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Got Bonds

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Just thought to make a thread about bonds as volatility of yields and related news are getting more frequent these days.

Today while in Eu yield are at record low (far from saying capitals are running away), in US and Australia they are getting towards new high, the 10 year bond in Australia touched 5.8% wile in US is at 3.85% (4.73 for the 30 years term), Japan, Singapore and HK are also stable, UK up a llittle back towards 4% (yesterday was UK budget day with no big surprises).

I think Bernanke today is wandering why a strong US$ (1.3% up for the US index yesterday) is pushing the long term yield up

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still on the way up for treasury bonds.

THe US are at 3.88 and 4.76 (highest in a long time)

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a good update from bloomberg

March 29 (Bloomberg) -- Former Federal Reserve Chairman Alan Greenspan’s warning that rising yields on government debt will drive up American borrowing costs is resonating with the world’s biggest bond traders, who say this month’s losses in the market for U.S. Treasuries are just the beginning.

Yields on 10-year notes, the benchmark for everything from mortgages to corporate bonds, climbed as high as 3.92 percent last week from a low of 3.53 percent in February. The 18 primary dealers of U.S. debt forecast the rate will reach 4.2 percent this year, the highest since October 2008, according to the median estimate in a survey by Bloomberg News.

Higher yields are the “canary in the mine,” Greenspan said in a March 26 interview on Bloomberg Television’s “Political Capital With Al Hunt.” The increases reflect concern over “this huge overhang of federal debt which we have never seen before,” he said. The budget deficit, which hit $1.4 trillion in fiscal 2009, will drive Treasury sales to a record $2.43 trillion this year, a February survey of 10 dealers showed.

“Bonds have seen their best days,” Bill Gross, manager of the world’s biggest bond fund at Pacific Investment Management Co., said in a March 25 interview with Tom Keene on Bloomberg radio from Pimco’s headquarters in Newport Beach, California.

While Treasuries returned 0.9 percent this year, they fell after each of the government’s three note auctions last week, which drew less demand than traders estimated. Economists and strategists also predict rising yields in Germany, the U.K., Canada, Japan and the rest of world’s major economies, Bloomberg surveys show.

Snowstorms, Greece

“The rally in Treasuries is over,” said James Caron, head of U.S. interest-rate strategy at Morgan Stanley in New York. Storms in January and February, and concerns that Greece would default “slowed growth to a great degree,” he said. “Now things are normalizing and other indicators are showing the economy is getting better.”

Morgan Stanley says U.S. yields will rise to 5.5 percent by year-end, from a nine-month high of 3.92 percent on March 25. Caron’s estimate is the highest among the primary dealers obligated to bid at government auctions. Treasuries would lose about 8.8 percent should the estimate prove correct.

The 10-year Treasury yield rose 16 basis points, or 0.16 percentage point, last week to 3.85 percent, the biggest weekly increase since December. The 3.65 percent note due February 2020 fell 1 1/4, or $12.50 per $1,000 face amount, to 98 6/32, according to BGCantor Market Data.

Ten-year yields climbed to 3.88 percent today as of 11:20 a.m. in Tokyo, while the note’s price dropped to 97 30/32

Rally Fades

Treasuries surged at the start of the year, with Bank of America Merrill Lynch’s U.S. Treasury Master index gaining 1.58 percent in January, as investors sought the safety of government debt on speculation that the global recovery would falter. Those doubts diminished in February as returns slowed to 0.4 percent and disappeared this month as bonds lost 1.07 percent.

Primary dealers say the losses will worsen as the U.S. economy rebounds from the worst financial turmoil since the Great Depression. Ten of the 18 dealers say the Fed will raise its target rate for overnight loans between banks before 2011.

“We are no longer in the height of the financial crisis,” said Michael Pond, an interest-rate strategist in New York at Barclays Plc. “Many investors wouldn’t buy into the sustainability of the recovery until it came along with job creation. We’ll see that with this month’s employment report and those positive prints will continue.”

