boz

Got Bonds

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well, greek bonds is speculative buy as they are junk status, yesterday lots of specualtors lost money.

Thanks for the info boz.

On trading bond pairs does forex also play a part or is it just relative yield movements?

Also teh greek bonds should be paying less yield now that they are guaranteed by the rest of europe? Shouldn't they?

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Thanks for the info boz.

On trading bond pairs does forex also play a part or is it just relative yield movements?

Also teh greek bonds should be paying less yield now that they are guaranteed by the rest of europe? Shouldn't they?

you can't trade pairs, you can trade bonds futures and if you go long in one and short the other one is like trading the pair.

i only get real time data of aussie and USA gov bonds (haven't trade bonds future jet)

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bond yield is dropping significantly during these sharemarkets crashes, the AU 10 year gov bond is just below 5.4% at lowest in months, canadian bond is back up above the one of US and EU is quite stable, UK is also quite stable and it is quite remarkable giving the inflation rate getting well over 3% over there.

here is Roubini see bond troubles soon:

May 18 (Bloomberg) -- The U.S. may fall victim to bond “vigilantes” targeting indebted nations from the U.K. to Japan in a potential second stage of the financial crisis, New York University professor Nouriel Roubini said.

“Bond market vigilantes have already woken up in Greece, in Spain, in Portugal, in Ireland, in Iceland, and soon enough they could wake up in the U.K., in Japan, in the United States, if we keep on running very large fiscal deficits,” Roubini said at an event at the London School of Economics today. “The chances are, they are going to wake up in the United States in the next three years and say, ‘this is unsustainable.’”

The euro touched a four-year low against the dollar today on concern nations with the largest budget deficits will struggle to meet the European Union’s austerity requirements. Roubini, speaking in a lecture hall packed with students who then queued to meet him at a book-signing, suggested that the public debt burden incurred after the banking panic of 2008 may now cause the financial crisis to metamorphose.

“There is now a massive re-leveraging of the public sector, with budget deficits on the order of 10 percent” of gross domestic product “in a number of countries,” Roubini said. “History would suggest that maybe this crisis is not really over. We just finished the first stage and there’s a risk of ending up in the second stage of this financial crisis.”

The U.S. posted its largest April budget deficit on record as the excess of spending over revenue rose to $82.7 billion. The federal debt is currently projected to reach 90 percent of the economy by 2020.

‘Constrained’ Politics

Roubini, who predicted in 2006 that a financial crisis was imminent, said that the record U.S. budget deficit may persist amid a stalemate in Congress between Republicans blocking tax increases and Democrats who oppose cuts in spending.

“In many advanced economies, the political will to do the right thing is constrained,” he said.

Roubini reiterated that the euro region faces the threat of a breakup after the Greek budget crisis. The European Union said today it transferred the first instalment of emergency loans to Greece, one day before 8.5 billion euros ($10.4 billion) of bonds come due.

“Even today there is a risk of a breakup of the monetary union, the euro zone as well,” Roubini said. “A double dip recession in the euro zone” is “something that’s not unlikely, given what’s happening.”

To contact the reporter on this story: Jennifer Ryan in London at jryan13@bloomberg.net

Last Updated: May 18, 2010 16:53 EDT

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Just noticed the US treasury bonds long term (10 and 30 years) are turning down. in a day the us$ was strong specially in relation to commodity and those currecny related to it, seems yield are not going to drop as much as they did in the GFC, probably investors are more aware of long term risks and keep money liquid.

Lots of chritics to Angela Merkel for the short bans but she is proving right as yield on eu bonds is down considerably, even France got below 3% (i think was first time). also euro together with jen was the strongest currency today

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Looks like the markets are putting the pressure on Ben to raise interest rates.

No......no.......no! Ben is going the other way! In the last 12 months he has increased FRN's in circulation by only 3.6%. This is way below the generational historical average of closer to 7%. This is how he is trying to maintain the value of the USD without raising rates. This is so the old dollar shorters don't go broke. Of course this also means a drying up of nominal capital for lending.

