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Lance Carson
The notes should hold support near 106-08 and then rally too 106-28 before another reaction sets in . The market's next stop after that will be 107-20.
Bond rally nearing an end?
- Thread starter gharghur2
- Start date
S.M.R.A. Poll
Final FOMC Survey Results: 60/40 For A Pause, 5.50% By Year-End
Based on final results, 61% voted for Federal Reserve policymakers to leave interest rates unchanged at Tuesday's meeting while the other 39% voted for another 1/4 percent increase in the federal funds rate target to 5.50%.
Final FOMC Survey Results: 60/40 For A Pause, 5.50% By Year-End
Based on final results, 61% voted for Federal Reserve policymakers to leave interest rates unchanged at Tuesday's meeting while the other 39% voted for another 1/4 percent increase in the federal funds rate target to 5.50%.
An interesting take on the 'conundrum' from the guy who wrote "The Dollar Crisis":
America's interest rate conundrum explained
By Richard Duncan | 7 August 2006
The author of bestselling book, The Dollar Crisis explains why the long end of the US yield curve previously failed to respond to Fed rate hikes; but why the long end should now rise.
When the Federal Reserve began increasing the Federal Funds Rate in June 2004, the yield on 10-year Treasuries fell instead of rising. Indeed, yields remained below their mid-2004 level until April 2006, despite 15 rate hikes (see Figure 1.) Chairman Greenspan described that unexpected outcome as a âconundrumâ. In retrospect, it is now clear that the conundrum originated with the discovery of accounting irregularities at Freddie Mac and Fannie Mae ...
http://www.financeasia.com/article.aspx?CIaNID=35611
America's interest rate conundrum explained
By Richard Duncan | 7 August 2006
The author of bestselling book, The Dollar Crisis explains why the long end of the US yield curve previously failed to respond to Fed rate hikes; but why the long end should now rise.
When the Federal Reserve began increasing the Federal Funds Rate in June 2004, the yield on 10-year Treasuries fell instead of rising. Indeed, yields remained below their mid-2004 level until April 2006, despite 15 rate hikes (see Figure 1.) Chairman Greenspan described that unexpected outcome as a âconundrumâ. In retrospect, it is now clear that the conundrum originated with the discovery of accounting irregularities at Freddie Mac and Fannie Mae ...
http://www.financeasia.com/article.aspx?CIaNID=35611
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Lance Carson
Excellent insight, it shows how issuance of debt plays a big roll in the yields.Wonder why CNBC does not gives it the priority it deserves.
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Lance Carson
IMHO,
Inflation is higher than most central
bankers would like and it's increasing. The indicator they
watch the most to gauge inflation is the deflator for
personal consumption expenditure excluding food and
energy. It went up an annualized 2.9% between April
and June, far above their preferred range of 1-2%. If
Bernanke raise rates too far, they risk pushing a faltering
economy into recession. But if they stop tightening too
soon, inflation will get out of hand. So the magic question
is: which one is more important? I believe the dangers of
rising inflation outweigh those of slowing growth. If
Bernanke is prudent (which so far he has been), he will
increase rates once again, and do the rate pause later
this year.
Inflation is higher than most central
bankers would like and it's increasing. The indicator they
watch the most to gauge inflation is the deflator for
personal consumption expenditure excluding food and
energy. It went up an annualized 2.9% between April
and June, far above their preferred range of 1-2%. If
Bernanke raise rates too far, they risk pushing a faltering
economy into recession. But if they stop tightening too
soon, inflation will get out of hand. So the magic question
is: which one is more important? I believe the dangers of
rising inflation outweigh those of slowing growth. If
Bernanke is prudent (which so far he has been), he will
increase rates once again, and do the rate pause later
this year.
agree.
but only "if" they are not taking fuel costs
too seriously. If they are, chances for a halt
today do improve.
imho.
but only "if" they are not taking fuel costs
too seriously. If they are, chances for a halt
today do improve.
imho.
I heard a famous gold-bug on TV over the weekend talk about inflation, and of course the next pending runup in gold prices... Basically it comes down to picking the best of two evils... It's easier, he asserts, to get an economy out of an inflationary environment, as opposed to a deflationary environment... I guess he's speaking about Japan and the rut they are still in... Plus, rates can't go below zero, Japan has certainly tried... the "rally" that many now speak of is limited by the fact that a 4% yield is really kinda the floor, while the upside is pretty crazy...
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Lance Carson
The market is banking on a pause, which will result in initial buying followed by a probable sell-off in treasuries, although it should be short lived. The response would not be unexpected because even as the expectations for a hold on rates are generally high the "no go" would result in increased inflation concerns (unless the statement really harps on the group's ability to move as needed in the face of price pressures).
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Lance Carson
Target is 110-00 still holds.