Auction Demand

The Labor Department may say April 2 that the U.S. added 190,000 jobs this month, after losing 36,000 in February, according to the median estimate of 62 economists surveyed by Bloomberg.

The global economy will expand 3.6 percent in 2010, the median of 51 estimates in a separate Bloomberg survey shows, more than the 3 percent forecast they made six months ago. JPMorgan Chase & Co. expects global growth to reach “an above- trend 3.4 percent pace” as confidence improves and labor markets recover, according to a March 18 report.

Bonds fell on March 23 after the Treasury’s $44 billion sale of two-year notes drew the weakest demand since December. The next day, five-year notes tumbled the most in seven months as the U.S. sold $42 billion at a higher yield than dealers forecast. Treasuries declined again on March 25 when the $32 billion auction of seven-year notes attracted the lowest ratio of bids received compared with those accepted in 10 months.

Goldman Bullish

Gross, who runs the $214 billion Total Return Fund, said investors should avoid the debt of the U.K. and invest in shorter-maturity U.S. and Brazilian securities and longer-term German and “core” Europe bonds.

Goldman Sachs Group Inc., the world’s most profitable securities firm, is bullish on bonds. It expects inflation will remain in check as the economy expands slower than investors anticipate. Consumer prices excluding food and energy will rise at a 1 percent annual rate over the next few months, from 1.3 percent in February, the firm predicts.

“Short-term U.S. interest rates will remain at rock- bottom levels for much longer than markets currently expect,” Jan Hatzius, Goldman’s chief U.S. economist, wrote in a report to clients on March 24.

Goldman predicts 10-year yields will drop to 3.25 percent by year-end, the lowest of any of the primary dealers. The firm forecast at the start of 2009 the yield would end that year at 3.2 percent. It finished at 3.84 percent.

Bunds, JGBs, Gilts

While consumer prices are barely rising now, Gross said inflation will accelerate as countries sell record amounts of debt to finance deficits. Pimco announced in December that it would offer stock funds for the first time.

The yield on the 10-year German bund will climb to 3.7 percent from 3.15 percent by the end of 2010, according to the median forecast of 17 firms in a Bloomberg News survey. Yields on Japanese government bonds of similar maturity will increase to 1.47 percent from 1.38 percent, and those in the U.K. will jump to 4.51 percent from 4.03 percent, separate surveys show.

“There will be a steady march higher in sovereign debt costs,” said William O’Donnell, U.S. government bond strategist at primary dealer Royal Bank of Scotland Group Plc, in Stamford, Connecticut. “Debt service as a percentage of government expenditures will rise. There will be pressure on disposable income because household debt costs should rise.”

Greenspan’s Buffer

America will use about 7 percent of tax revenue for debt payment in 2010 and almost 11 percent in 2013, while the U.K. is likely to spend 9 percent in 2013, rising to almost 12 percent under what Moody’s Investors Service describes as “adverse” scenarios.

Historically, there has been “a large buffer between the level of our federal debt and our capacity to borrow,” Greenspan said. “That’s narrowing. And I’m finding it very difficult to look into the future and not worry about that.”

Rates for 30-year fixed U.S. mortgages rose to 4.99 percent for the week ended March 25, the highest since the period ended Feb. 25, McLean, Virginia-based Freddie Mac said in a statement.

Corporate Spread

The extra yield investors demand to own corporate bonds rather than government debt shrank to the narrowest since November 2007 as faster economic growth has more than compensated for rising Treasury yields. Spreads have tightened to 151 basis points as of March 26, according to Bank of America Merrill Lynch’s Global Broad Market Corporate Index.

The Fed cited evidence the recovery will be slow on March 16, when it reiterated rates will stay low for an “extended” period. The central bank has kept its target rate for overnight loans between banks in a range of zero to 0.25 percent since December 2008.

“Economic conditions, including low rates of resource utilization, subdued inflation trends, and stable inflation expectations, are likely to warrant exceptionally low levels of the federal funds rate for an extended period,” the Federal Open Market Committee said in its statement.