Say hello to the mother of all credit squeezes! :shocking:

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No......no.......no! Ben is going the other way! In the last 12 months he has increased FRN's in circulation by only 3.6%. This is way below the generational historical average of closer to 7%. This is how he is trying to maintain the value of the USD without raising rates. This is so the old dollar shorters don't go broke. Of course this also means a drying up of nominal capital for lending.

Say hello to the mother of all credit squeezes! :shocking:

Isn't the money growth a pull strategy and not a push on from the FED? I mean the fed set rates and market decide how much money it needs, I don't think bernenke said no to banks asking for money diring last year, may be the slower growht is because too much extra was coming out the year before.

to me the only push strategy to limit money in market without touching rates is by increase the bank reserves, and for the other way to do the quantitative easing

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Up to yesterday, our 90 day bank bill yields rose sharply over the two days after the RBA's rate rise. It will be interesting to see how much of a drop they would have suffered today. Our 10 year bond yields are however going against the grain (temporarily I hope!).

I'm now beginning to think that we could be in for a deja vou of 2008 and consider that potentially the next move in interest rates might be down. Need to watch those 90 day yields closely that they don't drop much below 4.5%.

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:dots:

Australia to Keep Buying RMBS as Market Improves (Update1)

Share Business ExchangeTwitterFacebook| Email | Print | A A A By Ed Johnson

May 25 (Bloomberg) -- The Australian government said it will keep investing in residential mortgage-backed securities even as the market for the bonds appears to have stabilized.

The Australian Office of Financial Management has invested about A$8.7 billion ($7.2 billion) in 27 RMBS transactions under a program introduced during the financial crisis to stoke home- loan competition, it said in an e-mailed statement today.

“Given the high credit quality of Australian RMBS and the program objectives, the AOFM is willing to invest at tighter levels,” according to the statement. “This will continue to be balanced with the desire to encourage continued private sector participation.”

The government invests in mortgage-backed bonds to increase competition in the nation’s home loan market to help smaller lenders fund loans. Australia’s regional banks and non-bank lenders, which were heavier users of securitization as a funding source, lost market share to the nation’s four largest banks after the U.S. subprime collapse shuttered global credit markets.

The AOFM expects to invest in A$150 million of RMBS to be issued by Suncorp-Metway Ltd. at an initial price guidance of between 110 basis points and 130 basis points more than the bank bill swap rate, according to the statement. A basis point is 0.01 percentage point.

Suncorp Bank said today in a separate statement it plans to sell A$500 million of notes backed by a pool of prime residential mortgage loans. It hired Deutsche Bank AG and Macquarie Group Ltd. to help with the transaction, which will price on or before June 1.

To contact the reporter on this story: Ed Johnson in Sydney at Ejohnson28@bloomberg.net.

Last Updated: May 24, 2010 20:05 EDT

bloomberg

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Yields on 10-year notes /quotes/comstock/31*!ust10y (UST10Y 3.16, -0.04, -1.19%) fell 4 basis points to 3.16%. They earlier touched 3.07%, the lowest in 13 months.

Bond yields move inversely to prices and a basis point is 0.01%.

Yields on the current 2-year notes /quotes/comstock/31*!ust2yr (UST2YR 0.76, +0.02, +3.27%) reversed an earlier decline to rise 2 basis points to 0.76%.

They fell as low as 0.67% earlier -- the weakest since December. The two-year yield's all-time low, reached during the depths of the financial crisis, was 0.65%.

Yields on 30-year bonds /quotes/comstock/31*!ust30y (UST30Y 4.06, -0.03, -0.81%) fell 3 basis points to 4.07%, after having dipped below 4% earlier to touch a 7-month low.

Bonds pared their gains in afternoon trading as the euro and stocks recovered from the lows of the day.

