The Wall Street Journal – U.S. Treasurys Yield to Adversity Shades of early 2009? The extreme fear may have gone, but with 10-year Treasury yields heading back toward levels last seen as the global-financial system teetered on the brink, the same question has returned to center stage. Can U.S. policy makers stop the economy drifting… Continue reading How Low Can Yields Go?
The Wall Street Journal – Bye-Bye to the Fed-Funds Rate The Federal Reserve last week announced that it would reinvest proceeds from its massive mortgage-bond portfolio, sustaining what Chairman Ben Bernanke had in February called its “extraordinary lending and monetary policies.” But there must eventually be an exit from such policies. And if the chairman… Continue reading Does The FOMC Have The Ability To Control The Funds Rate Anymore?
The Financial Times – Developed economies could get trapped in a limbo land of zero inflation The battle to avoid deflation in the developed world could prove to be a long one, with twists and turns which could last for many years. In July, the core CPI data in the eurozone were somewhat firmer than… Continue reading Inflation vs. Deflation
The Wall Street Journal – Money-Market Funds to Join NY Fed’s Repo List The Federal Reserve Bank of New York is expanding its list of counterparties for conducting reverse repurchase agreement transactions, or reverse repos, putting another step in place for the process with which it will eventually unwind the Fed’s massive quantitative easing. By… Continue reading The Federal Reserve Expands Its Reverse Repo Counterparty List
The Financial Times – US banks receive Basel III boost Big US banks should be able to meet tighter global capital requirements without having to raise substantial amounts of new equity, according to calculations by Barclays Capital. The analysis by BarCap’s debt capital markets group estimates that the 35 largest US banks will have to… Continue reading Capital Requirements
The Wall Street Journal – AIG Sets Stage for First Bond Sale Since Bailout American International Group Inc. is laying the groundwork for its first debt offering in two years, in what could be a key measure of whether investors think the bailed-out insurance giant can stand on its own and ultimately repay taxpayer funds.… Continue reading AIG’s Debt Offering
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Charts of the Week Topics Covered This Week Include: Is The Fed Worried About A “Mega Refi” Environment? A New Measure of Fear, Correlation, Makes A New High – 1 A New Measure of Fear, Correlation, Makes A New High – 2 Correlation Among Different Asset Classes Quarterly Earnings – Gamed And Useless Statistics Quantitative… Continue reading Untitled
The CBOE has a relatively new index called the S&P 500 Implied Correlation Index. The CBOE S&P 500 Implied Correlation Index is a market-based estimate of the average correlation of the stocks that comprise the S&P 500 Index (SPX). It uses SPX options prices, together with the prices of options on the 50 largest stocks… Continue reading A New Measure of Fear, Correlation, Makes A New High
Bloomberg.com – Mortgage Bonds Slump on `Mega-Refi’ Concern Record-low interest rates for new mortgages may entice borrowers to refinance, led by those with newer loans, as applications hover at the highest in more than a year, according to the Mortgage Bankers Association. The inability of some homeowners to qualify for new Fannie Mae and Freddie… Continue reading Is The Federal Reserve Worried About A “Mega Refi” Environment?
The Washington Post – U.S. role at heart of housing debate The system worked until the companies bought too many bad loans during the recent housing bubble. When the housing market took a nose dive. The companies collapsed into the arms of the federal government, which has pumped in about $150 billion to keep them… Continue reading Fannie and Freddie
Zero Hedge (Blog) – Must Watch Kyle Bass Interview: “I Don’t Know How I Can Be Long Stocks” The one must watch interview of the week (if not of the year) features Hayman Capital’s Kyle Bass. Bass, who correctly called the subprime implosion (and profited handsomely from it) as a iconoclast contrarian to conventional wisdom,… Continue reading Very Bearish Talk