Too Cautious Fed

Primary dealers say policy makers led by Chairman Ben S. Bernanke may be too cautious. They see the Fed raising rates to 1 percent on average this year as demand increases for cash to invest in riskier securities such as stocks and corporate bonds.

“Risk appetites are rising and bonds will likely suffer,” Morgan Stanley’s Caron said.

The 0.89 percent gain in Treasuries this quarter compares with 4.56 percent for the Standard & Poor’s 500 Index, 4.64 percent for speculative grade bonds, and a 2.2 percent loss for the S&P/GSCI Index of Commodities.

“A labor market snapback will push the Fed into play,” said Carl Riccadonna, a senior economist in New York at Deutsche Bank AG. “They are moving in a less accommodative direction, but they will still be extremely accommodative. The peak in the unemployment rate came last fall. We should see sharper improvement over the next couple of months.”

Deutsche forecasts the Fed will raise rates by August and to 1.25 percent by 2011. That rate is “not even approaching restrictive,” Riccadonna said.

Following are the results of Bloomberg’s survey, conducted from March 22 to March 26. All values are for year-end:

Firm 2s 10s Fed Funds

BNP Paribas 1.25 3.75 1.25

Banc of America 1.5 4.25 0 - 0.25

Barclays Capital 2.1 4.3 1

Cantor Fitzgerald 1.75 4 0.75

Citigroup 2.25 4.15 1

Credit Suisse 1.25 3.75 1

Daiwa Securities 2.25 4.4 1

Deutsche Bank 2.25 4.5 1.25

Goldman Sachs 0.9 3.25 0 - 0.25

HSBC Securities 0.9 3.3 0 - 0.25

Jefferies 1.25 4.75 0 - 0.25

JPMorgan 1.9 4.5 0 - 0.25

Mizuho 0.8 3.7 0 - 0.25

Morgan Stanley 2 5.5 1.5

Nomura Securities 1.36 3.94 0 - 0.25

RBC Capital Markets 2.25 4.5 0.75

RBS Greenwich Capital 2.1 4.4 0 - 0.25

UBS 1.6 4 0.5

*****************************************************

Median 1.675 4.2 0.5

To contact the reporter on this story: Susanne Walker in New York at swalker33@bloomberg.net

Last Updated: March 28, 2010 22:44 EDT

I think either we get inflation or deflation the long term bond yield is going to rise. Today the AU$ 10 year bond is at new high of 5.81, also other asian countries with US are up on the yields

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The charts showed a bottom in interest rates quite a while ago! smile.gif

Why don't you request from the moderator to have this thread pinned, if it is going to be one of the 'regulars'?

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The charts showed a bottom in interest rates quite a while ago! smile.gif

you are tempting me to shorten the bond futures, never done it before but I have them in my trading window, either the 10 and 30 years US and the 3 and 10 years australian and the long gilt....

Why don't you request from the moderator to have this thread pinned, if it is going to be one of the 'regulars'?

If you are happy to post your bond related chart and news here instead the got share thread will be good to have it pinned. I also think the bond market is going to be much more important in the next future then in the last years

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junk bonds sales at record level (making big bonds headlines on bloomberg again) My link

March 29 (Bloomberg) -- Junk bond sales reached a record this month as rising profits and record low Federal Reserve interest rates foster lending and investment to the lowest-rated borrowers.

Companies worldwide issued $38.3 billion of junk bonds in March, passing the previous high of $36 billion in November 2006, according to data compiled by Bloomberg. Yields fell 0.95 percentage point to within 5.96 percentage points of government debt, the narrowest gap since January 2008, Bank of America Merrill Lynch index data show.

This is “an almost ‘Goldilocks’ environment for leveraged credit markets,” JPMorgan Chase & Co. analysts led by Peter Acciavatti, the top-ranked high-yield strategist in Institutional Investor magazine’s annual survey for the past seven years, said in a March 26 report to the bank’s clients.

