The Financial Times – Rethinking the (nonexistent) US century bond The US century bond seems like a no-brainer — until you spend a bit more time thinking about it. The idea: Interest rates are low, so let’s lock them in now! It’s like refinancing! Ireland did it! The idea after a little thought: If a century… Continue reading More On 100-Year Bonds
<Click on graphic for larger image> Bloomberg.com – The ‘Weird’ Commodity Hurting the Bears as Prices Double UBS’s Gordon says recent speculative rally has ‘surprised me’ Prices seen falling back to $60 in six months as supply gains Iron ore’s probably heading for a retreat in 2017 as new mine supply comes online and a… Continue reading Iron Ore
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<Click on chart for larger image> <Click on chart for larger image> The Financial Times – What’s up with the “term premium”? … Citi thinks higher US yields attract foreign inflows that compress the “term premium”. This is an interesting finding although we’re not sure the mechanism is plausible. One of the common explanations for the widening… Continue reading Why Are Rates Rising?
The Financial Times – Where will corporate America’s overseas cash pile go? US companies likely to put their money into share buybacks, just like in 2004 … David Kostin, Goldman Sachs’ chief US equity strategist, estimates that corporate America will repatriate about $200bn of its foreign cash stash, and plough $150bn of this into ramped-up stock… Continue reading Will Repatriation Lead To Buybacks?
Bloomberg.com – Ultra-Long Treasury Issuance Unlikely; 15Y-20Y Possible, MS Says (No Link) Liquidity of any new product “will be of paramount importance to Treasury,” and ultra-long issuance faces liquidity challenges related to STRIPS program, indexing, and investor preference for more liquidity in the 15yr-20yr curve segment, Morgan Stanley strategists led by Matthew Hornbach say in… Continue reading Street Push-Back On 100-Year Bonds
<Click on chart for larger image> <Click on chart for larger image> The Financial Times – Rout shrinks universe of negative yielding bonds by $2.5tn The global stock of negative-yielding debt has tumbled more than $2.5tn since the summer, underscoring the dramatic sell-off in bond prices and easing the burden on pension funds that have… Continue reading An Update On The Universe Of Negative Yielding Bonds
<Click on chart for larger image> The Wall Street Journal – U.S. Productivity Rose at 3.1% Rate in Third Quarter Latest figure, unchanged from the initial estimate, the biggest gain in two years The cost of labor in the U.S. grew more quickly than previously thought in the spring and summer, the latest sign that Americans’… Continue reading Productivity
Business Insider – FED’S EVANS: ‘We are on the cusp of a period of rising interest rates’ Citing rising 10-year U.S. Treasury yields and his forecast for about 2.25 percent economic growth next year, Chicago Federal Reserve President Charles Evans said on Monday he expects interest rate hikes to continue to rise as the economy improves.… Continue reading Fed Talk About Higher Rates
<Click on chart for larger image> The Financial Times – Monte dei Paschi readied for state bailout after Renzi defeat Political upheaval threatens €5bn bank recapitalisation plan Bankers are running out of private-sector solutions for Monte dei Paschi di Siena and have told the Italian lender to prepare for a state bailout this weekend after… Continue reading Italian Banks
Bloomberg Gadfly – Lisa Abramowicz: Upheaval? What Upheaval? Here’s a quick guide on how to trade political uncertainty in markets: Don’t. This point was driven home by the Italian vote on Sunday to reject key governmental reforms, which has been hailed as yet another victory for a wave of populism surging across the world. Does this have… Continue reading Markets And Political Uncertainty
<Click on chart for larger image> Comment With OPEC’s first production cut in 8 years, many expect rising prices. However, as the chart above shows, Brent crude oil has stalled out around $53.50 to $54. For the moment, Brent is struggling to get through this level. If prices fail to break through $55, the rally… Continue reading Is Crude Oil Breaking Out?