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The Japanese Bond Market May Really Be Ready To Collapse The Mad Hedge Fund TraderNov. 4, 2009, 5:11 AM Having spent a decade living in Japan sharing shoe box sized apartments, living on fish heads, rice, and instant ramen, I am something of an authority on that enchanting country. I spent the seventies toiling away learning Japanese, shuffling hundreds of flash cards whenever I rode the train or subways. My friends said I was crazy when I learned obscure, seemingly useless terms like hitokabu rieki (earnings per share) and genka shokyaku (depreciation). I even made the ultimate sacrifice to improve...

Treasurues-Bonds Jump As Mixed Data Fuels Recovery Doubts Fri Oct 30, 2009 11:29am EDT By Richard Leong NEW YORK, Oct 30 (Reuters) - U.S. Treasuries debt prices rose on Friday after a batch of mixed signals fanned skepticism about the strength of an economic recovery, rekindling a safety bid for bonds. Concerns that the the world's biggest economy could contract again hammered Wall Street, a day after the government said the United States posted its first quarterly growth in more than a year. With the economy still fragile a year after the global credit crisis, the Federal Reserve will likely...

TUSCALOOSA | The Tuscaloosa City Council Finance Committee voted to move ahead with an $8.5 million bond issue rather than waiting a year as Mayor Walt Maddox recommended. The committee's vote is a recommendation to the full City Council, but a straw ballot of council members, who were all present at the committee meeting, indicated that a majority favors the bond issue. On a 20-year repayment schedule, the bond issue would cost the city about $650,000 a year in debt service. The council had asked Maddox for a recommended list of projects. The estimated total and the annual debt service...

Charlie Bond, one of the last pilots of a covert World War Two fighter squadron, died recently, but the heroics of the US servicemen who took on the might of the Japanese air force in Burma will never be forgotten Published: 25/10/2009 at 12:00 AM Newspaper section: Spectrum Charlie Bond, one of the last surviving pilots of the legendary World War Two 1st American Volunteer Group (AVG), dubbed the "Flying Tigers", died in Dallas, Texas, on Aug 18, at the age of 94. Major General Charles R Bond, Jr, served 30 years in the US Air Force, retiring in 1968....

Back in 2003, the New Jersey Transportation Trust Fund Authority, which funds rail and road projects in the state, sold $345 million in auction-rate bonds. That's where the trouble began: Bloomberg: “This vividly shows the risk of entering into interest- rate swap agreements,” said Christopher Taylor, former executive director of the Municipal Securities Rulemaking Board in Alexandria, Virginia. “The world’s got to see what stupidity even the sophisticated investors like the transportation fund can get into.” While New Jersey replaced the debt with fixed-rate securities in 2008 after the $330 billion auction-rate bond market froze, the swap -- in which...

Stocks now pay way less than bonds once again, but neither pay much... BLINK and you missed it. US equities offered a greater yield on investment than did US Treasury bonds for less than five months... And from the day this oddity struck, 18 Nov. 2008, the S&P still had another one-fifth to fall. "When this inversion occurred, my two older partners assured me it was an anomaly," wrote the late Peter Bernstein in Nov. 2008. The inversion Bernstein referred to had occurred five decades earlier...back when the dividend yield offered by US equities slipped below the yield offered by...

Vanguard Cautions Investors On RallyOct. 6, 2009, 4:25 p.m. EDTSam Mamudi, Market WatchDon't be taken in by this year's robust gains, fund firm warns. NEW YORK (MartketWatch) -- Many mutual funds are poised to celebrate stellar returns this year, but one fund firm is going out of its way to warn investors not to get too giddy. Vanguard Group issued a cautionary note on Tuesday, emphasizing that strong third-quarter gains don't mean it's time to go overboard on certain areas of the market. Investors Brace for Earnings SeasonMichael Cuggino of the Permanent Portfolio Funds says the coming parade of quarterly...

