Bonds & Interest Rates

Why you shouldn’t fear rising interest rates …

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Posted by Larry Edelson - Money & Markets

on Wednesday, 08 February 2017 06:40

I’ve got to hand it to the majority of pundits out there. They just never learn to think for themselves. They keep dishing out the same nonsense, over and over again.

For instance, the notions that rising interest rates will kill off equity market gains, particularly in the U.S. … or choke off a real estate recovery … or kill the gold market for good — are myths. Period.

It might be true if interest rates were at record highs and well above the rate of inflation. But they are not. Interest rates are coming off of historic record lows in many parts of the world — even below zero in some countries — and they are far below the rate of inflation.

That’s important to understand. As rates rise from essentially 5,000-year-low levels — no matter what any central bank does — many investors will run for cover. But the only market that rising interest rates will truly hurt is the value of sovereign bonds. In other words, it will demolish governments’ ability to ever borrow again (a good thing).

Screen Shot 2017-02-08 at 6.22.25 AMConsider what’s happening right now with real estate. Why would rising mortgage rates — at this point in the economic cycle and recovery — be bad for property prices?

They won’t be bad. For the simple reason that as mortgage rates start to rise, all the pent-up demand for property will come out of the woodwork and start buying — in anticipation of further increases in the cost of borrowed funds.

That’s precisely what is happening in the U.S., in particular, where a housing recovery is well underway.

Consider the latest data from brokerage Douglas Elliman Real Estate, where January 2017 was an excellent month for high-end sales in Connecticut and where sales from $1 million all the way up to $5 million increased significantly compared to January 2016.

Overall, total inventory is down to 447 houses which is 13 lower than last year at this time, while total sales are up 16.



Bonds & Interest Rates

Investing Themes TO Consider

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Posted by Readtheticker.com

on Monday, 06 February 2017 06:06

Following winners is natural. These names represent the investing themes liked by readtheticker.com: Richard Wyckoff, Jesse Livermore, Richard Ney, William Gann, Jim Hurst, Sir John Templeton, Peter Lynch and William J O'Neil. These are the best gunslingers!

Investing Quote...

"Keep the number of stocks you own to a controllable number. It is hard to herd cats, and it is hard to track many securities. Take your losses quickly and do not brood about them. Try to learn from them but mistakes are as inevitable as death." ~ Jesse Livermore

"Until an hour before the Devil fell, God thought him beautiful in Heaven." ~ Arthur Miller, "The Crucible" [Contrarian Investing]

"Markets are designed to allow individuals to look after their private needs and to pursue profit. It's really a great invention and I wouldn't under-estimate the value of that, but they're not designed to take care of social needs." ~ George Soros

"Because of the extreme challenge, one must commit full attention to it." Market speculation is "no different than trying to be a successful doctor or lawyer ... you simply must devote yourself full-time to the study of your craft." ~ Bernard Baruch

"The financial markets generally are unpredictable. So that one has to have different scenarios... The idea that you can actually predict what's going to happen contradicts my way of looking at the market." ~ George Soros

Screen Shot 2017-02-06 at 7.11.10 AM


Bonds & Interest Rates

Wolf Richter: Central Banks Quietly Backing Out of Negative Interest Rate Policies (NIRP)

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Posted by Money and Markets

on Friday, 03 February 2017 12:39

Global-NIRP-German-10-yr-yield-2017-02-02One of the ironies of the fact that central banks appear to be throwing in the towel on negative interest rate policies (NIRP) is that their elite economist allies appear not to have gotten the memo. A noisy contingent is pushing to eliminate cash, and one of the big justifications is to allow central banks to engage in NIRP more effectively.

Markets are suspecting that central banks are in the process of exiting this fabulous multi-year party quietly, and that on the way out they won’t refill the booze and dope, leaving the besotted revelers to their own devices. That thought isn’t sitting very well with these revelers.

....read more HERE



Bonds & Interest Rates

Why I’m Dumping My Bond Funds… and You Should Too

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Posted by Marc Lichtenfeld via Wealthy Retirement

on Thursday, 02 February 2017 14:40

shutterstock 560527951-1-1024x535Fixed income is supposed to be a conservative strategy for generating income.

And if you do it right – by owning some individual bonds – you’ll be just fine. 

But bond funds aren’t the same as individual bonds.

And that’s why, starting this week, I’m purging bond funds from my personal portfolio.

....continue reading HERE



Bill Gross: Bond Fundamentals Confusing


Bonds & Interest Rates

He'll Bring Them (Inflation), And They Will Love Him For It

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Posted by NFTRH

on Wednesday, 01 February 2017 06:43

I used to make fun of the FOMC rate hike “decision” language in the mainstream media because under the Obama administration and its economic policies overseen by the Fed’s monetarypolicy, there really was no decision, was there?  It was ZIRP-eternity, interrupted by a lone and token rate hike in December 2015 (the Dec. 2016 hike does not count because the transition to a new administration and policy regime was already known; in effect, the Fed has already made its first hike under Trump).

According to the traders who make up the Fed Funds futures, there is no decision tomorrow, either.  From CME Group, we have virtually no one predicting two successive rate hikes.


....continue reading HERE


....related: 2017’s Real Milestone (Or Why Interest Rates Can Never Go Back To Normal)


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