...

seems the swinging back ball is even taking bonds yield lower then during the GFC.

also german bond yield is at 20+ years low (and then everyone complain how german are spending money to bailout greece)

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Edited by boz

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Quite an unusual week for government bonds. PIGS yields dropped quite significantly in the last couple of days, today alone the Spanish dropped 0.15% and in 3 days the Italian has gone from around 4.3% to 4% now. Record low also for The Japanese Yield at 1.21%.

Other country like USA, UK or Germany and France haven't changed.

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Surprise surprise on who buys US treasury...

Bond Giant Pimco Buys Treasurys in Recent Weeks

After months of deriding U.S. Treasury bonds, Bill Gross and his fund managers at Pacific Investment Management Co. have switched sides.

Pimco had been the biggest and most vocal of a large group of Treasury bears, predicting that Treasury prices would fall, and yields rise, as the U.S. economy strengthens and the government borrowing binge continued.

In the opposing camp was Pimco's chief rival, BlackRock Inc., which said in March that it was buying up Treasurys.

So far, BlackRock's view has proven to be the winning bet. The debt crisis in Europe sparked a global flight to safe-haven assets such ...

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Surprise surprise on who buys US treasury...

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Well in a deflation treasuries are usually a desirable buy. But I'd go Euro bonds if they're at a depressed price. All this stuff is just a fight between the Euro and USD for top spot. Out of the two, I believe the Euro will win easily.

Gold is better though.

But US treasuries with 14 trillion of the suckers running around is something I'd steer clear of. Sovereign Eurobonds are only about 7 trillion worth in USD.

Edited by wulfgar

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Well in a deflation treasuries are usually a desirable buy. But I'd go Euro bonds if they're at a depressed price. All this stuff is just a fight between the Euro and USD for top spot. Out of the two, I believe the Euro will win easily.

Gold is better though.

But US treasuries with 14 trillion of the suckers running around is something I'd steer clear of. Sovereign Eurobonds are only about 7 trillion worth in USD.

Euro bonds or country's bonds within the Euro?

Euro over US?

I'm laughing so hard I need to change my shorts. Put you purchases here (number of contracts and coupons with prices etc) so we can track them.

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Well in a deflation treasuries are usually a desirable buy. But I'd go Euro bonds if they're at a depressed price. All this stuff is just a fight between the Euro and USD for top spot. Out of the two, I believe the Euro will win easily.

Gold is better though.

But US treasuries with 14 trillion of the suckers running around is something I'd steer clear of. Sovereign Eurobonds are only about 7 trillion worth in USD.

you don't get much yield in europe bond if you want to take it safe, in germany you get 2.5% for holding the money there for 10 years and 2% for 7 years, not worth it when you can get gold or other phisical and safer assets. My money in euro is just sitting on the account and I can't be bothered to search for a better yield.

On the other hands you have greece that gives you over 10% yield, but it is a bet weather you'll get all your capital invested back.

In US you get a bit more then in europe if you hold there the money for 10 years, around 3.25% for 10 years, Canada is a bit better at 3.4% (but the CAD like the AUD is overvalued if you look it at the long term and you might lose a bit of capital there)

Edited by boz

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Euro bonds or country's bonds within the Euro?

Euro over US?

I'm laughing so hard I need to change my shorts. Put you purchases here (number of contracts and coupons with prices etc) so we can track them.

I'm not referring to it from the angle of currency trading, but rather the angle of savings. If I'm right savings in Euro is the best bet out of the paper currencies. It will come down to which currency will have liquidity, if you don't understand the importance of liquidity or what it is. Then you'll be changing your shorts quite often.

You only think of it the form of imaginary gains, it will become a question of keeping the purchase power.

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I am with wulfgar. The Germans have shown that they will take up the fight with speculators. It forced the other EMU countries to put austerity measures in place. As long as they are sincere, commit and accomplish balanced budgets in the EMU the Euro will be the long-term winner. They have a head start because I haven't seen any other countries act.