Bonds Boom As Investors Flock Back JACK HEALY Published: October 4, 2009 The swift rally in stock markets this year caught everyone’s attention. But with far less fanfare, a frenzy has been taking place in the market for corporate bonds. When credit markets practically shut down last year, businesses had to pay huge premiums to raise money from investors, offering returns of 10 to 20 percent to anyone who would buy a company’s debt. Now, investors are the ones paying higher prices as they race back into the bond markets, where companies and governments go to raise money for new...

Tiger Management Chairman Julian Robertson says that if China and Japan stop buying our debt, inflation could hit 20 percent. "It's almost Armageddon if the Japanese and Chinese don't buy,” Robertson told CNBC. "I don't know where we could get the money. I think we've let ourselves get in a terrible situation." Robertson’s 2008 picks, which included Visa, Baidu, Apple, and Google, handily beat the market. His worst performing choices went up 40 percent, the best more than doubled. Robertson says his firm still owns many of last year’s picks, but says he’s “not as berserk over owning stocks as...

A rapid rebound in credit markets this year has lured Americans into putting more of their savings into bond funds, which has helped push prices higher and bring in more cash. High-yield corporate bonds have jumped nearly 49% this year. If investors expect a repeat performance, they're in for an unhappy surprise, said Ashish Shah, Barclays co-head of global credit strategy. "There's money coming in from investors looking for the next 49% to happen, and it so obviously isn't going to happen," Shah said. The problem for bond buyers is actually a good thing: the start of robust economic growth

Google search the title to get to story. I'm not sure I can even post the link here [whack] This is a new story, not the same suspicious bonds from June of this year which showed up in Italy with Japanese travelers.

WASHINGTON -- Foreign demand for long-term U.S. financial assets fell in July from a month earlier, according to a report that the Treasury Department released Wednesday. China, Japan and the U.K. increased their holdings, but other countries such as Russia, Luxembourg, Switzerland and Ireland scaled back, as did a group of oil exporters. Meanwhile, the report shows that foreign investors shunned U.S. corporate and agency bonds and pared back purchases of Treasury bonds and notes. Overall, net foreign sales of long-maturity U.S. securities totaled $7.4 billion in July, following purchases of $70.7 billion the month before. Still, Brown Brothers Harriman...

Wall Street may have discovered a way out from under the bad debt and risky mortgages that have clogged the financial markets. The would-be solution probably sounds familiar: It's a lot like what got banks in trouble in the first place.

Last month federal agents arrested a large number of New Jersey politicians on bribery and money laundering charges. As described in the Wall Street Journal, one $97,000 bribe was handed off in an empty Apple Jacks box. Last week the New York Post exposed the highly suspect activities of State Sen. Pedro Espada Jr. A self-described "hero" to his largely Hispanic constituency, Espada was somehow able to secure for his son a $120,000/year state job. The only problem was that no one in the son's downtown Manhattan office had ever seen him before because he'd never shown up for work....

Municipal bonds are usually thought to be a risk-free investment. Turns out that's not always the case. ___ Vallejo, California's bankruptcy last year represented the largest municipal default in 14 years. For 16 months, Jefferson County, Alabama has been unable to pay debts on billions of dollars in sewer bonds. Almost everywhere, tax revenues have plummeted, throwing the finances of local governments into disarray. So, are municipal defaults becoming more common? As it turns out, that question is part of the backdrop to a dispute between the Securities and Exchange Commission and local governments over regulation of the municipal bond...

“Obama’s inauguration speech triggered “one of the greatest munie-bond rallies in history.” Municipal bonds (munies) are rising in value as the threat of additional taxation looms.”

