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Bonds & Interest Rates

Treasury Snapshot: 10-Year Yield at 2.06%, Lowest Levels Since November

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Posted by Jill Mislinski - Advisor Perspectives

on Monday, 11 September 2017 07:06

Let's take a closer look at recent activity in US Treasuries. The yield on the 10-year note ended the day at 2.06% and the 30-year bond closed at 2.67%, some of the lowest levels since November of 2016.

Here is a table showing the yields highs and lows and the FFR since 2007 as of today's close.

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The 2-10 yield spread is now at 0.79%.

The chart below shows the daily performance of several Treasuries and the Fed Funds Rate (FFR) since the pre-recession days of equity market peaks in 2007.

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....continue reading HERE



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Bonds & Interest Rates

D.C. Dysfunction and Central Bank Chaos

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Posted by Michael Pento - Pento Portfolio Strategies

on Wednesday, 06 September 2017 06:34

On September 5th, the members of both houses of Congress of the United States will clean the beach sand from between their toes and return to work. Our public servants who occupy The House of Representatives have been working on their respective tans since July 29th. The Senate has had a little less time in the sun; they held their final vote on August 3rd despite their pledge to stay until August 11th.

Hopefully, they got a lot of rest, because they have a lot to do upon their return. By the end of September Congress will need to pass a budget bill to avoid a government shutdown. Expect Tea Party Republicans to hold their ground on spending cuts while Trump petitions for his wall. According to recent tweets, Trump is pushing for this fight and welcomes a government shutdown. Get out the popcorn this could get interesting. 

Washington also need to increase the debt ceiling, to avoid a debt default that could trigger a global financial crisis. Treasury Secretary Steven Mnuchin can pay the bills in full and on time through September 29th – after that, he will need an increase in the country’s $19.81 trillion-dollar credit limit. Republicans are promising that a default is impossible, but Congress also promised a repeal and replacement of Obamacare within the first 100 days of the Trump Presidency, and Trump himself guaranteed to kill the ACA on day one--so I wouldn’t hold my breath that increasing the nation’s credit limit will go any smoother.

Congress also needs to reauthorize the insurance of 9 million children through the Children’s Health Insurance Program (CHIP) and pass the National Flood Insurance Program (NFIP)—Hurricane Harvey has put extra importance on this provision, as well as aid for the storm itself.

After they take care of those urgent matters they plan to segue back to tax reform, infrastructure and to take yet another crack at making some needed modifications to Obamacare; before the premiums rise to 100% of disposable income. 

And they will have to juggle this full legislative agenda while dealing with North Korea, Russia-gate and Confederate Statue-gate.  

For a body of elected officials who have built their careers on doing nothing they have an enormous amount of legislation to sift through in an incredibly short amount of time.

And all this dysfunction in DC is having an adverse effect on the dollar, which is already down over 9% this year. A strong dollar is emblematic of a vibrant economy. Whereas, the opposite displays faltering GDP growth and a distressed middle class.

 mp1

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Bonds & Interest Rates

Yellen in Jackson Hole

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Posted by Doug Noland

on Monday, 28 August 2017 06:42

800x-1"A resilient financial system is critical to a dynamic global economy -- the subject of this conference. A well-functioning financial system facilitates productive investment and new business formation and helps new and existing businesses weather the ups and downs of the business cycle." Janet Yellen, "Financial Stability a Decade after the Onset of the Crisis," August 25, 2017

I would add that a well-functioning financial system is critical to long-term social, political and geopolitical stability. Importantly, well-functioning finance would have mechanisms that promote adjustment and self-correction. This is fundamental to market-based systems. I would argue that this is also a basic premise of sound money and finance. Sound finance would neither suppress market volatility nor work to repeal business cycles - but would instead have inherent characteristics that counteract protracted market and economic excess.



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Bonds & Interest Rates

The NEXT Credit Crisis Has Already Started

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Posted by Bill Bonner - Diary of a Rogue Economist

on Friday, 18 August 2017 06:44

Screen Shot 2017-08-18 at 6.50.03 AMPOITOU, FRANCE – “My father told me to plant trees,” said a neighbor last night.

