Dollar run over???

[tsetsefly]

The dollar has lost almost 10 cents vs the Euro in the last 10 days or so and has lost value against other currencies as well... Its now at almost 1.37 vs the Euro...

Has the dollar rally ended?

[vinoveri]

Re: Dollar run over???

LIBOR plummeting and Commodities rallying, coincidence, or the beginnings of POOM, or head fake or...

Wait a minute - Treasuries still holding tight. What gives?

[GRG55]

Re: Dollar run over???

LIBOR plummeting and Commodities rallying, coincidence, or the beginnings of POOM, or head fake or...

Wait a minute - Treasuries still holding tight. What gives?

The bond market still says deflation. The equity markets/commodities say otherwise. Only one will be correct.

Maybe a re-test of the equity and commodity lows sometime in 2009, after this bounce?

[grapejelly]

Re: Dollar run over???

The bond market still says deflation. The equity markets/commodities say otherwise. Only one will be correct.

Well, did oil at US$140 in July08 "say" that we'd have inflation ahead?

Did Nasdaq at 5000 discount Nasdaq at 50,000, in 2000?

Does the market always discount accurately?

Isn't it true that it does NOT discount accurately especially at extremes?

And aren't we at extremes by any definition today, in just about every asset class?

The dollar seems to be plummeting right now. Bonds are probably benefiting from the demand for a place to put dollars post deleveraging. I wouldn't read much into the bond market right now except that it is a parabolic increase in price and we all know what happens after an asset class "goes parabolic"...?

[GRG55]

Re: Dollar run over???

Well, did oil at US$140 in July08 "say" that we'd have inflation ahead?

Did Nasdaq at 5000 discount Nasdaq at 50,000, in 2000?

Does the market always discount accurately?

Isn't it true that it does NOT discount accurately especially at extremes?

And aren't we at extremes by any definition today, in just about every asset class?

The dollar seems to be plummeting right now. Bonds are probably benefiting from the demand for a place to put dollars post deleveraging. I wouldn't read much into the bond market right now except that it is a parabolic increase in price and we all know what happens after an asset class "goes parabolic"...?

Ignore the bond market at your peril.

And most of the bond market [everything except sovereigns] has seen a parabolic DECLINE in price.

[ST]

Re: Dollar run over???

The dollar has lost almost 10 cents vs the Euro in the last 10 days or so and has lost value against other currencies as well... Its now at almost 1.37 vs the Euro...

Has the dollar rally ended?

Certainly looks that way - the magnitudes of the declines on a daily basis are staggering - at least compared to what I have witnessed over four years of watching the USD daily.

We'll see. Gold is certainly lagging here at the moment and should snap higher within a week.

[grapejelly]

Re: Dollar run over???

Ignore the bond market at your peril.

And most of the bond market [everything except sovereigns] has seen a parabolic DECLINE in price.

good point!

[ST]

Re: Dollar run over???

Ignore the bond market at your peril.

And most of the bond market [everything except sovereigns] has seen a parabolic DECLINE in price.

EJ said

When governments are inflating, the bond markets tend to be right short term, wrong long term.

I think the historical evidence proves this EJ snippet,.... however the instance when the Fed is buying all along the curve? Well, I will go with the currency market then.

[c1ue]

Re: Dollar run over???

I just want to point out a couple of interesting numbers:

1) Cost of a $10,000 30 year Treasury bond today with 3% compound interest:

$4119.87

2) Cost of a $10,000 30 year Treasury bond in 2 years with 15% interest:

$151.03

The difference? 2600%

And you'll have the opportunity to get 15% (ideally non-callable, but very unlikely) interest for 30 years.

[ST]

Re: Dollar run over???

The dollar has lost almost 10 cents vs the Euro in the last 10 days or so and has lost value against other currencies as well... Its now at almost 1.37 vs the Euro...

Has the dollar rally ended?

The big chart.

[bpr]

Re: Dollar run over???

c1ue:

Can you point me to a site that explains the bond market in detail and where you're getting these numbers from?

Yields are currently at 2.96% on 30-year, which makes TBT seem juicy, but I'd like to know how to calculate potential value (or loss) on a bond as rates fluctuate, as you did here.

Thanks.

I just want to point out a couple of interesting numbers:

1) Cost of a $10,000 30 year Treasury bond today with 3% compound interest:

$4119.87

2) Cost of a $10,000 30 year Treasury bond in 2 years with 15% interest:

$151.03

The difference? 2600%

And you'll have the opportunity to get 15% (ideally non-callable, but very unlikely) interest for 30 years.

EDIT: Just found these two pages with handy calculations:

http://www.investopedia.com/universi...ancedbond2.asp

http://www.investopedia.com/universi...ancedbond7.asp

[kingcopper]

Re: Dollar run over???

The bond market still says deflation. The equity markets/commodities say otherwise. Only one will be correct.

Maybe a re-test of the equity and commodity lows sometime in 2009, after this bounce?

Inflation ahead! Whenever Platinum becomes cheaper than gold, the precious metals find a bottom; almost always. This would seem to be a strong signal that we've hit a bottom in the deflationary deleveraging and will now see a slow climb in the commodities; i.e. inflation ahead.

[c1ue]

Re: Dollar run over???

BPR,

There are many varieties of bonds, but ultimately it all goes toward the effective interest rate.

The examples I used are zero coupon for simplicity's sake; calculations like that are trivial using Excel.

[tsetsefly]

Re: Dollar run over???

two more cents lost today against Euro... and t-bonds lower!

[D-Mack]

Re: Dollar run over???

Weak dollar poses risk to Treasury
Wed Dec 17, 2008 5:12pm EST

By Gertrude Chavez-Dreyfuss - Analysis

NEW YORK (Reuters) - A U.S. dollar in decline, with short term interest rates sliding to zero, could end up destabilizing the fixed income and credit markets.

Now more than ever the United States needs a strong dollar to convince investors to buy new U.S. debt that will fund a massive fiscal stimulus package, and the banking system bailout, as well as two wars in Afghanistan and Iraq.

But the U.S. government may have to wake up to the reality that money will gradually move out of yieldless U.S. Treasury bills offering near zero return.

The Federal Reserve on Tuesday cut its federal funds target rate to range between zero and 0.25 percent, and three month U.S. Treasury bills are already offering a return close to zero, while longer dated U.S. Treasury bond yields are at 50 year lows.

"As an investor, you have to ask yourself whether you take on that bond exposure and the currency risk," said Bob Sinche, global head of interest rates and foreign exchange at Bank of America in New York

...

http://www.reuters.com/article/ousiv...081217?sp=true

lets see what happens next