Sales soared as investors plowed a record $33.6 billion into speculative-grade funds this quarter, according to Cambridge, Massachusetts-based research firm EPFR Global. Bonds of Stamford, Connecticut-based Frontier Communications Corp. and Consol Energy Inc. of Pittsburgh, which sold a combined $5.95 billion of debt last week, rose about 2 cents on the dollar to 102 cents.

That’s a turnaround from February, when companies canceled sales at the fastest pace since credit markets began to freeze in 2007 amid concern that the inability of European governments to trim their budget deficits will threaten a global recovery.

Loan Revival

About $20 billion of high-yield, or leveraged, loans have been completed in February and March, compared with $38 billion for all of 2009, according to New York-based JPMorgan. Speculative-grade securities are rated below Baa3 by Moody’s Investors Service and BBB- by Standard & Poor’s.

Elsewhere in credit markets, yield spreads for company bonds shrank by an average 3 basis points last week to 151 basis points, or 1.51 percentage points, the narrowest since November 2007, according to Bank of America Merrill Lynch’s Global Broad Market Corporate Index. Yields rose to 4.02 percent from 3.98 percent.

AmeriCredit Corp. will sell $200 million of bonds tied to loans in its first asset-backed offering since the end of a U.S. program to revive that market. OAO Russian Railways sold $1.5 billion of debt in its debut foreign bond issue. Caixa Economica Federal, a government-controlled lender, plans to become the first Brazilian bank to sell local debt with a maturity of at least two years after the nation’s central bank opened up the market for such sales.

Subprime Auto Debt

Fort Worth, Texas-based AmeriCredit, a lender to auto buyers with poor credit, last issued similar debt in February through the Federal Reserve’s Term Asset-Backed Securities Loan Facility, which attracted investors by financing purchases of the securities. The TALF program ended earlier this month.

OAO Russian Railways’s foreign bonds were sold at a lower yield than OAO Gazprom’s similar-maturity debt on speculation the notes will be included in benchmark bond indexes. The seven- year bonds were priced to yield 5.739 percent on March 26, according to a banker with knowledge of the transaction. That compares with a yield of 6.065 percent on Gazprom’s dollar bonds due 2018, according to Bloomberg prices.

Caixa Economica, a Brasilia-based bank founded in 1861, may sell about 50 million reais ($27.5 million) of bonds called “letras financeiras” in May, Marcio Percival Alves Pinto, the bank’s vice-president of finance, said in a telephone interview.

Glencore International AG, the world’s largest commodities trader, plans to tap banks in Asia for the first time as it seeks to borrow at least $7 billion, according to two people familiar with the matter.

Default Swaps

The cost to protect against defaults on U.S. corporate bonds fell, trading in benchmark credit derivatives indexes show. The Markit CDX North America Investment Grade Index Series 14, which investors use to speculate on creditworthiness or to hedge against losses, declined 0.7 basis point to 87.25 basis points on March 26, according to CMA DataVision. For the week, the index rose 0.6 basis point.

In London, the Markit iTraxx Europe Index linked to credit- default swaps on 125 investment-grade companies rose 0.88 basis point to a mid-price of 78.6, Markit composite prices show.

Credit-default swaps tied to Greek government bonds fell 13.8 basis points to 295.5 on March 26, according to CMA, as leaders of the 16-nation euro region agreed to a potential bailout for Europe’s most indebted country. Default swaps on Greece soared to as high as 428 basis points on Feb. 4 on speculation the nation’s debt woes may spread.

Global Sales

Bond risk increased in Australia and Japan, with the Markit iTraxx Australia index gaining 1 basis point to 84.5 basis points as of 11:16 a.m. in Sydney, according to Citigroup Inc. The Markit iTraxx Japan index rose 0.5 basis point to 117.5 as of 8:32 a.m. in Tokyo, according to Morgan Stanley prices.

