<Click on graphic for larger image> The Financial Times – US and European junk bonds tumble US and European junk debt has tumbled in value since the year began as investors switch into government bonds, with US high-yield issues outpacing losses sustained at the start of 2008 as the financial crisis beckoned. High-yield US debt… Continue reading High Yield Bonds
<Click on graphic for larger image> The Wall Street Journal – Banks Drop as Global Rout Deepens For battered banks in Europe and beyond, negative rates come at the worst possible time Bank stocks led an intensifying rout in financial markets, amid concerns that global central banks struggling to boost growth will worsen an already… Continue reading Stressed Banks In A “Doom Loop?”
<Click on graphic for larger image> The Economist – Buttonwood: Slaves of the markets New evidence on what drives central banks to decide to change rates That has been the suspicion from the late 1980s onwards, when the Federal Reserve began cutting interest rates when equity markets wobbled. This approach became known as the “Greenspan… Continue reading Central Banks Are Influenced By Markets
<Click on graphic for larger image> The Economist – Interest rates: Negative creep The negative-rates club is growing. But there is a limit to how low rates can go Not so long ago it was widely thought that, if interest rates went below zero, banks and their depositors would simply switch to cash, which pays… Continue reading More On Negative Interest Rates
Comment We view betting markets as nothing but real-time polls. They give us a glimpse as to what the consensus is thinking at a given moment, which can change rather quickly. The benefit of betting markets is they can react quickly to events before the polls reflect it, as was the case with Rubio’s poor… Continue reading Using The Betting Markets To Understand The Election
None Today
<Click on graphic for larger image> Bloomberg.com – Yellen Says Legality of Negative Fed Rates in Question The Federal Reserve has not yet determined whether it would be able to legally implement negative interest rates in the U.S., Chair Janet Yellen said. “I would say that remains a question that we still would need to… Continue reading Yellen Stumbles On Questions Of Negative Rates
The Wall Street Journal – Jon Hilsenrath: Fed Sees Risks to U.S. Economy Rising Fed officials are unlikely to raise rates in March if growth outlook dims In her testimony, Ms. Yellen made clear she saw an abundance of risks that could undermine growth and hiring and hold inflation down longer than hoped or expected.… Continue reading The Fed vs. The Markets
Bloomberg.com – Bass Says China Bank Losses May Top 400% of Subprime Crisis Kyle Bass, the hedge fund manager who successfully bet against mortgages during the subprime crisis, said China’s banking system may see losses of more than four times those suffered by U.S. banks during the last crisis. Should the Chinese banking system lose… Continue reading Kyle Bass Warns Of Huge Losses For Chinese Banks
<Click on chart for larger image> <Click on chart for larger image> The Wall Street Journal – Banking Stocks Pummeled in Europe European banking stocks were hammered Thursday as investors continued to question lenders’ profitability and balance-sheet strength. Bank stocks on the Stoxx Europe 600 were down 5.9% amid a broader selloff in European equities,… Continue reading European Banks Still Under Pressure
<Click on graphic for larger image> The Wall Street Journal – Why the Yen Just Keeps Getting Stronger Abenomics was meant to pack a big punch. But this fighter turns out to have a glass jaw. The ferocious strengthening of the yen, and the tumble in Japanese stocks this week revealed the brittle underpinnings of… Continue reading Unwinding The Yen Carry Trade
CNBC – Jim Grant: We’re already in a recession The market was expecting Fed Chair Janet Yellen on Wednesday to indicate that the central bank will reverse its course, Jim Grant, founder of Grant’s Interest Rate Observer, told CNBC’s “Closing Bell” on Wednesday. Yellen appeared before Congress for semiannual testimony. Yellen told the House Financial… Continue reading Jim Grant Sees Recession