Edited by sydney3000

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I'm not referring to it from the angle of currency trading, but rather the angle of savings. If I'm right savings in Euro is the best bet out of the paper currencies. It will come down to which currency will have liquidity, if you don't understand the importance of liquidity or what it is. Then you'll be changing your shorts quite often.

You only think of it the form of imaginary gains, it will become a question of keeping the purchase power.

The US bond market has liquidity though through quantitative easing. Thay have not needed to of late but I thought the US reserve just buys bonds itself if the market is unwilling too, prints cash and buys bonds. This means you will always have a market for your US bonds even if they are being inflated away through quantitative easing. Now I read recently that they have not done this outright for 12 months but I imagine that is because they have not needed to, if ever their was a liquidity squeeze than I bet they would be the buyer of last resort.

Euro denominated bonds do not have this the member countries cannot quant ease.

I agree with your buy gold though, I wish I had bought more! I have stuff all but still the timing on my last purchase was pretty good. My first purchase is now at Bep as well which is a win.

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I agree with your buy gold though, I wish I had bought more! I have stuff all but still the timing on my last purchase was pretty good. My first purchase is now at Bep as well which is a win.

Gold is over for a while I think. I am some 25% up over a couple of years in my very small allotment.

Time to find an investment that no one else is looking at and is rabidly stupid.

As I say my new (after the gold thing worked so well and nothing sensible did) insane investment theory is to find something someone as daft as wulfie was 4(?) years ago is recommending but also has intrinsically funny value (as gold did and does; you can aaarrrR a lot and legitimately wear an eyepatch[1] plus when you buy rum at the bottleshop you can tell him you need it for your gold[2]).

As I have said my current idea is buying japanese samurai armour. This is mostly so I can wear a suit of armour while working on databases. I think it will be the best investment ever because it is so silly I giggle just typing it and I don't even have the armour yet.

The neighbours are away and their kids had a party where someone decided to play the drums at about 0100. At the moment all I can do is be a pissy neighbour [3]but imagine if I was wearing full armour and turned up at the door asking for a go! Man that would rule.

Plus if I ever get around to building my small dojo in the trees it will look awesome in there[4].

[1] that is why they ask all that personal info, so the government can send you an eyepatch.

[2] why does a guy at the bottle shop ask why you are buying so much rum? weird bastards.

[3] Which I wasn't but sheesh

[4] And the insane screaming we do when fighting will be payback for drums at 0100 hehehehe

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I am with wulfgar. The Germans have shown that they will take up the fight with speculators. It forced the other EMU countries to put austerity measures in place. As long as they are sincere, commit and accomplish balanced budgets in the EMU the Euro will be the long-term winner. They have a head start because I haven't seen any other countries act.

I'm looking forward to trading the Deutsche Mark against the USD. Also the Germans have massive Gold reserves, and a society that will persevere and be sustainable - they'll do OK.

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The US bond market has liquidity though through quantitative easing. Thay have not needed to of late but I thought the US reserve just buys bonds itself if the market is unwilling too, prints cash and buys bonds. This means you will always have a market for your US bonds even if they are being inflated away through quantitative easing. Now I read recently that they have not done this outright for 12 months but I imagine that is because they have not needed to, if ever their was a liquidity squeeze than I bet they would be the buyer of last resort.

Euro denominated bonds do not have this the member countries cannot quant ease.

I agree with your buy gold though, I wish I had bought more! I have stuff all but still the timing on my last purchase was pretty good. My first purchase is now at Bep as well which is a win.

It is a dangerous doing the quantitative easing. It will provide liquidity untill it doesn't anymore. If investor decide not to hold US bonds and US$ then all the money the FED will use to buy bond will be reversed into the economy generating inflation. Probably investors would redirect the money into stocks, commodity or any other phisical asset that would hold the value in time more then paper money or bonds. That is probably why the monetary aggregate in US have been falling in the last year.

