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Barclay's : I R To Go Much Much Higher

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http://www.telegraph.co.uk/money/main.jhtm.../ixcitytop.html

US interest rates to hit 6pc, warns Barclays

By Ambrose Evans-Pritchard

(Filed: 12/07/2006)

Inflation is rearing its ugly ahead across the globe, posing a major threat to stocks, bonds, and risky assets as the world's central banks move belatedly to restore discipline, Barclays Capital has warned.
Larry Kantor, the bank's chief of global research, said the
abrupt fall in asset prices over the last two months is the start of a long slow slide,
not just a mid-cycle hiccup as is widely believed.
"Over the past few years, abundance of liquidity has served as the fuel for a near universal rise in asset prices, particularly emerging market bonds and equities. That benign environment for assets is now changing," he said.
The bank forecast in its Global Outlook yesterday that the US Federal Reserve would raise rates to 6pc by the end of the year to choke off inflation, far higher than markets currently expect.
...../
The bank recommends "short" positions on US and Japanese bonds, a bet that prices will fall.
Cut back on equities
, especially Japanese stocks.
....../

A very serious HPC is guaranteed. Gordon's "Miracle Economy" consisting of HPI and MEW has been driven by cheap financing. Its all coming to an end soon, very soon.

IMO its long past the time when we should be out of equities and IR sensitive assetts (bonds and property).

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Guest Alright Jack

There is no doubt that the government is in a jam. (Please do not confuse me by talking about the central bank and government being separate somehow. They are not. It is just part of the illusion)

They have a deficit of some $4bn per month and rising fast (this is not counting all the stuff Gordon calls one off 'investment')

If they want to continue funding this by selling bonds then IR rates will need to rise (obviously as people start to factor in higher price inflation and systemic risks)

But further rises in rates will beget more problems and further economic weakness reducing the tax base ever further whilst expanding the entitlement base (unemployment for instance) so the deficit spirals ever further.

Failure to borrow the cash will mean they have to resort to using the printing presses directly. They have so far avoided this but it's only a matter of time. This is why recessions are, contrary to some beliefs, very highly inflationary. Because of the nature of the money expansion in times of recession the new money tends to go directly into the real economy whereas in the 'good times' moneycredit is injected, at the whim of society as a whole, into the latest fad.

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With the dollar the way it is, will even 6% rates over there affect UK interest rates... there's no sign of it happening so far, much to my surprise.

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A (serious, not sarcastic) question for those of you better informed on these matters (as I have no idea).

What is the 'normal' relationship between Government securities and base rates? i.e. When the government sells bonds - can it sell a 10 year bond at whatever interest rate it likes - or is it somehow related to the current base rate?

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Unemployment's (which puts a lie to all this EA nonsense about a strong economy) up again chaps but average earnings are slowing. I think this points to one thing - STAGFLATION.

Looks like last August's emergency rate cut hasn't done much - apart from further inflate the debt bubble.

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With the dollar the way it is, will even 6% rates over there affect UK interest rates... there's no sign of it happening so far, much to my surprise.

Hi, I hardly like to mention it .... because I think your priced-out campaign is great. So, as you never know who will be reading your signature ... you have the word 'creaping' in it when it should be 'creeping'.

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A (serious, not sarcastic) question for those of you better informed on these matters (as I have no idea).

What is the 'normal' relationship between Government securities and base rates? i.e. When the government sells bonds - can it sell a 10 year bond at whatever interest rate it likes - or is it somehow related to the current base rate?

I don't think the government sells bonds like tins of beans in a supermarket. They are just sold to the highest bidder. If the markets expect higher interest rates, why settle for a low bond yield? Meaning the price of the bond must drop, increasing the yield, until a buyer buys.

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I don't think the government sells bonds like tins of beans in a supermarket. They are just sold to the highest bidder. If the markets expect higher interest rates, why settle for a low bond yield? Meaning the price of the bond must drop, increasing the yield, until a buyer buys.

I don't know so I am only asking ... I understand how bond yields rise and fall as the price of the bond moves ... what I was asking was .... when the Governmentn offers bonds for sale it says something like:

'Here is a bond. It will cost you £100. We'll pay you 4.25% interest every year for 10 years and then we'll give you your £100 back.'

My question is - obviously the interest rate must be attractive to investors - but is the interest rate offered when the bond is first offered for sale related (either actually, or generally) to the current base rate?

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  • 302 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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