That's right, FAILS. No, you didn't hear it reported this way and won't, but that's the math. Here you have the results: . And here's the math: 1.923 BTC X 61.59% Primary Dealer bid = 1.18 BTC (PD), greater than 1.0. Or to put it a different way, but for the primary dealers the bid-to-cover was less than one, meaning that some of the issue would have been left on the table. Thats a fail; but for the primary dealers the issue would not have subscribed. Primary dealers are required to bid. That's the deal in exchange for their being...

http://www.reuters.com/article/bondsNews/idUSN1946360420090619 Fri Jun 19, 2009 By David Lawder WASHINGTON, June 19 (Reuters) - A purported $134 billion in U.S. government bearer bond certificates seized by police near the Italian-Swiss border are fake, the U.S. Treasury said on Friday. "Based on the photograph we've seen online, they are clearly fake. And not even good fakes," said Stephen Meyerhardt, a spokesman for the Treasury's Bureau of the Public Debt. He added that there is only $105 million in Treasury bearer bond securities outstanding, so the $134 billion amount seized far exceeds the universe of outstanding securites. The Treasury's determination confirmed the suspicions...

The futures look weaker at the open. There is continued fears over the latest jobs report. Furthermore, VP Biden's comment, in which he said that the administration "misread the intensity of the recession, aren't helping matters either. Most of the indices look to be down about 1% at the open.

More than one reader has emailed me asking me how bonds work and why I am so concerned about what Obama's policies will do to them and the economy with them. I think it's time for a wonky economics lesson for all the laymen out there on how bonds work. First, it's important to know that U.S. Treasury bonds are traded on an exchange, the Chicago Board of Trade, much like any other investment. As such, they work like any other investment in any market. It's ultimately determined by supply and demand. If there are more buyers than sellers the...

Milan (AsiaNews) – Four weeks have passed since American bonds were confiscated from two Japanese who were travelling on a direct train to Chiasso, Switzerland, and while there has been clarification of some points, very few, Italian authorities have remained silent on the rest of the episode. In addition, a strange coincidence in the timing of the arrest of a director of an internet radio who had made revelations regarding the incident increases the already strong oddities surrounding the case. This added to the revaluation of the fact that among the evidence seized there were "Kennedy Bond" all points toward...

SNIPPET: "It was discovered, according to police, that McFarland allegedly cashed stolen saving bonds at the same bank five days earlier. McFarland, a wanted parolee, was booked at the San Joaquin County Jail on charges including burglary, forgery, possession and use of fake identification cards, possession of stolen property, and an outstanding Santa Clara County warrant and parole violation."

June 22, 2009 Theories abound, but facts are in short supply. One fact that can be surmised is that there is a cover-up. The evidence for this is circumstantial, but overwhelming. It meets the standard of “beyond all reasonable doubt”, the supposedly highest standard set in American jurisprudence. It has been 19 days and the two alleged perpetrators/victims have not been identified to the public. The Japanese consulate general in Milan confirmed that the detention had taken place and said it was trying to confirm the authenticity of the bonds. Colonel Rodolfo Mecarelli of the Guardia di Finanza in Como,...

Well, just when you thought that the Bearer Bond story was finished, it gets twisted yet again. Remember, this was the claim: “They’re clearly fakes,” said Stephen Meyerhardt, a spokesman for the U.S. Bureau of the Public Debt in Washington. Uh, Bloomberg..... how about an accurate quote? "Based on the photograph we've seen online, they are clearly fake. And not even good fakes," said Stephen Meyerhardt, a spokesman for the Treasury's Bureau of the Public Debt. Online? You mean that the Treasury Department hasn't been sent a high-resolution digital photo of what was seized? A week after the fact? I...

One summer afternoon, two “Japanese” men in their 50s on a slow train from Italy to Switzerland said they had nothing to declare at the frontier point of Chiasso. But in a false bottom of one of their suitcases, Italian customs officers and ministry of finance police discovered a staggering $134bn (€97bn, £82bn) in US Treasury bills.

