Posts Tagged ‘treasury yields’

RAB CAPITAL: “MASSIVE” DECLINE IN YIELDS COMING

RAB CAPITAL: “MASSIVE” DECLINE IN YIELDS COMING

Courtesy of The Pragmatic Capitalist 

Deflated globe

The bond bubble theorists aren’t going to be happy about this report from RAB Capital.  Their analysts believe there is room for a “massive decline” in government bond yields in the coming years as central bankers attempt to fend off deflation. Bloomberg elaborated on the report:

“Interest rates cannot go up meaningfully for a very long time” in either country, the report said. U.S. Treasury yields have yet to fall far enough relative to the Fed’s target rate for loans between banks to reflect this prospect, he wrote. The same holds true for yields on U.K. gilts by comparison with the Bank of England’s base rate, in his view.

The 20-year Treasury yield ended last week at 3.49 percent after declining 1.2 percentage points from this year’s high, set on April 5. Twenty-year gilts yielded 3.91 percent after falling 0.83 point from a Feb. 19 peak. The gaps between the yields and benchmark rates — 3.24 points and 3.41 points, respectively — were still close to 40-year highs, according to the report.

bloom1 RAB CAPITAL: MASSIVE DECLINE IN YIELDS COMING

“Further purchases of bonds by central banks can only accelerate this inevitable adjustment” in yields, Joshi wrote, adding that the bull market in fixed-income securities “is far from over.”

The Fed may have to buy more debt to head off deflation, according to Joshi, who described this so-called quantitative easing as “the greatest pawn-broking scheme” ever implemented. Fed policy makers decided last month to keep the central bank’s securities holdings at $2.05 trillion by reinvesting proceeds from maturing mortgage-backed bonds into Treasuries.

It’s an interesting chart and analysis, however, the one thing I would point out is that rates tend to converge (1:1) when the Fed is fighting off an inflation threat. The periods shown on the above chart shows when the Fed raised rates substantially and inverted the yield curve.  In other words, the bond market was less concerned with inflation than the Fed was. Perhaps more importantly, however, the economy was smoking hot when rates converged. While I don’t disagree that rates are likely to remain low for some time, the implication that rates could converge appears a bit misleading. 10 year rates in Japan are sub 1% after 20 year of malaise while the overnight rate remains near zero. Are we headed there? I am not that…
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5-Year and 10-Year Treasury Yields Back at May 2009 Levels

5-Year and 10-Year Treasury Yields Back at May 2009 Levels

Courtesy of Mish 

Curve watchers anonymous is watching the yield curve.

Weekly Closing Chart of Treasury Yields

click on chart for sharper image

This is how today looks on Bloomberg.

Even with today’s bounce in equities, a bid remains for treasuries. This is a hint about underlying demand, and also about the so-called recovery that now seems to be gasping for air.

Note that 5 and 10-year treasury yields are at their lowest level since May of 2009. The 30-year long bond is approaching that level.

This sure isn’t hyperinflation behavior. It’s not even inflation behavior.

Mike "Mish" Shedlock

 


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Mortgage Market Remains Solidly Frozen

Mortgage Market Remains Solidly Frozen

Courtesy of Mish

On May 28 I wrote Mortgage Market Locks Up. Ten year treasury yields started to soar and 30 year mortgages for good borrowers jumped a full point from 4.5% to 5.5%.

The question on my mind at the time was whether or not the mortgage action was a brief outlier. It wasn’t. Things are now worse.

Two days ago Michael Becker, a Mortgage Consultant at Green Pastures Mortgage & Finance wrote:

Mish, I’ve attached two rate sheets to this e-mail. One shows the rates from May 21st, and the other from today June 5th (after a re-price). You can see on May 21st 4.625% was paying .375 points, and today 5.625% is paying .25 points.

So in a little over 2 weeks rates have jumped 1%. That is a huge jump.

When you add in the effect of the new Home Valuation Code of Conduct (HVCC) appraisal process, many loans originations will never close. This is because it is taking 15-25 days to get an appraisal back, and often those appraisals are coming 10-25% low. So locks expire or appraisals kill the deal, the latter possibly on purpose.

You are going to see the recovery in housing come to a complete halt. Trade up buying is already dead.

Michael Becker

On Wednesday I called Jeff Bell a Certified Mortgage Planning Specialist at Cobalt Mortgage for his take on the situation.

Jeff commented: "Mortgage rates jumped again to 5.75% and refis are frozen solid. The trade-up market is dead but some new houses are still moving …. for now. "

Fannie Mae 4.5% Mortgage Backed Securities

click on chart for sharper image

The current price is 96.66%. Compared to a couple short weeks ago, that is a crash.

Interestingly Jeff Bell also commented on the new Home Valuation Code of Conduct (HVCC), and is not too pleased with it.

One problem is lenders are requiring applicants to put up $500 for appraisals and if the amounts do not come in, even if they miss by a tiny bit, the deal is denied and the applicant is out $500. Jeff had a $1.2 million sale fall through because an appraisal was $20K short.

A couple years back lenders were letting anything slide, now they appear to be looking for


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Zero Hedge

The 'Golden Age Of Plastic'? Banks Are Quietly Raising Credit Limits For Freespending Borrowers

Courtesy of ZeroHedge View original post here.

Credit-card lenders are calling it the 'Golden Age of Plastic'. But that's mostly because they're the ones hoarding all the gold.