Credit swaps pay the buyer face value if a borrower defaults in exchange for the underlying securities or the cash equivalent. A basis point is 0.01 percentage point and equals $1,000 annually on a contract protecting $10 million of debt for five years. A decrease indicates improvement in the perception of credit quality; an increase, the opposite.

Global corporate bond sales rose to $273 billion this month, up from $162 billion in February, Bloomberg data show. That compares with the monthly average of $265 billion in 2009, when sales hit a record $3.2 trillion. Companies raised $722 billion through bond issues this year, compared with $1 trillion in the first quarter of 2009.

Sales Double

Returns for the month total 0.3 percent, and 2.52 percent for the year, according to Bank of America Merrill Lynch’s Global Broad Market Corporate Index. U.S. junk bonds have gained 2.94 percent in March and 4.64 percent in 2010. JPMorgan’s Acciavatti said spreads may narrow another 85 basis points by year-end.

“Appetite is definitely there,” said Joel Levington, director of corporate credit for Brookfield Investment Management Inc. in New York, which has $24 billion in assets under management.

Sales of high-yield bonds in March more than doubled last month’s total of $16 billion, driving issuance this year to $78.5 billion, the busiest quarter on record, Bloomberg data show. High-yield companies, taking advantage of the lower borrowing costs, said they planned to repay debt with proceeds from at least $20 billion of this month’s sales.

“The mindset of investors is that this spread product is ideally situated for this kind of macro environment,” said Charles Himmelberg, the chief credit strategist at Goldman Sachs Group Inc. in New York.

Rising profits

The fastest economic growth in six years during the final three months of 2009 fueled a surge in corporate profits that may set the stage for job gains and a broader U.S. recovery. Earnings increased 8 percent in the fourth quarter, the biggest year-over-year gain in 25 years, the Commerce Department said on March 26.

Economists expect global growth of 3.6 percent in 2010 and Fed Chairman Ben S. Bernanke told lawmakers March 25 that U.S. interest rates will likely remain low for some time to help the recovery.

Frontier’s four-part, $3.2 billion offering on March 26 was the largest sale of high-yield U.S. corporate bonds since May, when Teck Resources Ltd., a Vancouver-based metals producer, issued $4.23 billion of senior secured notes, Bloomberg data show.

The telephone company’s five-year notes were bid at 102.25 cents on the dollar on their first day of trading, according to RW Pressprich & Co. The seven-year debt traded at a mid-price of 102 cents, the 10-year bonds were bid at 101.5 cents and the 12- year debt was bid at 101 cents. All the securities were issued at par, Bloomberg data show.

Consol, Matalan

Consol, the coal and natural gas producer, sold $2.75 billion of notes on March 24 in its first bond in eight years, Bloomberg data show. Consol split the offering between $1.5 billion of 8 percent notes due 2017 and $1.25 billion of 8.25 percent bonds maturing in 2020, and plans to use the proceeds for an acquisition. On March 26, the 2017 notes traded at 102.375 and the 2020 notes reached 102.625, according to S&P LCD. Both were issued at par.

The S&P/LSTA US Leveraged Loan 100 Index rose 0.34 cent last week to 90.84 cents on the dollar, the sixth straight weekly gain and the highest level since June 30, 2008. Average loan rates, which are about 5.41 percentage points more than the London interbank offered rate, may narrow to 4.25 points more than Libor by year-end, Acciavatti said.

Loans of U.K. budget clothing retailer Matalan Ltd., which sold 225 million pounds ($335 million) of high-yield bonds on March 24, rose in their first day of trading last week. The loans climbed to 100.5 percent of face value, from 99 percent, according to prices provided by Mizuho Financial Group Inc. and London-based credit broker Guy Butler Ltd.

At least 17 borrowers postponed or withdrew $7.7 billion of debt sales through mid-February, according to data compiled by Bloomberg. That’s the most since more than 50 were canceled in the months after financial markets began to freeze in July 2007.

