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gruffydd

Ooooo Ayyyy And Up She Goes... Interest Rates To Rise In Us

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http://www.bloomberg.com/apps/news?pid=206...id=aA7e3oMFCMn8

Treasuries Fall After Auction, Russian Threat to Cut Holdings

By Dakin Campbell and Dan Kruger

June 10 (Bloomberg) -- Treasuries fell, pushing 10-year yields to the highest level since November, as the government sold $19 billion of the securities and Russia said it may switch some of its reserves from U.S. debt.

Thirty-year bond yields reached the most in a year after a Russian central bank official said the nation may buy International Monetary Fund bonds. Today’s auction is the second of three sales this week that will raise $65 billion, part of the U.S.’s record borrowing program.

“It’s the same situation of overwhelming supply versus spotty demand,†said John Spinello, chief technical strategist in New York at Jefferies Group Inc., a brokerage for institutional investors, before the auction. “The trend is still against the market.â€

The yield on the 10-year note rose 13 basis points, or 0.13 percentage point, to 3.98 percent at 1:03 a.m. in New York, according to BGCantor Market Data. The 3.125 percent security maturing in May 2019 declined 1, or $10 per $1,000 face amount, to 93.

Edited by gruffydd

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http://www.bloomberg.com/apps/news?pid=206...id=aA7e3oMFCMn8

Treasuries Fall After Auction, Russian Threat to Cut Holdings

By Dakin Campbell and Dan Kruger

June 10 (Bloomberg) -- Treasuries fell, pushing 10-year yields to the highest level since November, as the government sold $19 billion of the securities and Russia said it may switch some of its reserves from U.S. debt.

Thirty-year bond yields reached the most in a year after a Russian central bank official said the nation may buy International Monetary Fund bonds. Today’s auction is the second of three sales this week that will raise $65 billion, part of the U.S.’s record borrowing program.

“It’s the same situation of overwhelming supply versus spotty demand,†said John Spinello, chief technical strategist in New York at Jefferies Group Inc., a brokerage for institutional investors, before the auction. “The trend is still against the market.â€

The yield on the 10-year note rose 13 basis points, or 0.13 percentage point, to 3.98 percent at 1:03 a.m. in New York, according to BGCantor Market Data. The 3.125 percent security maturing in May 2019 declined 1, or $10 per $1,000 face amount, to 93.

Could someone please translate this into English?

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interest rates may rise a little but not very much. 100% guaranteed.

http://www.bloomberg.com/apps/news?pid=new...id=aR2peeJA76bM

Bond Dealers Say Futures Traders’ Rate Bets Wrong

http://www.bloomberg.com/apps/news?pid=new...id=apSiuh9eDtFE

Pimco Says ‘Rate Hikes Will Be Some Time in Coming’

Edited by nohpc

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interest rates may rise a little but not very much. 100% guaranteed.

Guaranteed by someone who joined the forum in 2006, and decided "nohpc" would be a good user name. :lol::lol::lol:

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interest rates may rise a little but not very much. 100% guaranteed.

what are interest rates for new borrowers by the way?

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what are interest rates for new borrowers by the way?

Don't care. I'm tracking the base rate so my mortgage is next to nothing. The best situation for me now is a massive house price crash so I can buy myself and my fiance a lovely house whilst continuing to pay bugger all for my london flat and raking it on the rental.

The higher interest rates for new borrowing go the less likely the BOE is to raise rates.

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interest rates may rise a little but not very much. 100% guaranteed.

Maybe you should be advising Bernanke then? You sound much more sure of the future than he does. :rolleyes:

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Don't understand this comment: “It’s the same situation of overwhelming supply versus spotty demand,†said John Spinello, chief technical strategist in New York at Jefferies Group Inc., a brokerage for institutional investors, before the auction. “The trend is still against the market.â€

Surely if yields are high the trend is with the market?

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interest rates may rise a little but not very much. 100% guaranteed.

http://www.bloomberg.com/apps/news?pid=new...id=aR2peeJA76bM

Bond Dealers Say Futures Traders’ Rate Bets Wrong

http://www.bloomberg.com/apps/news?pid=new...id=apSiuh9eDtFE

Pimco Says ‘Rate Hikes Will Be Some Time in Coming’

From the ticker:

Well, I'll get a pile-on for this, but the bond traders are correct....that is, if we do NOT get a bond market dislocation (that appears to have started). Based on economic data, there is no reason for interest rates (yields) to rise as demand for debt/credit origination is at all-time lows, and perhaps nearly non-existent. Indeed, all fundamentals point to a real need for safety, just like there was last year. It's the stock market that isn't acting on underlying fundamentals.