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The US bond market has liquidity though through quantitative easing. Thay have not needed to of late but I thought the US reserve just buys bonds itself if the market is unwilling too, prints cash and buys bonds. This means you will always have a market for your US bonds even if they are being inflated away through quantitative easing. Now I read recently that they have not done this outright for 12 months but I imagine that is because they have not needed to, if ever their was a liquidity squeeze than I bet they would be the buyer of last resort.

Euro denominated bonds do not have this the member countries cannot quant ease.

I agree with your buy gold though, I wish I had bought more! I have stuff all but still the timing on my last purchase was pretty good. My first purchase is now at Bep as well which is a win.

I've looked up the figures. They haven't been printing cash in the sense of the 1970's. They print a certain amount of cash these days come rain or shine. What the BOE, ECB and FED did was to borrow cash from the market in exchange for their own commerical paper. The retail banks now have Central Bank ious to play along with there own. It simply came down to the retails not trusting each other and being unwilling to trade there own market paper.

The RBA has printed on average 7% more cash per annum for the past 20 years ever since Basel one came into operation.

My suspicion is the BIS sets the rate for the creation of banknotes by mainstream central banks. It appears they've created an artificial gold standard were a type of paper gold increases at something like 7% per annum. Hence Central Banks buy this paper gold in order to create their own currency.

The gold supply normally increases at 1.5% per annum. During some boom years during the gold rush the gold supply increased by as much as 5% per annum.

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The gold supply normally increases at 1.5% per annum. During some boom years during the gold rush the gold supply increased by as much as 5% per annum.

In Niall Fergusons Ascent of Money, to make the point about how stable metal backed currencies were he reffered to the considered rampant inflation in Spain after the Americas were discovered due to Silver suddenly being far less valuable. Spain over that 150year odd period had similar inflation to us every 12 odd years. Lol.

You would imagine at 1.5% per annum that actually coincides nicely with population growth and probably slightly less than production capacity growth, i.e. your money would buy slightly more every year you held it.

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It is a dangerous doing the quantitative easing. It will provide liquidity untill it doesn't anymore. If investor decide not to hold US bonds and US$ then all the money the FED will use to buy bond will be reversed into the economy generating inflation. Probably investors would redirect the money into stocks, commodity or any other phisical asset that would hold the value in time more then paper money or bonds. That is probably why the monetary aggregate in US have been falling in the last year.

True,

I do hope though that if similar occured in AUS our reserve bank would come out punching, i.e. raise interest rates at least giving us bears a couple of years to buy our houses before our hard saved money becomes worthless.

I am starting to wish I had put it all in gold just so the government can't f*ck me!

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In Niall Fergusons Ascent of Money, to make the point about how stable metal backed currencies were he reffered to the considered rampant inflation in Spain after the Americas were discovered due to Silver suddenly being far less valuable. Spain over that 150year odd period had similar inflation to us every 12 odd years. Lol.

You would imagine at 1.5% per annum that actually coincides nicely with population growth and probably slightly less than production capacity growth, i.e. your money would buy slightly more every year you held it.

That's complete nonsense. Some claims put the rise in prices as threefold in the course of the 16th century, however the silver flowed out of Europe for eastern goods. Just as it had during roman times.

A days unskilled labor was 3 grams of silver in 14th century England, by 1800 it was 6 to 9 grams of silver.

The Spanish wrecked themselves not because of the silver they got, but because they very quickly borrowed heavily against future silver production. In the end they lived on credit and much like today the inflation was as much a product of a credit boom. It all went bust in the 17th century.

People can never spend enough.

The actual average wage today if the entire world is taken would be $10 a day at a guess, perhaps 20 grams of silver at best.

Ferguson is either mistaken or dishonest in trying alter history to fit his theory.

Silver and gold per world capita has risen with improved technology, but so has grain production. Gold still buys the same amount of grain that it did during Roman times.

The American's very quickly learned to spend money they didn't have as well.

The exchange rate between gold and silver in Roman times was 14 to 1.

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