To contact the reporters on this story: Bryan Keogh in London at bkeogh4@bloomberg.net; John Detrixhe in New York at jdetrixhe1@bloomberg.net

Last Updated: March 29, 2010 00:53 EDT

So, at one side you have companies and businesses rushing to sell bonds and rise money, may be thinking they are going to have their debt inflatied away and the company will outgrow them. At the other side you have central banks giving away money for free, so why not borrow from central banks at low rate and reinvest in longer term at higher rates?

This is going to end up very bad....:thumbdown:

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junk bonds sales at record level (making big bonds headlines on bloomberg again) My link

So, at one side you have companies and businesses rushing to sell bonds and rise money, may be thinking they are going to have their debt inflatied away and the company will outgrow them. At the other side you have central banks giving away money for free, so why not borrow from central banks at low rate and reinvest in longer term at higher rates?

This is going to end up very bad....thumbdown.gif

Sub Prime II coming your way!

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Sub Prime II coming your way!

... but not just yet. We need a bit more euphoria on the junk bond market.

post-148-12698589007064_thumb.jpg

post-148-12698589079488_thumb.jpg

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Usually stuff like sovereign bonds it ok stuff. You can buy long bonds and get a good rate of return, but you are not stuck for the term because bonds can simply be sold any time to the market.

Now normally bonds are pretty ok......I say this, but.......

The world is not safe for bonds while gold is on the prowl!

The war against gold has always been the war of those who issue bonds.

The gold ban of the 1930's was to protect the value of government bonds.

In the mid 90's the FED began selling its gold hoard to bring the POG down. The result was government gold sales and profits where poured into US treasuries. This kept yields down and allowed the FED to run a low interest rate policy, which saw Credit Bubble created.

And that kiddies, was essentially the story!

Basically gold will hammer bonds in the coming years. The market sell out on bonds for gold. Yields will open up like a vast chasm.....we are already seeing the effect now.

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And that kiddies, was essentially the story!

Uncle wulfie,

Does that mean that we're going to get cheaper houses together with extra interest on our bank accounts ... if the banks are still open?

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Uncle wulfie,

Does that mean that we're going to get cheaper houses together with extra interest on our bank accounts ... if the banks are still open?

The bond market is what supports the credit system. The bond market collapses.......you can kiss easy credit goodbye. Of course property prices will collapse.

You won't get higher interest rates, simply because the banks and the market won't be able to pay it.

You'll end up with a large spread on bonds. This means those holding will be reluctant to sell, and potential buyers will not buy. And never the twain shall meet.

A bonds will lose liquidity and market will be frozen. This is the engine of monetary destruction.

Remember what occurred with the US RMBS in 2007? Study closely. When a market ceases to be liquid, deflation is the outcome.

You'll get your cheap house Cobran. The collapse of commercial credit at the end of the year will see to that. But don't leave all your money in the bank in 2011.

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The bond market is what supports the credit system. The bond market collapses.......you can kiss easy credit goodbye. Of course property prices will collapse.

You won't get higher interest rates, simply because the banks and the market won't be able to pay it.

You'll end up with a large spread on bonds. This means those holding will be reluctant to sell, and potential buyers will not buy. And never the twain shall meet.

A bonds will lose liquidity and market will be frozen. This is the engine of monetary destruction.

Remember what occurred with the US RMBS in 2007? Study closely. When a market ceases to be liquid, deflation is the outcome.

You'll get your cheap house Cobran. The collapse of commercial credit at the end of the year will see to that. But don't leave all your money in the bank in 2011.

It is often hard to follow your thought wulfie.

In your scenario can't the RBA and government provide liquidity by buying directly the bonds or in giving relatively cheap money to the banks to get them to buy those bonds?

Cobran is probably refering about lending those money to banks that would have total access to rba money.

Anyway, I don't think there will be big numbers of bond with low liquidity, mainly credit in australia is driven by banks borrowing and lending and not by retail bond market listed on the market.

I remember when Argentina collapsed and defaulted 10 years ago their bonds were liquid and tradable with a not too bad spread till the last minute. I think any sovereign bond, including greece will be like that till the last minute.