The bond traders also know that the Fed doesn't set interest rates, they follow the demand for credit, and right now, that demand for credit is negligable. All this bull**** about raising rates, is just that - bull****.

What we have is a confluence of events that are contrary to underlying economics. We have monetary deflation, and that should cause rates to come down, as demand for debt/credit origination plummets further and the capacity for people to take on debt shrinks even more.

However, we also have massive debt overhang, much of which has now been taken on by the government, and the government is adding to it with a highpowered steam shovel.

Inflection point and a real conundrum. What wins out? Fear of underlying deflation or fear of government default due to debt service? The latter is a self-fulfilling prophecy at the rate they are spending.

If the bond traders really thought there was going to be massive inflation, then they would be stampeding out of Treasuries and into the equities market. I think what we are seeing right now in equities is NOT that - it is mostly the PDs using our tax money in order to get some income at the moment, since they sure as hell aren't making money doing what banks do, lending money. This taxpayer infusion has the knock-on effect of pulling in the short bus riders. The other thing we see is foreign CBs feeling a bit leery of holding long-term Treasuries, so they are shortening their duration, and therefore yields are rising on the longer end of the curve.

IMHO, if we do not have the all-on bond market dislocation right now, there WILL be a stampede back into Treasuries and yields will come down. Of course for the bond traders, if they're early, they're dead. If they're wrong, they're dead. So, I don't bet against the bond traders.

Edited by housesforcourses

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Maybe you should be advising Bernanke then? You sound much more sure of the future than he does. :rolleyes:

:lol: Yes the 10 year seems to be pushing a 4% coupon,,from around 2.33%.Id call that one hell of a rise.

Fancy the market doing the opposite to what the FED wanted..Buried in the info was talk of sterling being the big winner as a "reserve" currency :o .Print away Gordon the world wants those lovely crisp 20s.

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Could someone please translate this into English?

Low interest rates in the US are resulting in less demand from foreign investors wanting to keep buying their bonds... the % return is too low for them.

The dollar's position as the world's reserve currency is essential to the US, and they need to sell those bonds like crazy at the moment.

Therefore, US interest rates will have to rise to attract more foreign investment.

Buried in the info was talk of sterling being the big winner as a "reserve" currenc

Hahaha... oh dear. :lol:

Edited by DementedTuna

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:lol: Yes the 10 year seems to be pushing a 4% coupon,,from around 2.33%.Id call that one hell of a rise.

Fancy the market doing the opposite to what the FED wanted..Buried in the info was talk of sterling being the big winner as a "reserve" currency :o .Print away Gordon the world wants those lovely crisp 20s.

The 10 year has just broken 4% according to guys on the Gilts thread.

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The 10 year has just broken 4% according to guys on the Gilts thread.

In the time it took me to make a cup of tea.So they are pricing in +40% inflation over 10 years..It was always going to be so.

Private investors,skinned on the stock market crash to sell at the bottom missing the bounce,straight into the treasury bubble thats tanking.Lose half your capital and lose half of that half.

Done up like kippers.

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The dollar's position as the world's reserve currency is essential to the US, and they need to sell those bonds like crazy at the moment.

Therefore, US interest rates will have to rise to attract more foreign investment.

But will that mean that the rates, return on, of bonds will simply rise or will it mean that the general US base rate will be forced up?

Surely, in this crazy world they will manipulate it so they pay more on the US bonds to get foreign investors to buy them whilst screwing US savers by keeping the base rate low?

Or is it not possible to do this?

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But will that mean that the rates, return on, of bonds will simply rise or will it mean that the general US base rate will be forced up?

Surely, in this crazy world they will manipulate it so they pay more on the US bonds to get foreign investors to buy them whilst screwing US savers by keeping the base rate low?

Or is it not possible to do this?

Only possible through printing.Or as the uber bears would say on here,,the route to hyper-inflation.The bond action could indicate the recession is ending,or inflation and stagflation is upon us.Bets gentlemen (and ladies) please :ph34r:

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It's uncharted territory, can't see base rates rising while the printers are still going myself

+1

My thoughts too,though could make the IR spike later very nasty.

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+1

My thoughts too,though could make the IR spike later very nasty.

It's a non starter.