A funny thing recently happened at the Italian-Swiss border. Italian authorities found a briefcase filled with $134.5 billion in U.S. government bonds. While this now appears to be merely a massive counterfeiting case, initial worries were that a major nation clandestinely attempted to unload a staggering sum of genuine U.S. dollar securities. On June 3, Italy’s Guardia di Finanza (Financial Police) arrested two Japanese men in their 50s. They were apprehended in Ponte Chiasso, an Italian-Swiss frontier town about 25 miles from Milan. Rather than traveling express to Switzerland, these suspects were on a local northbound train where they stood...

A reporter is sent to Italy to learn more about the bond smuggling story. But nobody knows where the two men are. At least the Japanese press is sitll interested in story of the two Japanese men caugh withs ome $134.5 billion in (presumably fake) US bearer bonds. We can't read Japanese, and Google Translate isn't particularly helpful, but a reader informs us that the gist of this story is that a newspaper sent a reporter to Como, Italy and found that the men had been released, with their whereabouts unknown. Now, the easiest, most-benign explanation for this whole thing...

A decision by China to reduce its US Treasury holdings suggests concern about the US attitude towards its economic woes, Chinese economists were quoted as saying in state media Wednesday. The remarks, coming after US data showed a modest decline in Chinese investments in US government bonds, were in contrast to an earlier statement in Beijing which had said the recent sell-off was a routine transaction. "China is implying to the US, more or less, that it should adopt a more pragmatic and responsible attitude to maintain the stability of the dollar," He Maochun, a political scientist at Tsinghua University,...

According to Japan Today, two Japanese nationals were detained by Italian financial police last week after trying to enter Switzerland with $134 billion worth of undeclared U.S. bonds, mostly Treasury bonds, an Italian daily said Wednesday. The Japanese consulate general in Milan confirmed that the detention had taken place and said it was trying to confirm with Italian authorities whether the two were indeed Japanese nationals and their identities. According to the report in il Giornale, two unidentified Japanese in their 50s concealed the bonds, including 249 U.S. Treasury bonds each worth $500 million, in a suitcase with a false...

Now remember that the U.S. Treasury needs to sell a couple trillion dollars of new debt every year from now until doomsday. (Forget the fantasy that the economy is going to recover and tax revenues will skyrocket.) Not only that, but the Treasury also has to roll over trillions in old debt which comes due. That's a heap of trillions, and guess what--there is no Plan B except to print off a couple trillion dollars and "monetize" the debt by buying it with newly printed dollars. Nobody knows what will happen if the Federal Reserve and the Treasury try to...

So far as I can tell the only Bloomberg among all US MSM have published any news reports on the $135 billion of US bearer bonds being smuggled by two Japanese businessmen from Italy into Switzerland. This story has raised many interesting and important questions, to which there have been no answers yet. But there is another interesting and important question I haven't seen discussed. Why, when major European and Japanese media have reported it, have none of the US MSM done so? I can think of only two reasons: 1) the story is now known to be only an...

Cheeky bastards. Before the left attacks me, read what liberal blogger Jane Hamsher of FireDogLake thinks about the Democratic ploy to attach a $100 billion debate-free IMF credit line to a war supplemental funding bill for Iraq and Afghanistan. Take a minute to check out the citizen whip count tool they constructed to help defeat the bill. Nice work. Apparently the $35 billion in AIG payouts to over-leveraged Euro banks wasn't enough for Obama who has championed borrowing the $100 billion from your kids and the Chinese in order to give it to the IMF, so that they will rescue...

Here’s yet another huge financial story that has been virtually blacked out by the US financial media. Although on the surface, this story appears to be a non-event, if we consider some of the released facts about this case, you will understand why I consider it to be a huge story. On June 8th, the Asia News reported the following story: “Italy’s financial police (Guardia italiana di Finanza) has seized US bonds worth US 134.5 billion from two Japanese nationals at Chiasso (40 km from Milan) on the border between Italy and Switzerland. They include 249 US Federal Reserve bonds...

Watch this unbelievable video!!! Put it in a separate window, and make it a small window so you can read the transcript below in my comment.

