The Wall Street Journal – Treasurys Loom Large in Index Bond Funds The U.S. government’s heavy borrowing has significantly altered the complexion of the U.S. bond market and, with it, the holdings of mutual funds that hew to bond indexes… Total U.S. Treasury debt has ballooned to more than $13.6 trillion in September 2010 from… Continue reading Bond Funds
The Financial Times – High-frequency traders slowed by headwinds While new and cheaper technology has enabled ultra-fast traders to grab greater market share, the cost of being the very fastest has been rising, to such a degree that only very big or highly specialised firms can afford to compete in the race to cut trading… Continue reading High Frequency Trading
Charts of the Week Topics Covered This Week Include: Is Italy Next? Or Is Ireland Next? Is Greece About To Default? Everyone Hates Bonds! Stock Market Drawdown and Sentiment The Federal Reserve Formalizes An Exit Strategy How Long Has The Fed Been On Hold? 11 Days or 931 Days? The U.S. Unemployment Rate Don’t Expect… Continue reading Untitled
The Wall Street Journal – Fed Crafts Exit Plan but Won’t Act Soon The exit won’t be simple. It will involve a combination of allowing the securities portfolio to shrink and raising short-term interest rates. In the plan formalized at the last meeting, the Fed’s exit will involve several steps that play out over months.… Continue reading The Federal Reserve Formalizes An Exit Strategy
The Wall Street Journal – Debt-Sale Hype Under Fire in EU It is one of Wall Street’s few certainties. Ask a banker selling bonds or shares how their deals are doing and the answer is invariably: “Lots of interest from investors.” Now a European self-regulatory body is looking at whether that perennial optimism might have… Continue reading The European Way – Lie About The Economy And Bond Market
<Click on chart for larger image> MarketBeat (WSJ Blog) – Greece Vs. Germany: Another Look at the Great Convergence Throughout this whole Greek crisis, there’s one thing we haven’t really understood. Why did investors ever charge Greece — a country that’s spent roughly 50% of the time since it won independence from the Ottoman Empire*… Continue reading Greece Vs. Germany
<Click on chart for larger image> Bloomberg.com – Ireland Cut to Junk Rating by Moody’s Ireland joined Portugal and Greece as the third euro-area nation to have its credit rating reduced to below investment grade as European Union finance ministers struggle to contain the region’s sovereign-debt crisis. Moody’s Investors Service cut Ireland to Ba1 from… Continue reading Ireland Is Downgraded
<Click on chart for larger image> The Financial Times – Italian and Spanish bonds feel heat as contagion fears rise Some strategists even warn that the eurozone project could break up unless action is taken quickly. Willem Buiter, Citi’s chief economist, says: “The crisis has moved to the broad periphery or the soft core of… Continue reading EU Contagion
CATO Institute – What the Debt Ceiling Really Means The clock is slowly ticking toward Aug. 2, the date on which the U.S. faces “fiscal Armageddon” — according to the Obama administration — unless Congress agrees to raise the debt ceiling. But would we? The Obama administration, as well as much of the media and… Continue reading The Debt Ceiling
Zero Hedge (blog) – Vladimir Putin Calls Bernanke A Hooligan, Angry At American Money Printing Vladimir Putin. In a speech before the of economic experts at the Russian Academy of Sciences, the Russian prime minister had the following to say: “Thank God, or unfortunately, we do not print a reserve currency but what are they… Continue reading The “Hooligan” Speaks Before Congress Today
<Click on chart for larger image> The Wall Street Journal – M&A Keeps ‘Junk’ Flowing Market jitters have inhibited most high-yield bond issuance recently, but merger-and-acquisition financing has remained steady as companies already committed to takeovers have to raise capital despite higher borrowing costs. M&A-related activity, which usually accounts for 10% of new “junk” bonds,… Continue reading M&A