“It was right after I bought this place. Of course, I was young… I was busy… I didn’t have time to plant trees.

“Now, I tell my sons to plant trees while they’re still young. So they can enjoy them later.

“Funny, as you get older, and the less future you have available, the better you know it.”

Closed Book

What follows is a meditation on something we cannot know – tomorrow. 

The future is a closed book, insofar as it is possible to know what will happen. But that doesn’t mean the future won’t happen.

And although it is terra incognita – a place you’ve never been before – that doesn’t mean you shouldn’t pack your old familiar toothbrush and a warm sweater; it might be a lot like home.

Aesop wrote his fables. The French have added to them with a few of their own. Here’s one about the future:

Long ago, an old man decided to turn his farm over to his son and his wife.

“I have just one condition,” he told them. “You have to let me stay with you as long as I live.”

This was readily agreed. But the son’s wife and the old man didn’t get along. Finally, the wife persuaded her husband to throw him out. And so he did.

But taking pity on the old man, the younger man turned to his own son: “Go and get a horse blanket for your grandfather so he’ll at least have something warm to wrap around him.”

A few minutes later, the young boy came with a blanket, but his father could see that it was only half a blanket.

“Why did you cut the other half off?” he asked.

“Oh…” replied the boy. “That’s for you when you get old.” 

All of a sudden, a pattern came into view. And the future didn’t seem so unknowable.

Like a tall tree, the future casts its shadow backward over the present. 

If you think it will rain later in the day, you take an umbrella in the morning. If you think stocks will go up, you buy now. If you think you have only two years to live, there is no point buying a refrigerator with a 20-year guarantee.

Gift to the Future

The invention of money greatly increased man’s interest in tomorrow.



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Bonds & Interest Rates

What I Learned at (Economics) Summer Camp

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Posted by John Mauldin - Mauldin Economics

on Monday, 14 August 2017 06:56

Will Yellen Stay or Go?
Quantitative Tightening
Consensus Forecasts
Lightning Round
Chicago, Lisbon, San Francisco, Denver, and Lugano

All over America, kids who were fortunate enough to go to summer camp are busy telling mom and dad what they did. Their stories will be suspiciously incomplete, but that’s OK. We know they learned something.

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Well, I went to camp this summer, too. I go every year, and I always learn more than I can manage to remember. Camp Kotok is an invitation-only gathering of economists, market analysts, fund managers, and a few journalists. It takes place at the historic Leen’s Lodge in Grand Lake Stream, Maine. We fish, talk, eat, drink, and talk some more. It’s a three-day economic thought-fest (and more rich food and wine than is good for me or anyone else at the camp). For me, that’s about as good as life gets.

(Aat the end of the letter in the personal section I’ll describe a typical day at my summer camp. Not exactly arts and crafts and games. Unless poker counts as a game.)

Come along with me as I share some of my main takeaways from the camp and then, in a “lightning round,” touch on on a few various shorter topics.

David Kotok of Cumberland Advisors started the event after narrowly escaping death in the World Trade Center on 9/11. It was a way for him and a few friends to get away from the city, appreciate life, and talk about things that matter. Now the gathering has grown to about 50 of us. We meet under the Chatham House Rule, which means we can’t quote each other directly without permission. That helps promote an open exchange of ideas. And it’s definitely open. It is interesting to see the difference in the level of communication in an environment where people are not worried about being quoted when they trot out a new idea they have recently started thinking about. Testing those ideas against one’s peers, who might have different views about the same topic, is a valuable process.

David relaxes the rule for certain parts of the event, and that’s part of what I’ll share with you today. The Saturday night dinner always includes a debate on some contentious issue, with participants who are known to disagree. Martin Barnes from Bank Credit Analystalways moderates. He is one of the few who can quiet that room, with his imposing height, his booming Scottish brogue, and his offbeat sense of biting humor.

This year’s debate topic was the Federal Reserve. Specifically, we discussed the Fed’s future leadership and policies. Both are very much in question right now, and much depends on the answers. Time will tell what happens, but here is what some experts think.

Will Yellen Stay or Go?



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