LONDON -- The once-booming market for Islamic-friendly bonds, having suffered a contraction amid the credit crisis, now faces a new challenge: default. The fledgling market in recent months experienced its first two defaults, and they aren't expected to be the last as issuers like Saad Group hit financial difficulties. This is taking investors and courts into uncharted territory as they seek to apply Western laws to bonds that were designed to comply with Islamic law, or Shariah.

Fox's Glenn Beck is the first mainstream outlet to pick up on this intriguing story Surprise surprise. Fox News is the only "mainstream" US news outlet to be interested in the story of the $134.5 billion in (probably fake) bonds that were seized in Italy. Host Glenn Beck had us on to talk about the story, and they even got the first quote from the Treasury.

Meno: I haven't seen you since spring classes ended. Adeimantos: I have been away: Paris. London. Frankfurt. Meno: Oh. Pleasant? Interesting? Adeimantos: Not really interesting--too jet-lagged, so I sit in my hotel room in my underwear, read the Economist and Financial Times, and reflect on how if in my 20s I had been in a fancy hotel in central Paris with someone else paying I would have thought I was in heaven, but that now I am just tired. Thus not too pleasant either. Meno: Middle age is a shipwreck? Kephalos: It gets worse... Adeimantos: However, it was somewhat lucrative:...

It just gets more and more odd after my original report, with the latest coming from a German newspaper (translation courtesy of Google): Hit for the Zöllner: The contraband securities valued at 134 billion U.S. dollars are apparently real. Die italienische Finanzpolizei hatte zwei Japaner ertappt, die im doppelten Boden eines Koffers milliardenschwere Anleihen in die Schweiz schaffen wollten. The Italian financial police had two Japanese caught in the false bottom suitcase billion-dollar bonds in Switzerland wanted to create. Von dem Fund profitiert das hochverschuldete Italien. Note that this has received very little coverage in the so-called "mainstream US media"...

Milan (AsiaNews) – Italy’s financial police (Guardia italiana di Finanza) has seized US bonds worth US 134.5 billion from two Japanese nationals at Chiasso (40 km from Milan) on the border between Italy and Switzerland. They include 249 US Federal Reserve bonds worth US$ 500 million each, plus ten Kennedy bonds and other US government securities worth a billion dollar each. Italian authorities have not yet determined whether they are real or fake, but if they are real the attempt to take them into Switzerland would be the largest financial smuggling operation in history; if they are fake, the matter...

For those who love a mystery, this story has more than one.  Italian authorities seized more than $130 billion in bonds from two Japanese nationals as they presumably prepared to cross the border into Switzerland.  No one can tell at the moment whether the bonds are genuine or counterfeit: Italy’s financial police (Guardia italiana di Finanza) has seized US bonds worth US 134.5 billion from two Japanese nationals at Chiasso (40 km from Milan) on the border between Italy and Switzerland. They include 249 US Federal Reserve bonds worth US$ 500 million each, plus ten Kennedy bonds and other US...

If you don’t understand the uproar in Friendswood about the city’s plan to issue $11 million in debt without voter approval, just ask yourself a couple of questions: What if city leaders are completely right about the legal question? Is it still a good idea to borrow money without asking voters for their approval? Is a good idea to obligate them when they have clearly indicated they want a say about any debt they’d be responsible for? City officials have asked a judge in Travis County for a ruling that says the city can issue certificates of obligation to finance...

FRIENDSWOOD — The city has asked a Travis County judge to say it is legal for Friendswood to issue $11 million in debt without voter approval. The city had planned to issue $11 million in certificates of obligation to fund roads, parks, an animal shelter and a records building, but some residents said the city charter prohibited the city from issuing certificates of obligation. While bonds require voter approval, certificates of obligation do not. The city charter was amended by voters in 1997 to prohibit the city from issuing debt without voter approval that it could not finance from its...

