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- ABREAST OF THE MARKET
- FEBRUARY 7, 2011
Bond Market Flashes
Jump in U.S. Treasury yields signals market fear that Fed is behind the curve on prices
BY MARK GONGLOFF
The U.S. bond market has begun sending a message that inflation risks are rising and the Federal Reserve may be too slow to act, potentially marking a significant turning point in the economic recovery.
In the past week, Treasury-bond yields have jumped to their highest levels since last spring. Yields on 10-year Treasurys surpassed 3.5% and 30-year yields broke through 4.7%, which makes some worry could mean rates will march even higher.
Long-term rates have been gradually moving higher in response to an improving economy and rising commodity prices. But in recent days the increases in yields accelerated, a move ...
the rest behind the paywall:
http://online.wsj.com/article/SB1000...543513562.html
but who cares, the [COMMENTS] on these articles are _better_ than the actual 'news' itself:
- 4 hours ago
- Misty Lane wrote:
1. Make sure read down 1/2 way down (13th paragraph) because only then will you see mention of the QE2.
2. "Though the labor market has been a stubborn laggard, investors appeared to take January's head-scratching drop in unemployment to 9% at face value."
How can ANYONE take that number "at face value" when everyone knows once again, the denominator in the calculation was lowered by over 500k people who are no longer considered part of the work-force?
I'm sorry, but I keep wondering WHO these stories are written for and what the agenda is.
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- BUSINESS
- FEBRUARY 7, 2011
'Toxic' Assets Still Lurking at Banks
BY MICHAEL RAPOPORT
During the financial crisis, investors fretted over "toxic," hard-to-value assets that banks were carrying. Those fears have faded as bank profits have rebounded, loan delinquencies have declined, and bank stocks have soared 25% in the past five months.
But banks still hold plenty of the bad assets that once spooked investors: mortgage-backed securities, collateralized debt obligations and other risky instruments. Their potential impact concerns some accounting and banking observers.
In part due to those bad assets, the top 10 U.S.-owned banks had $13.8 billion in "unrealized losses" that have lasted at least a year in their investment portfolios as of ...
who knows... does _anybody_ really know? does anybody in DC even understand _why_ nobody in manhattan even seems to care? _they_ still get their billions, so hey! WGAS (who gives a...), right?
but hey! things are looking up, theres LESS BANKS FAILING THIS YEAR vs last,
according to c1ue:
and, not to worry - our neighbor is booming?
CANADA FX DEBT-C$ drives to 2-1/2 year high on jobs data
TORONTO, Feb 4 (Reuters) - The Canadian dollar hit its
highest level against the U.S. dollar since May 2008 on Friday,
while bond prices held lower after a U.S. government report
showed employment rose far less than expected in January.
Stronger-than-expected Canadian job gains for January
underpinned the Canadian dollar's climb to as high as C$0.9832
to the U.S. dollar, or $1.0171.
At 9:27 a.m. (1427 GMT), the currency CAD=D4 was at
C$0.9856 to the U.S. dollar, or $1.0146, still firmer than
Thursday's North American session close at C$0.9910 to the U.S.
dollar, or $1.0091.
...
Canada added 69,200 jobs in January, more than quadruple
the forecast of a 15,000 gain. The unemployment rate edged up
to 7.8 percent from 7.6 percent in December as more people
sought work, according to Statistics Canada data.
Both sets of jobs figures kept Canadian bond prices in
negative territory, as economic recovery hopes have recently
gained more traction.
In particular, the short-dated interest-rate sensitive
front end was steeply lower on the notion that the Bank of
Canada may start raising interest rates sooner than expected.
----? will this be good for: http://seekingalpha.com/symbol/cef ?
and GASP, even the McPaper seems to be noticing???
Prices starting to creep higher
The near-zero inflation era may be ending. Prices are rising slightly,
and economists expect a steady climb as the recovery gains steam.
In recent earnings reports, some retailers and manufacturers have said they're boosting prices this year on clothing, groceries and other items after holding firm in 2010.
The uptick is largely driven by surging food, energy, cotton and other global commodity prices as economic growth heats up significantly in China and emerging markets.
yup - just keep re-gurgitating the stuff uncle ben spits out and CALL IT NEWS?
http://www.usatoday.com/money/econom...ion04_ST_N.htm
and Mr Black Swan himself seems to be getting nervous???
