Economy Archives - Page 132 of 132 - the patient investor

August 21, 2011

10-Year Treasury yields at new 50-year low

10-Year Treasury yields are testing support at 2.00 percent — a 50-year low. One thing is clear: Fed monetary policy has failed. Suppressing short-term interest rates has, in most cases, lifted the economy out of recession, but also set us up for an even bigger crash the next time round — requiring even more severe interest rate cuts. Long-term yields have been falling for 30 years. We are now clipping the tree tops — with short-term rates near zero and no gas in the tank to lift us over the next obstacle. A bond market revolt cannot be far off.

10-Year Treasury Note Yields $TNX

A “bond market revolt” is a general sell-off of Treasurys when bond-holders decide that rewards (yield) are not commesurate with the risk. We have already witnessed several bond-holder revolts in European markets. A rise in yields would raise the cost of rolling-over existing Treasury debt, ratcheting up the budget deficit even further. This is a threat that should not be ignored.

August 14, 2011

The Fed is a Rogue Elephant wonkish rant – Telegraph Blogs

I am wary of Bernanke’s sudden change of heart on headline inflation. It confirms my suspicion shared by many readers that the Fed is deliberately bringing about inflation and currency debasement to cushion the effects of debt-deleveraging. This amounts to a soft default on America’s debts.

via The Fed is a Rogue Elephant wonkish rant – Ambrose Evans-Pritchard Telegraph Blogs.

August 12, 2011

Nouriel Roubini says the risk of a global recession is greater than 50 percent – WSJ.com

Economist Nouriel Roubini says the risk of a global recession is greater than 50 percent, and he’s putting his money in cash.

[gigya src=”http://s.wsj.net/media/swf/VideoPlayerMain.swf” width=”512″ height=”363″ quality=”high” wmode=”transparent” allowFullScreen=”true” flashVars=”videoGUID={C036B113-6D5F-4524-A5AF-DF2F3E2F8735}&playerid=1000&plyMediaEnabled=1&configURL=http://wsj.vo.llnwd.net/o28/players/&autoStart=false”]

http://online.wsj.com/video/roubini-warns-of-global-recession-risk/C036B113-6D5F-4524-A5AF-DF2F3E2F8735.html

August 10, 2011

Fire the Fed …… and replace them with a Rating Agency

On 1 November 2010 the Fed commenced QE2, purchasing US Treasurys with the stated intention of reducing long term interest rates. Over the next 4 months, 10-Year Treasury yields rose by 120 basis points (1.20%).

10-Year US Treasury Yields

Why do we need the Fed, who can’t punch their way out of a paper bag, when a rating agency (S&P) can send yields plunging 65 points in less than two weeks. 🙂

August 10, 2011

Did Standard and Poor’s Break SEC Regulations in Disclosing Its Downgrade to Select Parties? « naked capitalism

There is a much more straightforward basis for questioning S&P’s conduct, and it has nothing to do with how S&P arrived at its rating. There is compelling evidence that the ratings agency made selective disclosure of its downgrade decision before it made it public last Friday evening. A reader told us certain hedge funds were informed Tuesday and traded successfully on the information. A separate source had told me certain banks were briefed on Thursday and were told of the US downgrade but assured their ratings would be unaffected. On Friday morning, Twitter was alight with the news.

via Did Standard and Poor’s Break SEC Regulations in Disclosing Its Downgrade to Select Parties? « naked capitalism.

10-Year US Treasury Yield

It appears that some market participants were aware of the coming downgrade even earlier — on Friday [?] the previous week.

August 7, 2011April 18, 2024

Tipping point

Posted August 3, 2011 8:00 p.m. ET (10:00 a.m. AET) on Trading Diary.

Markets are approaching the tipping point at which they will confirm a primary down-trend. The probability of a bear market is around 75 percent, with 80 about as high as you can get at a turning point. As highlighted in May, every significant spike in crude oil prices in the last 50 years has been followed by a recession — and the current spike is likely to prove no different. Ben Bernanke will modestly decline to take the credit, but the initial groundwork for higher oil prices was laid by QEII. Prices had started to rise well before the conflict in Libya.

Investor flight to safety is clearly signaled by the sharp fall in 10-year treasury yields.

Other safe havens such as gold and the Swiss franc display a corresponding spike over the last few days.