Gloom-and-doom economists who have portended the imminent collapse of the American consumer (we don't want to name names) might have a reason to put off their calls for a downturn of epic proportions just a little bit longer. Because at a t...



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Phil's Favorites

BOGUS DEFENSE BINGO

 

BOGUS DEFENSE BINGO

Courtesy of Teri Kanefield

(Teri is an author, political commentator and lawyer. Visit her blog for more of her thoughts here.)

If the Trump Defense Trial Brief is any indication, we will be hearing lot of bogus defenses and crazy conspiracy theories.

I wanted a way to get through it without wanting to poke my eyeballs with a fork.

So I came up with an idea: Bogus Defense Bingo. You can get your bingo card here.

...

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The Technical Traders

The Wuhan Wipeout - Could It Happen?

Courtesy of Technical Traders

News is traveling fast about the Corona Virus that originated in Wuhan, China. Two new confirmed cases in the US, one in Europe and hundreds in China. As we learn more about thispotential pandemic outbreak, we are learning that China did very little to contain this problem from the start. Now, quarantining two cities and trying to control the potential
outbreak, may become a futile effort.

In most of Asia, the Chinese New Year is already in full swing.  Hong Kong, China, Singapore, Malaysia, India and a host of other countries are already starting to celebrate the 7 to 10 day long New Year.  Millions of people have already traveled hundreds of thousands of miles to visit family...



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Kimble Charting Solutions

Bad News For Crude Oil Should Come From This Pattern, Says Joe Friday

Courtesy of Chris Kimble

It’s a good idea for investors to be aware of key indicators and inter-market relationships.

Perhaps it’s watching the US Dollar as an indicator for precious metals or emerging markets. Or watching interest rates for the economy. Experience, history, and relationships matter. And it’s good to simply add these to our tool-kit.

Today, we look at another relationship that has signaled numerous stock market tops and bottoms over the years, and especially the past several months, Crude Oil.

When crude oil tops or bottoms, it seems that ...



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Insider Scoop

5 Software-Application Stocks Moving In Thursday's After-Market Session

Courtesy of Benzinga

Gainers

Atlassian Corporation, Inc. (NASDAQ:TEAM) stock surged 9.7% to $145.50 during Thursday's after-market session. According to the most recent rating by Morgan Stanley, on January 13, the current rating is at Overweight.

Diebold Nixdorf, Inc. (NYSE:DBD) shares increased by 8.1% to $11.48. The most recent rating by DA Davidson, on December 13, is at Buy, with a price target of $17.00.

Telaria, Inc. (NYSE:TLRA) stock rose 4...



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Biotech

Snakes could be the original source of the new coronavirus outbreak in China

Reminder: We are available to chat with Members, comments are found below each post.

 

Snakes could be the original source of the new coronavirus outbreak in China

Chinese cobra (Naja atra) with hood spread. Briston/Wikimedia, CC BY-SA

Haitao Guo, University of Pittsburgh; Guangxiang “George” Luo, Univers...



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Chart School

RTT browsing latest..

Courtesy of Read the Ticker

Please review a collection of WWW browsing results. The information here is delayed by a few months, members get the most recent content.



Date Found: Monday, 16 September 2019, 05:22:48 PM

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Comment: This chart says SP500 should go back to 2016 levels (overshoot will occur of course)



Date Found: Tuesday, 17 September 2019, 01:53:30 AM

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Comment: This would be HUGE...got gold!


...

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Members' Corner

The War on All Fact People

 

David Brin shares an excerpt from his new book on the relentless war against democracy and how we can fight back. You can also read the first, second and final chapters of Polemical Judo at David's blog Contrary Brin.

The War on All Fact People 

Excerpted from David Brin's new book, the beginning of chapter 5, Polemical Judo: Memes...



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Lee's Free Thinking

Why Blaming the Repo Market is Like Blaming the Australian Bush Fires

 

Why Blaming the Repo Market is Like Blaming the Australian Bush Fires

Courtesy of  

The repo market problem isn’t the problem. It’s a sideshow, a diversion, and a joke. It’s a symptom of the problem.

Today, I got a note from Liquidity Trader subscriber David, a professional investor, and it got me to thinking. Here’s what David wrote:

Lee,

The ‘experts’ I hear from keep saying that once 300B more in reserves have ...



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Digital Currencies

Cryptos Have Surged Since Soleimani Death, Bitcoin Tops $8,000

Courtesy of ZeroHedge View original post here.

Bitcoin is up over 15% since the assassination of Iran General Soleimani...

Source: Bloomberg

...topping $8,000 for the first time since before Thanksgiving...

Source: Bloomberg

Testing its key 100-day moving-average for the first time since October...

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Mapping The Market

How IPOs Are Priced

Via Jean Luc 

Funny but probably true:

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Promotions

Free eBook - "My Top Strategies for 2017"

 

 

Here's a free ebook for you to check out! 

Phil has a chapter in a newly-released eBook that we think you’ll enjoy.

In My Top Strategies for 2017, Phil's chapter is Secret Santa’s Inflation Hedges for 2017.

This chapter isn’t about risk or leverage. Phil present a few smart, practical ideas you can use as a hedge against inflation as well as hedging strategies designed to assist you in staying ahead of the markets.

Some other great content in this free eBook includes:

 

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