Bonds News

Yields on treasury bonds were expected to start trending up as the end point for the Fed's $600 billion QE2 program came closer. The thinking was that as the Fed stopped buying these bonds, yields will have nowhere to go, but up. This fairly plausible view, which has Pimco's Bill Gross as one of its exponents, has failed to materialize thus far. With QE2 just days away from coming to a close, yields on the benchmark 10-year treasury bond are below 2.9%. Yields on the shorter maturity treasury bills are close to zero. This would mean that investors in treasury bills are not asking for anything in return for lending money to Uncle Sam. Given the deadlocked debt-ceiling negotiations in DC and Greece's debt problems hogging headlines, is the bond market behaving rationally? The short answer is - Yes. The bond market is rationally pricing what the Fed will do to its balance sheet and short term interest rates even as QE2...

The currency markets ended the week consolidating. The euro is showing resilience in the face of higher yields on European bonds. Peripheral spreads are mostly wider on the day; with Portugal 10-year yield above 7% for the 11th straight day and so that should help the dollar continue to recoup some of its losses. Sterling is being underpinned by strong UK retail sales data. UK Retail sales came in with an increase of 1.9% compared to the .6% expected by economists. The direction the BOE might take with regards to policy will become clearer with the release next week of the minutes from the February meeting, with markets looking to see if any other MPC members joined Sentance and Weale in voting to hike rates. Weale’s vote to hike in January was a surprise, and the first time in this policy cycle that another member joined hawk Sentence in voting to tighten. As the UK growth and inflation outlook has shifted,...

By Barbara Zigah The findings of the recently published Financial Crisis Inquiry Commission won’t come as any great surprise to those investors who’ve followed the stories of the financial crisis from the beginning.  Succinctly stated, the Commission found – as many individuals have been saying all along – that the crisis could have been averted.  The crisis became, simply because those in the know – regulators from the various governmental agencies, and the so-called, “captains of finance” – failed to take heed of the warning signs, if indeed they even recognized them as such.  The Commission acknowledges that it wasn’t any one particular event which led to the crisis, but a generalized laissez-faire attitude among all of those entities which share the blame. According to the Commission, time and again, those government agencies, including the Securities and Exchange Commission, the Comptroller of the Currency, the Office of Thrift Supervision, and the N.Y. Branch of the Federal Reserve Bank – agencies that we...

European stock markets were mixed on Thursday as investors awaited the outcome of Spanish and Italian debt auctions, while U.S. futures indexes pointed to a lower open on Wall Street. During European morning trade, the EURO STOXX 50 climbed 0.69%, France’s CAC 40 gained 0.30%, while Germany's DAX was up 0.02%. Markets were focused on bond sales by Spain and Italy later in the day and on an interest rate decision by the European Central Bank. Meanwhile, shares in the financial sector were broadly higher. Shares in Spain’s largest lender Banco Santander surged 4.49%, rival BBVA saw shares rally 5.55%, while Italy’s biggest bank Unicredit jumped 2.78%. However, shares in Germany’s second largest lender Commerzbank plunged 2.84% after it said it planned to increase capital by up to 10% to meet stricter capital requirements by issuing new stock. Meanwhile, shares in Germany’s largest airliner Deutsche Lufthansa tumbled 2.13% after it said that operating results in the fourth quarter could be lower after adverse weather affected...

The bear market in bonds will be confirmed globally. While interest rates likely bottomed in 2010, a significant rise in rates during 2011 will confirm a bear market trend for smart money investors. This bear market will continue until the global currency market is restructured. Precious metals will surprise on the downside in the first half and surprise on the upside in the second half. Gold will top $1650 and silver will top $50. This will confirm the third phase of the bull market in precious metals. A return to the energy sector in a big way. Energy companies have disappointed since 2009 due to a softening in US demand and the BP disaster. Oil will exceed $100 and capital will start flowing into energy investments as it did in 2007 and 2008. Natural gas and alternative energy will also rebound. Global stock markets will correct in the first half but end higher for the year. June and July will be a pivot...

