Federal Reserve policy is keeping Treasury yields too low to provide reasonable returns for most investors, Pimco's Bill Gross told CNBC.
[[wysiwyg_imageupload:1596:]]By Adrian Ash
Is the bond market finally catching on to the "forced risk" trade...?
AS NIALL FERGUSON never tires of reminding us, bond markets rarely react early to bad news, no matter how plain it looks to everyone else.
"In the years leading up to the First World War," as the Harvard historian explained in 2006, for instance, "the London bond market - then the biggest in the world - appears to have become markedly less sensitive to international crises than it had been in the nineteenth century." So despite much gnashing of teeth over the Russian/German/Yellow/Turkish threat to empire in the ever-xenophobic British press, the catastrophe of August 1914 still caught bond holders napping (holidaying in fact), oblivious to their imminent risk and the decades of negative real returns that lay ahead.
[[wysiwyg_imageupload:1566:]]By Bud Conrad
The amount of loans being provided by our banking system is a good reflector of the strength of our economy. Below is a big-picture view that shows the total loans in the U.S. as the Fed reports in its H.8 each week. We can see that loans outstanding declined at a rapid rate at the beginning of the current great recession, but there seems to be a recovery in the little jump at the end of the chart, as highlighted by the two small black arrows. A little closer look shows that the Consumer Loans segment is the source of the optimism that we see in the total.
[[wysiwyg_imageupload:1513:]]By Peter Schiff
Back in October of 2009, when Congress first announced the formation of a commission to investigate the cause of the 2008 financial crisis, I knew immediately that their ultimate conclusions would support the agendas of their respective political parties. (Watch the video blog I recorded that day) Particularly, I knew that the commission's Democrat majority would use the crisis to justify more government involvement in the financial markets. These concerns have now been fully validated.
Japan and the United States faced new pressure to confront their swollen budget deficits as the IMF and rating agencies demanded more evidence they can bring their public debts under control.
By Doug Noland
For the week, the S&P500 gained 1.1%, and the Dow increased 0.8%. The Banks jumped 1.3%, and the Broker/Dealers gained 2.0%. The Morgan Stanley Cyclicals surged 2.6%, and the Transports advanced 1.4%. The Morgan Stanley Consumer index increased 0.4%, and the Utilities gained 0.9%. The S&P 400 Mid-Caps increased 0.4%, and the small cap Russell 2000 gained 0.5%. The Nasdaq100 jumped 2.7%, and the Morgan Stanley High Tech index rose 2.5%. The Semiconductors gained 3.4%. The InteractiveWeek Internet index jumped 3.1%. The Biotechs increased 0.8%. With bullion clobbered for $51, the HUI gold index sank 7.2%.
By Jordan Roy-Byrne CMT
Heading into 2011, the consensus outlook on precious metals is slightly positive but the consensus believes that higher interest rates will ultimately support the US currency and in turn engender a move out of Gold. The Gold naysayers are using “rising rates” as a way to dismiss Gold. Let me explain why this belief is not only false but utterly dangerous.
For the first time on record, investors are demanding a smaller premium to own U.S. corporate bonds than global company debt.
By Rolf Norfolk
This item may seem to be UK-based, but essentially the situation is much the same on the other side of the Atlantic. It's a story, not about domestic mortgages but about the sleeping bear of the bond market:
There are few indicators more prescient than the yield curve. Over the years the curve has successfully predicted all but two post WW2 recessions. In the last 40 years it is 7 for 7 in predicting recessions. A negative yield curve is generally consistent with a Federal Reserve that is attempting to cool the economy. Clearly, they have a tendency to overshoot.