They can either piss off a handful of incredibly rich people (who know where they live) or turf millions of people out on the street (breaking the social systems they rely on to be wealthy themselves). This is the exactly same choice they have faced all along and all they have done so far is print money in the hope of not having to make it.

Kicking the can down the road wll be tried again.

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Fancy the market doing the opposite to what the FED wanted..Buried in the info was talk of sterling being the big winner as a "reserve" currency :o .Print away Gordon the world wants those lovely crisp 20s.

Yeah that would be a nightmare. With no real reserve currency we could have have a series of faux ones.

Everyone rushes into the Gbp, then everyone rushes out again after a few weeks and on to the next unlikely candidate.

It would make the house price bubble appear to be the height of sanity.

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:lol: Yes the 10 year seems to be pushing a 4% coupon,,from around 2.33%.Id call that one hell of a rise.

Fancy the market doing the opposite to what the FED wanted..Buried in the info was talk of sterling being the big winner as a "reserve" currency :o .Print away Gordon the world wants those lovely crisp 20s.

Looks toppy though don't you think?

My guess is it will be short-lived.

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But will that mean that the rates, return on, of bonds will simply rise or will it mean that the general US base rate will be forced up?

Surely, in this crazy world they will manipulate it so they pay more on the US bonds to get foreign investors to buy them whilst screwing US savers by keeping the base rate low?

It won't necessarily force the base rate up. The base rate is the rate that the central bank sets for 'overnight' loans - they manipulate the market (by undercutting if the market rate is too high, or borrowing money if hte market rate is too low) for loans so that the overnight rate in the market is within their range.

Longer term rates are set by the market. In the case of 'short term' treasury bills - e.g. 3 month. The bills pay no interest. They simply pay $100 on expiry. The price that investors bid for them determines the effective rate. E.g. if I pay $99 for a 3 month bill, I'm in effect getting a return of about 4% per year.

Longer term bonds and notes (different name, same thing) do pay interest at a fixed rate - but, again, it's the price that investors are prepared to pay that fine tunes the interest rate. If the fine tuning range starts to run out (meaning that investors are bidding silly prices e.g. $30 for a $100 bond) then the treasury can create new issues with a different nominal rate, so that the prices stay sensible. In other words, the treasury will adjust rates in response to the market - not to control the market itself.

It should be stressed, that there are no signs that buyers don't want to buy, there are plenty of buyers, just that the buyers are making lower bids.

In the same way that the base rate acts as a baseline for overnight commercial loans - loans at base rate are made with 'zero risk' collateral, so a commercial loan will need a risk premium added to the interest rate - so the treasury rate (a long term fixed rate loan, with 'virtually zero' risk) acts as a baseline for long-term fixed rate loans (e.g. fixed rate mortgages).

The problem savers face is that they are stuck with low rates, because cash savings are just that - cash, which can be withdrawn at any time. Cash investments that are only tied up overnight, only get the overnight rate. If you want a higher rate, then you need to tie your money up for longer - there's nothing to stop people buying treasury bonds, gilts, etc. directly. The US version of NS&I (treasurydirect.gov) sells treasury bills/bonds online. NS&I package up gilts into slightly simpler (and tax free) packages.

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Looks toppy though don't you think?

My guess is it will be short-lived.

Not something i know enough about to risk a penny,,or indeed dime.I think Injin nailed it.They dont know what the hell to do,so just do the same.

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Typical USA. Just when we thought we could finally produce something bigger than they could...

WASHINGTON, June 10 (Reuters) - The U.S. government posted a $189.65 billion budget deficit in May, a record for the month and the eighth straight monthly deficit, the U.S. Treasury said on Wednesday.

In May 2008, the deficit was $165.93 billion.

The May deficit exceeded analysts' consensus forecast in a Reuters poll for a $181 billion budget gap.

In the first eight months of fiscal 2009, which ends Sept. 30, the budget deficit totaled $991.95 billion compared with $319.40 billion in the same period of fiscal 2008.

Reuters

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In the time it took me to make a cup of tea.So they are pricing in +40% inflation over 10 years..It was always going to be so.

Private investors,skinned on the stock market crash to sell at the bottom missing the bounce,straight into the treasury bubble thats tanking.Lose half your capital and lose half of that half.

Done up like kippers.

thats why i am 100% cash except for one trade shorting ftse 6200 ;-)

but when does 100% cash become a losing trade.................. :unsure:

Edited by getdoon_weebobby

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