First Quarter: Weak Growth Amid Signs of the Emergence of New Crisis The euro zone did not have time to take a breather early in 2010 as economic dilemmas continued to trail it. After two consecutive quarters of growth achieved in the second half of 2009, the pace of progress continued in the first quarter of 2010 but at a moderate pace amid the emergence of a new crisis that has become the overriding concern of leaders in the region and it even was extended at the global level throughout 2010, which is the "European sovereign debt crisis." The main focus throughout 2010 was on the sovereign debt crisis that was considered a challenge to the resilience of the euro-area economies against the repercussions of global financial crisis as well as the ability of governments to continue to support the weak economy. In fact, signs of crisis appeared significantly in November 2009 when Greece announced its fiscal budget plan for the year in...

New Year’s eve, people said good bye to 2009 and warmly welcomed 2010 with new hopes and dreams. So did the U.S economy, as it said goodbye to the disastrous 2009, which reflected the worst of the worst economic crisis that has hit the U.S economy and the world for a matter of fact since the Great Depression in the 1930’s, and welcomed 2010 with a strong belief that it will be a year of recovery and prosperity. The economic crisis did show its worst side in 2009, the negative GDP growth rates existed in that year, and the excruciating unemployment rates were also witnessed throughout 2009. Analysts expected to put all that behind in 2010 and January did not prove them wrong as then the 5% growth in GDP during 2009’s final quarter was released. Yet nothing went as planned or hoped for, and I will explain why by narrating the events of 2010 each quarter individually. January to March: The Promising...

What do I have in common with Nouriel Roubini? We’re about the same age, and we were both born in European countries, although at opposite extremes of the Continent. What’s different? Mr. Roubini thrives on “busts” while I prefer a balanced approach and focus on “booms” and “busts.” We also differ on conclusions. I recall Mr. Roubini’s piece in the Financial Times on November 1, 2009, titled “Mother of all carry trades faces an inevitable bust,” in which he laid out his opinion on the eventual deleveraging of the Dollar shorts and how it would wreak havoc in all markets of all stripes. But one day this bubble will burst, leading to the biggest coordinated asset bust ever: if factors lead the dollar to reverse and suddenly appreciate – as was seen in previous reversals, such as the yen-funded carry trade – the leveraged carry trade will have to be suddenly closed as investors cover their dollar shorts. A stampede will...

LONDON, Jan 3 (Reuters) - German government bond futures opened higher on Monday, with trading subdued by market holidays in parts of Asia and the UK. Sovereign debt markets are expected to gear up again this week after the Christmas break, with bonds of the euro zone's more indebted nations likely to come under renewed pressure as governments begin their 2011 fundraising programmes. German and France kick-off the year's supply with auctions on Wednesday and Thursday, while Portugal -- seen as the next most likely to need financial assistance -- will also sell T-Bills on Wednesday. At 0703 GMT, March Bund futures were 0.20 points higher at 125.50. Two-year bond yields were 3 bps lower at 0.829 percent, with 10-year yields half a basis point lower at 2.945 percent. German 10-year yields ended 2010 almost 50 bps lower than in January after Bunds came under pressure in the fourth quarter as markets priced in a better global economic outlook and worried over the cost...

Equities Major Asian markets were mostly lower on Tuesday, as China’s Shanghai Composite fell another 1.7%, adding to Monday’s 1.9% loss.  The Hang Seng dropped .9%, and the Nikkei closed down .6%. In Europe, volume remained low as London’s markets remained closed for another day.  The major indexes ended little changed with the DAX and CAC 40 both closing less than .1% off their previous close. US markets ended mixed in yet another slow day  The Dow gained 21 points, rising to 11575, after hitting a fresh 52-week high of 11591 earlier in the day.  The Nasdaq slipped .2% to 2663. Treasuries and Commodities A $35 billion in 5-year notes drew weak demand, with the yield above the secondary market rate and a low bid to cover ratio.  5-year notes fell 18/32, pushing the yield up to 2.16% from Monday’s 2.02%.  10-year notes fell 1 8/32 to yield 3.49%, and 30-year notes tumbled 2 8/32, to yield 4.54%. Yields Jump as Treasuries Sell Off A $29 billion...