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Bonds & Interest Rates

Treasury Bonds Are 'Contrarian' Mega Bullish

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Posted by NFTRH

on Monday, 19 December 2016 07:55

"In short, markets were overly skittish into the election and the big flush on election night cleared the way for what the presidential cycle forecast should happen; and that is for the last 2 months of the election year to be bullish.  And here we are, complete with dumb money eating up stocks and puking out bonds."

It is the last sentence that is of interest for this week's eLetter.  Overly sensational subject line aside, long-term Treasury bonds are making a contrarian setup when viewed from a sentiment perspective. 

Sure, T bonds are in bearish technical trends and appear to be a fundamentally unsound asset class, given the decades old debt-for-growth regime and the would-be inflationary plans of the new administration; but when looking strictly at sentiment, long-term Treasuries are a 'buy' and a good, risk 'off' way to hedge stock positions while paying out monthly income (unlike shorting stocks). 

Let's first look at public sentiment toward the 10 year Treasury.  Do you remember last summer?  That would be the time frame that global NIRP (negative interest rate policy) was being promoted in the financial media.  What happened last summer?  Why, people herded into Treasury bonds in a risk 'off' frenzy, bought bonds at ridiculously low rates of interest and then got blown up for their herding behavior.  The bond has dropped ever since as the new promotion, rising interest rates, took hold.  Last summer was a time to get risk 'on' (during Brexit) as we noted at the time.

da4989fe-b34a-4f36-be84-6cefa775d287 

That is what the dumb money is doing.  Now what about those considered the smart money, the Commercial Hedgers?  Why, there they are taking the other side of the trade once again.  After positioning net short during the NIRP/Brexit hysterics, they are now in a strenuously bullish alignment:



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Bonds & Interest Rates

Trump's Financial Revolution!

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Posted by Chris Vermeulen - The Gold & Oil Report

on Friday, 16 December 2016 06:23

Trump's economic plans will increase national debt!
A Ticking time bomb!

Currently, U.S. debt stands at a mammoth $19.8 trillion and will continue to increase under President-elect Trump considering his lenient tax cuts and plans for infrastructure spending:( http://www.usdebtclock.org/).

The proposed tax cuts, inclusive of accrued interest and macroeconomic effects will increase the national debt by $7 trillion, over the next decade, and by $20 trillion within the next two decades, according to Forbes. There are no details on how the President-elect plans to finance these tax cuts.

reunp


'Protectionism' has no winners!



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Bonds & Interest Rates

US Federal Reserve raises interest rates for first time in a year

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Posted by NEWS

on Wednesday, 14 December 2016 13:17

janet-yellen-dataThe Federal Reserve has raised a key interest rate in response to a solid US economy and expectations of higher inflation, and it foresees three rate hikes in 2017.

Key points:

  • The US Federal Reserve raises the interest rate from 0.5 per cent to 0.75 per cent
  • It is the first time in a year that the interest rate has been raised, and the second time since the GFC
  • Analysts predict a faster pace of increases in 2017 as the Trump Administration takes over

The Fed's action will mean modestly higher rates on some loans.

The central bank announced after its latest policy meeting that it is increasing its benchmark rate by a modest quarter-point to a still-low range of 0.5 per cent to 0.75 per cent. 

The Fed last raised the rate in December 2015 from a record low near zero set during the 2008 financial crisis.

The Fed's move, only the second rate hike in the past decade, came on a unanimous 10-0 vote. 

It also released an updated economic forecast that showed modest changes to its outlook for economic growth, unemployment and inflation, mainly to take account of stronger growth and a drop in the unemployment rate for November to a nine-year low of 4.6 per cent.

Its new projection has the unemployment rate dipping to 4.5 per cent by the end of 2017 and remaining at that level in 2018.

The Fed foresees economic growth reaching 1.9 per cent this year, slightly above its forecast in September, and 2.1 per cent in 2017. The new prediction is slightly more optimistic than it projected in September.

The Fed kept its long-term estimate for economic growth at 1.8 per cent, far below the 4 per cent pace that President-elect Donald Trump has said he can achieve with his program of deregulation, tax cuts and increased spending on infrastructure.

The Fed's estimate that it will raise rates three more times in 2017 is up from an estimate of two increases at the September meeting.

Its policy statement showed only modest changes in wording from the previous meeting. It said "economic activity has been expanding at a moderate pace since mid-year" helped along by solid job growth.

Mr Trump's plans for tax cuts and infrastructure spending have led investors to expect that inflation will pick up in coming months.

Pick-up fuels hopes economy will keep rising ....continue, reading view video HERE

...related from Larry Edelson: The Two Biggest Debt Caverns in the World

...related: Can we expect as many as six rate hikes?



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Bonds & Interest Rates

The Two Biggest Debt Caverns in the World …

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Posted by Larry Edelson - Money & Markets

on Wednesday, 14 December 2016 06:47

No, it’s not the so-called massive government debt problem in China. Like the stories of the ghost cities there, China’s debt problems are largely a myth, in the sense that it’s still largely a closed economy and monetary system. A communist economy where it’s largely the state owing the state … debts can be extinguished by the stroke of a pen.

I’m talking about the brewing U.S. pension crisis and Washington’s sovereign debt crisis, which is now here in spades.

I have been ramping up the warnings in these columns and in my new E-wave columns that now publish every Monday, Wednesday and Friday afternoons.

You know about the U.S. sovereign debt crisis. Washington is officially in debt to the tune of $20 trillion PLUS as much as another $200 trillion in “unofficial debts and IOUs.”

Things like raided Medicare accounts, Social Security Trust Funds, and more.

Screen Shot 2016-12-14 at 7.35.00 AMIt’s so bad already that the 30-year U.S. Treasury has already had its worst decline in 26 years, shedding as much as 19% of its value in just the past five months, with the yield soaring from 2.099 to 3.16, a huge 50.5% jump in the same time period.

So much pain is coming in the sovereign debt markets of Europe, Japan and the U.S. …

It will be like a nuclear holocaust wipeout of tens of trillions of wealth.

But there’s also the more personal hit of watching y



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Bonds & Interest Rates

Fed highly anticipated to hike U.S. rates. Can we expect as many as six rate hikes?

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Posted by Futures - Stock Commodity Options & Forex Strategy

on Monday, 12 December 2016 13:23

yellen9 reuters 0-1The U.S. Federal Reserve gets ready for the final monetary policy meeting of the year, and just like last year there is a high probability of a rate hike announcement. The U.S. Federal Reserve will publish the Federal Open Market Committee (FOMC) statement on Wednesday, Dec. 14 at 2:00 pm EST. Fed Chair Janet Yellen will then host a press conference where she will read a prepared statement and open the floor for questions from the financial press at 2:30 pm EST.

The Fed is expected to raise the benchmark funds rate by 25 basis points. The eyes of the market will be focused on the economic projections from the central bank to get some insights on next year's policy moves.

The Bank of England (BoE) will release the Monetary Policy Summary on Thursday, Dec. 15 at 7:00 am EST. The central bank is expected to keep rates on hold with the majority if not all the votes in favor of keeping rates on hold. There is no press conference scheduled following the publication of the statement but the BoE releases the minutes of the meeting immediately after to offer transparency to markets.



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