unravel in June 2007 with the liquidity crisis in two hedge funds owned by Bear Stearns, one of the world's largest and most successful investment banks. The funds were heavily invested in sub-prime mortgage securities. The damage soon spread across the Atlantic to a little-known German state-owned bank, IKB. In July 2007, IKB's wholly-owned conduit, Rhineland Funding, had approximately €20 billion of Asset Backed Commercial Paper (ABCP). In mid-July, investors refused to rollover part of Rhineland Funding's ABCP. That forced the European Central Bank to inject record volumes of liquidity into the market to keep the banking system liquid. Read full article... Read full article...
Friday, February 22, 2008
Fed Interest Rate Cuts have Resulted in Surging Commodity Price Inflation / Interest-Rates / Inflation
By: Adrian_Ash
Six Months of Fun, Fun, Fun from the Fed - "...If Bernanke was expecting a 13% rise on Wall Street, he's got a 45% rise in gold instead – plus a real disaster in US Treasury bond yields..."
THIS WEEK marked the six-month anniversary of the Fed's first cut to US interest rates during the current world banking crisis.
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Tuesday, February 19, 2008
The Credit Crash - The Next Shoe to Drop Will Be... / Interest-Rates / Credit Crisis 2008
By: John_Mauldin
As everyone by now knows, there is chaos in the municipal bond market. This week's Outside the Box is from good friend and Maine fishing buddy David Kotok of Cumberland Advisors ( www.cumber.com ).
Briefly, he outlines the problems we are seeing in munis, but then he goes on to warn of the possible next shoe to drop in closed end municipal bond funds. David is one of the smarter advisors I know, and when he points out a problem, I would suggest taking action.
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