Bonds & Interest Rates

“Fed gets the accounts out of line. Mr. Margin gets them in line.”

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Posted by Bob Hoye - Institutional Advisors

on Wednesday, 21 September 2016 09:16

Screen Shot 2016-09-21 at 9.11.10 AM



This week’s harvest of headlines records a lot of hope in the crude oil markets as well as remarkably reckless borrowing. Matched, of course, by the equivalent in lending.

All without a regard for how the debt will be serviced. Financial history is at the point where the real power shifts from the Federal Reserve System to Mister Margin. It has many times since 1913 and since the advent of reckless central banking the roles of each side have become very distinct.

The Fed’s ambition is to get the accounts fully leveraged or “out of line”. This has been impressive. Mr. Margin’s job description is to get the accounts “in line” and that will be done.

It could take until November.

The following is part of Pivotal Events that was published for our subscribers September 14, 2016.

Stock Markets



Bonds & Interest Rates

Junk-Bond Traders Pile Into Bearish Bets Ahead Of Fed/BoJ

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Posted by ZeroHedge

on Tuesday, 20 September 2016 08:21

After one the biggest rallies in the last seven years off the Feb lows, high-yield bond investors are rushing into bearish (hedge) positions 20160920 HYG1ahead of this week's Fed/BoJ spectacle. Put volume (protecting downside) in the last few days has soared to levels only seen around Brexit and last December's Fed rate-hike as Bloomberg notes, investors have already become skittish on signs that global central banks may turn off the spigot.

HYG has seen a yuuge surge off the Feb lows...


....continue reading HERE



Bond Bubble has Finally Reached its Apogee


Bonds & Interest Rates

China Now Dumping Unprecedented Amounts Of U.S. Treasuries

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Posted by King World News

on Tuesday, 20 September 2016 08:12

KWN-Russell-I-8182015-864x400 cAhead of this week’s Fed decision, China is now dumping unprecedented amounts of U.S. Treasuries.

For a 4th straight month foreigners were net sellers of US notes and bonds. They sold a net $13.1b in July which brings the year to date level of selling to $156b which compares to net selling of $20b in 2015, net buying of $165b in 2014, $41b in 2013 and $400b in both 2011 and 2012. This level of selling is unprecedented going back to when data collection started on this in 1977…continue reading HERE


...also, the European situation:

The Crisis Is Escalating


Bonds & Interest Rates

35th Anniversary of Bull Market In Long-Term US Treasuries, the Best Risk-Adjusted Investment in Modern Capitalist History

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Posted by Jas Jain

on Monday, 19 September 2016 06:56

Next month would be 35th anniversary of the bull market in long-term US Treasuries. The yield on 30-Year US Treasuries peaked at 15.2% in October 1981 and has been steadily going down since and is headed to below 1% in the next 2-3 years. Adjusted for risk, there has been no investment in the history of modern capitalism, for 400+ years since the founding of Dutch and English East India trading companies, which has been as rewarding as the investment in the long-term US Treasuries for the past 35 years.

For this 35-Year period, 30-Year US Treasuries have yielded significantly more than the inflation rate. Add to that the capital appreciation in the bond price the purchasing power of the dollars invested in long-term Treasuries 35 years ago, with coupons reinvested, has multiplied more than ten fold! One can buy more than ten times the gold, or crude oil, than one could have bought with the money. At any time in history a safe investment that has multiplied the purchasing power of savings this greatly would be considered a miracle and we are living thru this miracle.

Gross Ignorance of Treasuries Among Investors

Very few people know that on a total return basis the 30-Year bonds have significantly out-performed S&P 500 for the past 18 years and the past 9 years, periods during which we have seen bubbles and bursts in the stock market. Very soon we would have a 36-40 year period during which the long-term bonds would have out-performed S&P 500! The reason is not hard to see. A picture (please see Fig. 1) is worth a thousand words.

42553 a



Bonds & Interest Rates

We Live In Unprecedented Times

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Posted by Michael Campbell

on Friday, 16 September 2016 07:08

The World is upside down. For 5000 years investors have been paid an interest rate to compensate for the risk and for the use of the capital. Now, thanks to government incompetence in financial disasters, we now paying government for the privilege of using our money!

.....related: Michael Campbell on - The Formula For Social Unrest & Political Upheaval




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