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It is often hard to follow your thought wulfie.

In your scenario can't the RBA and government provide liquidity by buying directly the bonds or in giving relatively cheap money to the banks to get them to buy those bonds?

Cobran is probably refering about lending those money to banks that would have total access to rba money.

Anyway, I don't think there will be big numbers of bond with low liquidity, mainly credit in australia is driven by banks borrowing and lending and not by retail bond market listed on the market.

I remember when Argentina collapsed and defaulted 10 years ago their bonds were liquid and tradable with a not too bad spread till the last minute. I think any sovereign bond, including greece will be like that till the last minute.

Because there is a limit on how many dollars the government can print. Most of the mainstream currencies seem to operate on a cap of 7%. They print that regularly anyway so it is QE every year.

The current QE around the world is dependent on the government issuing debt. The market goes cold on that debt, you can kiss QE goodbye.

Recently the congress was screaming at Bernanke for not printing enough dollars.

Currently there is 933,542 billion US dollars in circulation. Seven years ago there was 686,257 billion US dollars in circulation.

933,542 to 686,257 in 7 years equals 4.5% per annum does it not?

This is not the dream inflation of the dollar shorter, he is in for a sticky end.

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Our 10 year bond yields are breaking out of the triangle. That should spell higher mortgage rates ahead.

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post-148-12700208060497_thumb.jpg

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Our 10 year bond yields are breaking out of the triangle. That should spell higher mortgage rates ahead.

In the short term higher interest rates are quite possible, but not in the longer term. The world market cannot absorb high rates because unlike 1980 we don't have massive growth industry (computers) on the roll.

If the Martians landed creating vast new trade opportunities........yeah sure!

That's why they're kicking the tin can down the road. They all hope something will emerge out of the blue in the meantime to save their bad fiscal policies.

I think we do the cargo cult thing, build model flying saucers everywhere and hope in attracts the Martians!

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In the short term higher interest rates are quite possible, but not in the longer term. The world market cannot absorb high rates because unlike 1980 we don't have massive growth industry (computers) on the roll.

If the Martians landed creating vast new trade opportunities........yeah sure!

That's why they're kicking the tin can down the road. They all hope something will emerge out of the blue in the meantime to save their bad fiscal policies.

I think we do the cargo cult thing, build model flying saucers everywhere and hope in attracts the Martians!

I also tought about that,

there are big player in Asia that can boost or drop demand for goods or credit at any time in overwhelming numbers and for an extended period of time, once rising workers wages allign to rising inflation and rising stock market increase as well money numbers as a consequence interest rates can stay high for longer.

I think the point is that a 5% interest rate is always sustainable in the long term if inflation, wages and cpi is above 5% as well, china alone can boost world inflation for an extended time if they want

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I also tought about that,

there are big player in Asia that can boost or drop demand for goods or credit at any time in overwhelming numbers and for an extended period of time, once rising workers wages allign to rising inflation and rising stock market increase as well money numbers as a consequence interest rates can stay high for longer.

I think the point is that a 5% interest rate is always sustainable in the long term if inflation, wages and cpi is above 5% as well, china alone can boost world inflation for an extended time if they want

Yes, I'm not in favor of the modern views of "growth" in relation to money supply. The argument is that inflation does not could occur if the money supply rises in concert in with the production of goods and services.

To me this is nonsense. For me gold is a key guide in what real production means. Historically the supply of gold per capita has risen slowly.

For the last 110 years the ratio of gold has been 3/4 ounce per world capita. In 1850 it was 1/2 ounce per world capita. Much less in ancient Roman times.

So for me the critical context is money supply per capita. The fact that we have far more goods and services per capita today than in ancient Roman times means little in terms of monetary inflation. Certainly it means a lot of price deflation. In the early 70's a HP scientific pocket calculator was around $340. Today a scientific pocket calculator is about $20 in Woolworths. For the same thing I paid $40 in the early 80's.

The supply of scientific calculators was low at first and therefore expensive in per capita monetary terms. By the early 80's they were generally available. Today almost without limit. Do we base the monetary standard on science calculators?

