Free Republic

Statist central bankers plan to devalue their respective currencies and risk inflation even if The Fed tapers. Since Central Banks compete with each other, low rate pressures should keep US Treasury rates in line. Central bankers from Japan and the U.K. predicted their new campaigns to encourage expansion will work, sustaining support for global growth even as the Federal Reserve considers a reduction in stimulus. As the annual gathering of central bankers and economists in Jackson Hole, Wyoming, drew to a close yesterday, Bank of Japan Governor Haruhiko Kuroda said his souped-up asset-buying “has started to exert effects” on the...

There are more rumblings from the Jackson Hole central banker party going on in Wyoming. Central bankers from Japan and the U.K. predicted their new campaigns to encourage expansion will work, sustaining support for global growth even as the Federal Reserve considers a reduction in stimulus. As the annual gathering of central bankers and economists in Jackson Hole, Wyoming, drew to a close yesterday, Bank of Japan Governor Haruhiko Kuroda said his souped-up asset-buying “has started to exert effects” on the world’s third-largest economy. Bank of England Deputy Governor Charlie Bean said the U.K.’s pledge this month to avoid raising...

Stanford University economist John Taylor feels that ‘Sooner the Better’ for Fed to unwind quantitative easing. Here is Taylor’s take on the first day of the Jackson Hole party. According to Taylor, academics outside the Fed revealed considerable skepticism about the effectiveness of the Fed’s quantitative easing and forward guidance programs. Of course Fed officials did not express the same doubts. The first paper was by Bob Hall. It argued that neither quantitative easing nor forward guidance was effective, or as he put it, “Both quantitative easing and forward guidance, as implemented by the Fed, are obviously weak instruments.” He...

Here are the minutes of the most recent FOMC meeting. Federal Reserve officials were “broadly comfortable” with Chairman Ben S. Bernanke’s plan to start reducing bond buying later this year if the economy improves, with a few saying tapering might be needed soon, minutes of their last meeting show. In other words, it was a hawkish set of minutes pointing to tapering. The reaction in the US Treasury 10 year yield? ust10082113 And agency MBS prices fell about 12 basis points. mbs082113 And the globe is awash in blood (as in rising sovereign yields). wbm082113 Here is a photo of...

The Chicago Fed National Activity Index fell to -0.10 for July. That is less than the expectation of -0.15 and a decline from the June reading of -0.13. But an improvement over the REVISED print of -0.23 for June. chci Thank goodness for revisions that make even a lousy print look positive! Stocks fell in Europe and Asia and oil led declines in commodities on speculation the Federal Reserve will curb bond purchases next month. U.S. equities were little changed and Treasuries advanced. The MSCI All Country World Index lost 0.5 percent to 369.20at 9:37 a.m. in New York, the...

The 10 year Treasury yield has risen 77% since May 2nd. ust10081913a And mortgage rates (Bankrate 30yr Fixed-rate) are up 32% since May 2nd. t10b30081913 As refinancing volumes plummet, lenders are trying to extend the home financing boom by pitching adjustable-rate mortgages to borrowers, harkening back to the pre-crisis boom years. Applications for adjustable-rate loans now make up 6% of mortgage loan requests, up from 3% at the beginning of the year, though still well below the 32% peak in 2004, according to the Mortgage Bankers Association. Choosing an adjustable-rate mortgage would seem counterintuitive when interest rates are rising. But...

The Treasury 10 year yield rose today to its highest level in 2 years. ust10081613 Now for the bad news: the Treasury 10 year yield is pulling from from the German 10 year Bund yield. treasybundso The rising 10 year Treasury will likely cause the 30 year fixed-rate mortgage to rise. treas10mort Here is a chart of fixed-rate, ARM versus the 10 year Treasury. frmarmmay1 Got ARMs?

The House Oversight Committee slammed the Treasury Department on Thursday for withholding documents related to the committee’s investigation of the administration’s expansion of subsidies in the Obamacare exchanges. Committee chairman Rep. Darrell Issa (R., Calif.) and Health Care Subcommittee chairman James Lankford (R., Penn.) threatened in their letter to use legal force against the department if it does not turn over the documents by Aug. 29. The committee has been investigating for over a year the administration’s decision to expand subsidies to the federally run health insurance exchanges mandated by Obamacare. The 2010 law creates subsidies for insurance purchased on...

Today has the dubious distinction of being the 6th Hindenburg Omen in eight days. hindfed The New York Stock Exchange has seen a massive rise in its index since Quantitative Easing began. nyafed All eyes are on St Louis Fed President James Bullard for hints on tapering at 3:15pm EST today. Chances are he will say the same things as The Atlanta Fed’s Lockhart. Like the raptors in “Jurassic Park,” The Fed board members are doing coordinated attack patterns to signal their taper intentions. Raptors-in-Jurassic-Park--002 Both the US Treasury yield and dollar swaps curves are upward sloping indicating that rates...

Global sovereign yields jumped almost 10 basis points (except for Greece). wbm081313 And as of 11am EST, the US Treasury 10 year yield rose almost 9 basis points as retail sales rose in July for a fourth consecutive month. ust10081313 The US Treasury yield curve steepened (of course, it looks like the Treasury 10 year yield increase since the short-end of the curve is low and seemingly constant). 102081313 The Fannie Mae 3.0% agency MBS continues its fall from May 1, 2013. I reach a plateau since mid July but may start falling again. fannie3081313 And the Dow Jones is...