The auction results make absolutely no sense under "conventional wisdom." Median yield down, primary dealers took about half and indirect bidders took the other half, basically. What? 50% take for foreign central banks on 30y debt at a 4.6ish coupon? That makes no sense given what we're being told is coming: massive inflation, maybe even hyperinflation, commodities ramping to the moon, the stock market going to the moon in a hyper-inflationary printing explosion. The stock market rocketed on the release. I couldn't make sense out of the initial FX moves, especially in the DX and Yen. Someone was front-running in...

Ok, this was rumored several days ago, but now I can find actual news reports - at least, outside the US: Milan (AsiaNews) – Italy’s financial police (Guardia italiana di Finanza) has seized US bonds worth US 134.5 billion from two Japanese nationals at Chiasso (40 km from Milan) on the border between Italy and Switzerland. They include 249 US Federal Reserve bonds worth US$ 500 million each, plus ten Kennedy bonds and other US government securities worth a billion dollar each. Those sound like Bearer Bonds - at least the Kennedy ones do. We no longer issue those (nor...

ROME — Two Japanese nationals were detained by Italian financial police last week after trying to enter Switzerland with $134 billion worth of undeclared U.S. bonds, mostly Treasury bonds, an Italian daily said Wednesday. The Japanese consulate general in Milan confirmed that the detention had taken place and said it was trying to confirm with Italian authorities whether the two were indeed Japanese nationals and their identities. According to the report in il Giornale, two unidentified Japanese in their 50s concealed the bonds, including 249 U.S. Treasury bonds each worth $500 million, in a suitcase with a false bottom that...

Britain last week was put on negative credit watch by Standard & Poor's for downward re-rating from its current AAA. The United States, Japan and several other countries are running record deficits, yet their bond yields are still close to all-time lows. That brings up an awkward question: what happens if the global investment community, public and private sector, sours on government bonds as an asset class? There's good reason for rational investors to do so. Britain's debt is forecast by S&P to exceed 100% of gross domestic product (GDP) by 2013, Japan's debt may exceed 200% of GDP by...

Potholes? Faded road stripes? Downed signs or faulty traffic lights? Too bad; take a number, and drive carefully. Among Gov. Arnold Schwarzenegger's proposals for closing the state's $24 billion budget deficit is to redirect gas-tax away from cities and counties to pay debt service on state highway bonds — draining $744 million from local government coffers in the next fiscal year and $745 million in the year after that. "It'll have a devastating effect here," said Alameda County's Public Works Director Daniel Woldesenbet. "This isn't just a public works issue, but a public safety issue." Woldesenbet said his agency stands...

A 27-year bull market in bonds is over and a brutal bear market is under way, says Tom Atteberry, co-manager of FPA New Income. That's bad news for bond investors, particularly those holding Treasurys and municipal IOUs. Atteberry, who spoke with us at the annual Morningstar Investment Conference in Chicago, says there is good reason to believe that the run-up in Treasury yields that began late last year will continue. Atteberry says he's seeing anecdotal evidence that Chinese investors, huge holders of Treasurys, are beginning to sell their government-bond stakes. "They are very, very nervous" about the Federal Reserve purchasing...

US government bond prices, especially those of longer maturities, lost considerable ground in the latest session. Bonds were hit across the board due to next week's supply, an improving tone in US jobless claims and productivity data, a jump in crude-oil prices, mortgage-related selling as well as hedges related to new corporate bond sales. The seven-year and 10-year notes were the biggest losers, with the 10-year yield touching as high as 3.747 per cent, approaching the six-month high of 3.76 per cent set in late May. The US Treasury Department announced a sale of $US65 billion ($81 billion) in notes...

WASHINGTON (Reuters) - The Federal Reserve is studying significant moves in the U.S. government bond market last week that could have big implications for the central bank's strategy to combat the country's recession. But the Fed is not really sure what is driving the sharp rise in long-dated bond yields, and especially a widening gap between short and long term yields. Do rising U.S. Treasury yields and a steepening yield curve suggest an economic recovery is more certain, meaning less need for safe haven government bonds and a healthy demand for credit? If so, there might be less need for...