Taleb Advises ‘First’ Avoid Treasuries, Then Dollar
http://www.bloomberg.com/news/2011-0...-update1-.html
Nassim Taleb, author of “The Black Swan,” said the “first thing” investors should avoid is U.S. Treasuries and the second is the dollar.
Taleb, a principal at Universa Investments LP whose 2007 bestselling book argued that history is littered with rare events that can’t be predicted by trends, also said he would rather hold euros than dollars, even as the region’s sovereign- debt crisis persists. “Euros have Germany, the dollar has nothing,” he said at a conference in Moscow.
Taleb made similar comments at the same forum last year, saying “every single human being” should bet Treasuries will decline because of the policies of Federal Reserve Chairman Ben Bernanke and President Barack Obama. Bernanke has pledged to inject dollars into the U.S. financial system and cut borrowing costs by buying $2.3 trillion of Treasuries and other assets, a tactic known as quantitative easing.
“As skeptical as I am about Europe, I prefer it by far to the United States,” said Taleb at the conference, hosted by Troika Dialog, Russia’s oldest investment bank.
The U.S. is just like Greece, only without the International Monetary Fund to enforce discipline, Taleb said today. Greece came close to defaulting on its sovereign debt last year before receiving a bailout from the European Union.
“We have a very dire situation in the United States, and every day that goes by it gets worse,” Taleb said. “Every day that goes by, we’re spending money. We’re increasing that cumulative debt.”
Treasury Yields Climb
Benchmark 10-year Treasury yields rose one basis point to 3.49 percent by 12:39 p.m. in London, the highest since Dec. 15. The U.S. government has said it would sell $72 billion of notes and bonds next week.
Yields have climbed since the announcement of the second phase of the Fed’s bond-buying program on Nov. 3. The return on the 10-year note has risen 0.92 percentage point, or 92 basis points, according to Bloomberg generic data, while the yield on two-year Treasuries has more than doubled, adding 35 basis points to 0.68 percent over the same period.
The dollar climbed against 10 of the 16 other major currencies tracked by Bloomberg today, including the euro and the New Zealand dollar, amid speculation reports this week will point to an acceleration in U.S. economic growth.
Bill Gross, who runs the world’s biggest bond fund at Pacific Investment Management Co. predicted the “end of the bull market” for Treasuries in a report published on Jan. 7, saying the bonds may need to be “exorcised” from model portfolios and replaced with “more attractive alternatives.”
‘Bond Riot’
“The only happy thing that can happen in the U.S. is a bond riot” where investors stop buying debt, Taleb said today. This would “force some discipline” in to the Treasuries market, he added.
Russia, the world’s third-biggest holder of short-term Treasury debt behind Hong Kong and Japan, has trimmed its holdings of the securities by 25 percent since March 2009, according to U.S. Treasury Department data. The country held $55.2 billion of the bills as of the end of November, or 7.3 percent of the total outstanding, the data shows.
The world’s largest energy exporter boosted its holdings of U.S. debt 200 percent in the six months following the September 2008 collapse of Lehman Brothers Holdings Inc. to a record $73.2 billion in March 2009. Treasuries surged during the global financial crisis, climbing 14 percent in 2008, as investors sought out the relative safety of U.S. government debt.
‘Biggest Accident’
Rising real interest rates in the U.S. are a worldwide concern, said Bhanu Baweja, global head of emerging-market fixed-income and currency strategy at UBS AG.
“The biggest accident that the global economy could face is in the U.S. government bond market,” Baweja said by phone from London. “I’m also worried about U.S. Treasuries.”
Standard & Poor’s won’t cut its AAA rating on U.S. government debt “in the short-to medium-term,” Scott Bugie, managing director for financial institutions at the ratings agency, said in Moscow today.
10-year Treasury yields have dropped 0.21 percentage points, or 21 basis points, in the past year, while the yield on two-year notes has declined 19 basis points.
It’s “a no brainer” to bet on a decline in Treasuries, Taleb said at last year’s Troika conference in Moscow Feb. 4. “Every single human being should have that trade.”
EDIT: FUN with HTML.... sorry for the visible html on the index/top-level doc -cant edit the title bar once it print to that doc?
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