tag:blogger.com,1999:blog-6616959642391988608.post2913421286765077000..comments2024-03-28T00:18:25.641-07:00Comments on Calafia Beach Pundit: Bond yields are out of whackScott Grannishttp://www.blogger.com/profile/14028519647946868684noreply@blogger.comBlogger13125tag:blogger.com,1999:blog-6616959642391988608.post-53052283824538944362011-12-15T09:16:27.195-08:002011-12-15T09:16:27.195-08:00In re Europe, the Irish seem to be healing slowly ...In re Europe, the Irish seem to be healing slowly through a combo of fiscal restraint and standing by their pro-growth tax regime. The Spaniards actually voted to take their medicine in the form of Rajoy. The Italians were given no choice and will be less successful but at least monti owes his power to no one in italy so he is not bound by the decades of bribes that his predecessors made to getDonny Baseballhttps://www.blogger.com/profile/08040288585224426073noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-71109174111335519862011-12-15T08:46:21.044-08:002011-12-15T08:46:21.044-08:00The Euroone is cooked, from what I can tell.
Desp...The Euroone is cooked, from what I can tell.<br /><br />Despite the fact that no modern economy has flourished with inflation rates below 2 percent, German is seeking to impost such a peevish regimen on the entire continent.<br /><br />Ergo, there wil have bankrupt nations. <br /><br />The belief in ultra-tight money is faith-based---a half-baked ideology or religion, usually tied to some sort ofBenjamin Colehttps://www.blogger.com/profile/14001038338873263877noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-642542962152306182011-12-15T08:18:33.356-08:002011-12-15T08:18:33.356-08:00" - - - the US is looking at 4 more years of..." - - - the US is looking at 4 more years of $1.3T deficits, then CDS will widen and the BMVs will show up right quick."<br /><br />The BMV's, the everyone-must-suffer wing of the GOP, the sky-is-falling group (led by David Walker, Ron Paul and Alan Simpson), etc. have been telling us this for at least a couple of years. Yet interest rates on USG debt have, once again, hit new Ed Rhttps://www.blogger.com/profile/17720176132423294274noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-70681164780266012182011-12-15T06:37:03.572-08:002011-12-15T06:37:03.572-08:00The CDS market and the Bond Vigilantes know that t...The CDS market and the Bond Vigilantes know that the US is always the last safe house. That doesn't mean the house is necessarily safe, just more attractive relatively. If it looks like 1) Europe can solve its problems through self-imposed fiscal rectitude, and 2) the US is looking at 4 more years of $1.3T deficits, then CDS will widen and the BMVs will show up right quick.Donny Baseballhttps://www.blogger.com/profile/08040288585224426073noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-60379938472456240412011-12-15T05:57:18.989-08:002011-12-15T05:57:18.989-08:00The CDS on USG debt is the lowest of ANY significa...The CDS on USG debt is the lowest of ANY significant country. (yes, Norway -- with a large BoP surplus and its own currency -- is slightly lower). <br /><br />CDS on USG debt are lower than most of the other AAA-rated countries; Germany, France, Netherlands etc. And this despite the GOP's efforts to sabatoge the credit rating of the USA in August.<br /><br />What is it that free and open Ed Rhttps://www.blogger.com/profile/17720176132423294274noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-68442025314274007152011-12-15T05:52:48.341-08:002011-12-15T05:52:48.341-08:00Perhaps global investors are turning to bonds as a...Perhaps global investors are turning to bonds as a safe haven from deflation -- afterall, near zero interest is certainly not the incentive to hold treasuries -- we need to keep an eye on all explanations, including the notion of a market that is preparing for global depression...McKibbinUSAhttps://www.blogger.com/profile/10545798495680527622noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-52665887092687610812011-12-15T03:41:38.637-08:002011-12-15T03:41:38.637-08:00Ed R makes a point like an ice pick in the forhead...Ed R makes a point like an ice pick in the forhead.<br /><br />I think Treasuries are a safe haven because the USG has a massive armed forces to protect it from hostile takover and it can print its own currency. Plus, if not mistaken, it has always made good on its bonds. Correct?Johnhttps://www.blogger.com/profile/06365403570563730880noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-38414960630156147862011-12-14T17:50:20.058-08:002011-12-14T17:50:20.058-08:00Another explanation is that the markets are pricin...Another explanation is that the markets are pricing for deflation and depression, which is increasingly evident across Main Street USA, and even the national economy, as evidenced by the sharp downward trend in the employment to population ratio, the extended declines in home prices, and the extended decline in wage-earners' real wages over the past decade -- all of this evidence indicates McKibbinUSAhttps://www.blogger.com/profile/10545798495680527622noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-51618361674773980842011-12-14T17:28:02.431-08:002011-12-14T17:28:02.431-08:00" . . . .artificially depressed Treasury yiel..." . . . .artificially depressed Treasury yields"<br /><br />How can the price of anything that has massive trading in open markets have an 'artificial' price?<br /><br />If you think the yields are 'artificially' depressed then they must be due for a 'correction'.<br /><br />So why don't you call your broker and sell short some USG bonds? If current yields Ed Rhttps://www.blogger.com/profile/17720176132423294274noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-34828853156349302632011-12-14T16:51:49.829-08:002011-12-14T16:51:49.829-08:00Re: corporate bonds. I think that artificially dep...Re: corporate bonds. I think that artificially depressed Treasury yields are contributing to the recent widening of corporate spreads, making them look riskier than they probably are. However, yields on corporate bonds are historically low, suggesting that investors do find them somewhat attractive. In any event, corporate bonds are typically priced relative to Treasuries, not to inflation. I Scott Grannishttps://www.blogger.com/profile/14028519647946868684noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-20083952855474712592011-12-14T16:37:44.261-08:002011-12-14T16:37:44.261-08:00Somehow, I just can't get riled up about a 2 p...Somehow, I just can't get riled up about a 2 percent core inflation rate, a rate that now appears to be waning.<br /><br />Evidently, bond investors don't worry about it either. They anticipate even lower inflation. Perhaps they see another deflationary recession in the wings--Europe looks that way. Maybe they think the USA is the next Japan. Maybe we are. <br /><br />From 1982 to 2007, Benjamin Colehttps://www.blogger.com/profile/14001038338873263877noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-6772105722384946302011-12-14T16:16:40.351-08:002011-12-14T16:16:40.351-08:00From SG:
"Instead of "stimulating"...From SG: <br />"Instead of "stimulating" the economy, enormous increases—in both nominal and relative terms—in federal spending have ended up "stimulating" the unemployment rate more than anything else. The reason? The public sector spends money much less efficiently than the private sector."<br /><br />Given the "inefficient" ways government spends money, Johnhttps://www.blogger.com/profile/06365403570563730880noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-11826787835727810882011-12-14T15:34:44.479-08:002011-12-14T15:34:44.479-08:00Scott Grannis wrote:
"The only reasonable exp...<b>Scott Grannis</b> wrote:<br />"The only reasonable explanation for this divergence, as far as I can tell, is that the level of Treasury yields is artificially depressed."<br /><br />Are corporate bonds, hi-yield corporate bonds and municipal bonds priced to reflect 2 - 2.5% long term inflation? Or are they also artificially "out of wack"?Williamhttps://www.blogger.com/profile/04418491109912775561noreply@blogger.com