I don't think so. The price of goods will naturally react to supply and demand. But the critical factor in monetarism is purchase power per capita within a context.

Note our glorious education system will not teach rudimentary monetarism. It only teaches that befitting slaves.

Due to the characteristic of gold supply remaining step with population, I regard it as a good money guide. However of the course the historical Central Bank activity in relation to gold is counter-intuitive. Britain sold most of gold reserves at the lowest price it could get. The cnetral banks bought gold hand over fist in the early 80's when gold was at its most expensive.

From my perspective they are operating in collusion to keep gold from being regarded as money in preference to their hugely marked up paper product. It is a very lucrative business, it will cost a few cents to create a hundred dollar bill.......but you still pay a hundred.

When the Central Banks claim gold would be a disaster......yes for them.....but not for you, the buying public.

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Yes, I'm not in favor of the modern views of "growth" in relation to money supply. The argument is that inflation does not could occur if the money supply rises in concert in with the production of goods and services.

To me this is nonsense. For me gold is a key guide in what real production means. Historically the supply of gold per capita has risen slowly.

It is better though for governments to direct spending toward the productive parts of your economy at least aiming to spend to increase production. In theory at least it is supposed to be neutral on inflation.

You are probably right that it still has some inflationary pressures due to wage rises and less caapcity in the short term during construction but I suspect it is far less inflationary then just handing out cash with no increase in productivity whatsoever like our cash handouts and school building projects.

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overnight in US bond yield shot up to a 10 month high of 4.95% (for the 10 year term)

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April 2 (Bloomberg) -- U.S. stock-index futures, yields on 10-year Treasuries and the dollar advanced after employers added the most jobs in three years, boosting optimism that the economic recovery is accelerating. Standard & Poor’s 500 Index futures expiring in June rose 0.3 percent to 1,177.30. U.S. stock exchanges were closed today for Good Friday. Treasuries fell, driving the yield on 10-year notes up 0.08 percentage point to an almost 10-month high of 3.95 percent. The U.S. dollar reached 94.70 yen, the strongest since August, at 9:45 a.m. in New York.

Payrolls rose by 162,000 last month, less than anticipated, after a revised 14,000 decrease in February that was smaller than initially estimated, figures from the U.S. Labor Department in Washington showed today. The March increase included 48,000 temporary workers hired by the government to help conduct the 2010 census. The unemployment rate held at 9.7 percent.

“It’s a good, solid report,” Treasury Secretary Timothy F. Geithner said in a Bloomberg Television interview in New York. “It shows we’re getting stronger, and the economy is now creating jobs.”

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So:

we have oil braking up above 83$, stock market braking upwars as well, a relatively strong US$ and then a rising long term bond yield.

These things are incompatible and I think will be short term. I think the one that will give up soon is a strong US$ (that is also the price of gold)

Edited by boz

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overnight in US bond yield shot up to a 10 month high of 4.95% (for the 10 year term)

My link

So:

we have oil braking up above 83$, stock market braking upwars as well, a relatively strong US$ and then a rising long term bond yield.

These things are incompatible and I think will be short term. I think the one that will give up soon is a strong US$ (that is also the price of gold)

I think the $US index still has more in it and being helped by rising yields. OTH, the US market is overbought and as I said in the 'Got Shares' thread, the rising oil price will change the 'V' recovery into some kind of 'W'. In a month's time will know if it is 'Sell in May and go away' time again.

post-148-12702691820147_thumb.jpg

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overnight in US bond yield shot up to a 10 month high of 4.95% (for the 10 year term)

My link

So:we have oil braking up above 83$

, stock market braking upwars as well, a relatively strong US$ and then a rising long term bond yield.

These things are incompatible and I think will be short term. I think the one that will give up soon is a strong US$ (that is also the price of gold)

Well I do tell you guys.

How's the portents looking for OIL, oh ancient and wise one?

How about 120 USD by June?

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