The US Treasury auction went off better than last week’s 10 and 30 year auctions. ta36mth Particularly with regard to the bid/cover ratios. The 6 month bid/cover remains at 5.01 while the 10 year and 30 year are lower and at their 2nd lowest point since early 2009 when QE1 began. This is indicating that there are fears that The Fed will slow down the taper of $88 billion per month in Agency MBS and Treasury purchases. But at the long- and mid-section of the yield curve, not the short-end. Here is a chart of Expected Future Outcomes and Most...

The Federal Reserve’s Balance Sheet has swelled to $3.6 trillion since 2008. And The Fed keeps adding $88 billion in Treasury and agency mortgage-backed securities purchases each month. fedbal081113 The stock market has taken off like a jackrabbit, particularly after March 18, 2009 when the Federal Reserve’s Open Market Committee (FOMC) announced that the program would be expanded by an additional $ 1 trillion in purchases of Treasury and Agency MBS securities. $750 billion in purchases of agency MBS and $300 billion in Treasury purchases, to be precise. fedbalspx Now The Fed is hinting at tapering of the $88 billion...

The stock market has experienced a fantastic run with the advent of quantitative easing (QE) policies by The Fed. Here is a chart of the S&P 500 index versus the Fed Funds Target rate. spxfed20`13 But The Hindenburg Omen* oracles (like Mark Faber) are coming out with warnings of a 20% drop in the SPX. To be sure, the Hindenburg Omen is flashing red … again. homentoday Will this be a redux of the 1987 stock market crash (as Mark Faber claims) when The Fed jumped in after the crash? spx1987 Or will it be a gradual decline like gold?...

The stock market has experienced a fantastic run with the advent of quantitative easing (QE) policies by The Fed. Here is a chart of the S&P 500 index versus the Fed Funds Target rate. spxfed20`13 But The Hindenburg Omen* oracles (like Mark Faber) are coming out with warnings of a 20% drop in the SPX. To be sure, the Hindenburg Omen is flashing red. hund080913 Will this be a redux of the 1987 stock market crash (as Mark Faber claims) when The Fed jumped in after the crash? spx1987 Or will it be a gradual decline line gold? gold080913 Of...

Today’s 30 year Treasury auction was similar to the 10 year auction from earlier this week. 30yraucr Specifically, the bid to cover ratio fell to the 2nd lowest point since February 2009. 30yrbcover February 2009 is near the beginning of QE. 04-qe-timeline Falling bid to cover reflects concerns about the Fed tapering (aka, removing the punch bowl). punchbowl

The bid-to-cover ratio, which gauges demand by comparing total bids with the amount of securities offered, today printed at 2.45 for the 10 year Treasury auction, the lowest since April 2009. This decline reflects concern that the Federal Reserve will slow its asset purchases. bidcov080713 And the bid to cover ratio has really been falling since 2012 as the 10 year Treasury yield has risen. bidcov10yry Here is a closer look at the bid to cover, the 10 year Treasury yield and the Bankrate 30 year fixed-rate average. closerlook1 As the market fears a tapering of Fed stimulus, the bid...

The House Committee on Oversight and Government Reform subpoenaed Obama Treasury Secretary Jack Lew for withholding documentation from Congress in the ongoing IRS Tea Party Scandal investigation. The Oversight Committee accuses the Obama Administration of impeding and obstructing the investigation. “During the past two weeks, President Obama and you have repeatedly labeled the IRS’s strategy of targeting Americans for their political beliefs as a ‘phony’ scandal. While the Obama Administration has so publicly deflected responsibility for the targeting, it simultaneously has attempted to thwart congressional oversight into the matter… the IRS has engaged in a systematic effort to delay, frustrate,...

The economic news, particularly surrounding Thursday’s jobless claims numbers and Friday’s job report, wreaked havoc on the Treasury 10 year yield. Despite that 10 basis point rise on Thursday and the 10 basis point drop on Friday, we are almost back to where we started at Wednesday close. ust10080213a Since May 1st, the US Treasury 10 year yield has risen almost 100 basis points. yc51080213 And the Bankrate 30 year fixed average (yellow) has risen as well by 106 basis points. br10080213 The spread between the Bankrate 30 FRM and the 10 year Treasury yield is now 181 basis points,...

House Republicans on Friday accused Treasury Secretary Jacob Lew of obstructing their investigation into the IRS’s targeting of tea party and conservative groups, and issued subpoenas for more agency documents. Oversight committee chairman Darrell Issa sent a scathing latter to Lew blasting him and Obama for dismissing the GOP’s claims about IRS targeting as a phony scandal, saying that Lew has attempted to thwart his investigation. (Snip) The IRS came under scrutiny when its auditor reported earlier this year that the agency had singled out groups with “tea party,” “patriot” or “9/12” in their names for special scrutiny when the...

(CNSNews.com) - According to the Daily Treasury Statement for July 26, which the Treasury released this afternoon, the federal debt has been stuck at exactly $16,699,396,000,000.00 for 70 straight days. That is approximately $25 million below the legal limit of $16,699,421,095,673.60 that Congress has imposed on the debt. The portion of the federal debt subject to the legal limit set by Congress first hit $16,699,396,000,000.00 at the close of business on May 17. At the close of every business day since then, it has also been $16,699,396,000,000.00, according to the official accounting published by the Treasury Department.