Federal Reserve Archives - Page 18 of 25

Uncle Sam's Bargain Bonds

Posted on May 24, 2018 by George Yacik

According to a widely reprinted and circulated report in the Wall Street Journal, for the first time since 2000, U.S. government bonds now yield more than all of their developed world counterparts. Looking just at the 10-year security, the yield on the benchmark Treasury note now yields more compared to a record number of countries, and the yield differential between the U.S. government note and its German bund counterpart is its widest in almost 30 years.

Basically, this means that the arguably safest investment available anywhere in the world – the one American business schools still hold up as a “riskless” benchmark – yields way more than most other sovereign debt, including Italy’s, Canada’s and Australia’s – but no, not Greece’s, although they’re not too far off.

Let’s look at the numbers. Continue reading "Uncle Sam's Bargain Bonds" →

That Elusive 3 Percent Yield

Posted on May 11, 2018May 10, 2018 by George Yacik

On Wednesday morning, the yield on the benchmark 10-year Treasury note moved back over 3%. In just the past five years, though, that has only happened twice before, but then only for a day or so. Is this the time the yield breaks 3% and stays there?

The most recent time before Wednesday, of course, was just two weeks ago. On April 24 the yield moved a hair above 3.0%%, then hit 3.03% the next day. It then quickly retreated below the magic number and hasn’t gone above it until now.

Before then, the last time the yield hit 3% – and I mean just – was at the very end of 2013 and the very beginning of 2014. It hovered right at 3% for a few days and then subsequently dropped sharply, eventually falling to well below 2.0% over the next year. The last time the note has been comfortably over 3% and remained there, was back in the summer of 2011.

What is it about that 3% mark that fixates investors – or rather, attracts them? Just like in 2013, that 3% figure seems to serve as a buy signal for investors.

Are they making a mistake? Is it really a buying opportunity, or just a bond market head fake? Continue reading "That Elusive 3 Percent Yield" →

Interest Rates On The Rise

Posted on April 24, 2018 by The INO.com Team

Hello traders everywhere. The 10-year U.S. Treasury yield has risen above 3% for the first time since January of 2014, signaling that higher interest rates are ahead for the U.S. bond market as the Federal Reserve is intent on boosting interest rates after keeping them at historically low levels for some time. The yield, the benchmark for everything from U.S. mortgages to dollar bonds in developing nations, climbed as high as 3.0014% in morning trading, before slipping back below 3% to 2.979% in the early afternoon.

As the 10-year yield broke three percent the stock market turned lower with the DOW losing over 1% on the day with the S&P 500 losing .80% and the NASDAQ falling 1.4% as tech is posting heavy losses.

Speaking of tech, the FAANG stocks are all lower on the day with Alphabet leading the way. Alphabet (Google) is posting a loss of over 4.5% on the day after reporting earnings where they made a lot of money, but investors are worried about rising expenses.

The other FAANG members are posting steep losses as well. Facebook declined 3.4%, Amazon 3.8%, Netflix declined 4.2% and Apple is losing just a tad over 1% on the day.

Key Levels To Watch This Week:

S&P 500 (CME:SP500): 2,553.80
Dow (INDEX:DJI): 23,344.52
NASDAQ (NASDAQ:COMP): 6,805.90
Gold (NYMEX:GC.M18.E): 1,337.60
Crude Oil (NYMEX:CL.M18.E): 67.14
U.S. Dollar (NYBOT:DX.M18.E): 88.94
Bitcoin (CME:BRTI): 6,616.14

Every Success,
Jeremy Lutz
INO.com and MarketClub.com

Will The 10-year Treasury Crack 3% This Week?

Posted on April 23, 2018 by George Yacik

In case you hadn’t noticed, the yield on the benchmark 10-year U.S. Treasury note is this close to hitting the psychologically important 3% level. Is this the sign of still higher rates to come, or another buying opportunity, meaning rates are going to fall back again?

While most of the market seemed not to notice, seeing as it was fixated on corporate earnings and what’s going on in the tech sector, the yield on the T-note surged by 14 basis points last week to close Friday at 2.96%. That’s up nearly 25 bps since the beginning of this month and 55 bps year to date. It’s also the highest level since the beginning of 2014.

If you recall, we got close to hitting 3% two months ago, when the yield spiked to 2.95% on February 21, surging 25 bps in just two weeks before retreating quickly back to about 2.80% by the end of the month. The note then traded in a fairly narrow band between 2.80% and 2.90% over the next month before dropping sharply to 2.73% at the end of March and early April, after which it surged to Friday’s level.

Are we going to repeat the pattern of late February, meaning that this represents a buying opportuning in the Treasury market, or is this the signal that we are going to finally blow past 3% following February’s false start? Continue reading "Will The 10-year Treasury Crack 3% This Week?" →

Will China Nuke Its Own Treasury Portfolio?

Posted on April 13, 2018 by George Yacik

If you’re an investor in U.S. Treasury bonds, should you be worried that China may go nuclear? (No, not that kind of nuclear, the kind in the headline of a recent Reuters article about China’s supposed “nuclear option” to stop buying, if not outright sell, its huge holdings of American government bonds).

According to that report – speculation, really – China may consider retaliating against President Trump’s tough tariff talk by pulling its indirect support of the U.S. government, namely its holdings of about $1.2 trillion of Treasury securities. That makes it the largest foreign holder of that debt. Japan is a close second with $1.1 trillion, while Ireland (Ireland?) is a distant third with $328 billion. Altogether, $6.2 trillion of the U.S. government’s total debt of $20 trillion is held by foreign entities or about 31%. That would put China’s share at about 18% of the total foreign-held amount and less than 6% of the grand total.

In case you were wondering, the Federal Reserve holds about $4.5 trillion of the national debt or about four times what China owns. The Social Security Administration owns about $2.8 trillion.

So, is this something we really need to be worried about, even under the remote possibility that China would actually, in financial terms, cut off its nose to spite its face? Continue reading "Will China Nuke Its Own Treasury Portfolio?" →

Tag: Federal Reserve