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Interest Rates, Local interest rate discussions
early birds
post Posted: Apr 9 2021, 09:33 AM
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Speaking at an International Monetary Fund event overnight, Jerome Powell said that price rises from spending combined with bottlenecks in the supply chain would not cause the kind of yearly increases that would be considered as inflation. Bond traders were quick to snap up treasuries and send yields lower, allowing technology stocks to resume their ascent and send the Nasdaq 100 up 3.2% to a seven-week high, just below its record. The Dow Jones closed above 33,500 for the first time and the S&P 500 enjoyed its second day in history above 4,000.

With futures mostly higher, we expect a positive open across Asia. The Hang Seng shows potential to break above 29,100 resistance which would also invalidate trendline resistance to suggest prices are trying to revert to its longer-term bullish trend, whilst a break below 28,500 warns of another leg lower.

The ASX 200 broke to a 13-month high after its fifth consecutive bullish session, yet 7,000 capped as resistance. From here we would look for the 6938-breakout level to hold as support before targeting the 7,100 handle and the 7,197 highs.

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market and economy awash with "free" cash atm.



 
nipper
post Posted: Apr 1 2021, 08:53 AM
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In Reply To: early birds's post @ Apr 1 2021, 08:35 AM

the old saying:


Money talks and BS walks




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"Every long-term security is nothing more than a claim on some expected future stream of cash that will be delivered into the hands of investors over time. For a given stream of expected future cash payments, the higher the price investors pay today for that stream of cash, the lower the long-term return they will achieve on their investment over time." - Dr John Hussman

"If I had even the slightest grasp upon my own faculties, I would not make essays, I would make decisions." ― Michel de Montaigne

Said 'Thanks' for this post: early birds  
 
early birds
post Posted: Apr 1 2021, 08:35 AM
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How Japanese Investors Accelerated the Treasury Selloff
Banks focused on booking profits by the Japanese fiscal year-end unloaded bonds in recent weeks

The sharp rise in Treasury yields in recent weeks looked like a test of whether the Federal Reserve can keep interest rates low after the economy regains its footing.

Under the surface, other factors drove the selloff in U.S. government bonds, pushing prices down and yields up, according to investors and analysts. One factor was heavy selling by investors in Japan who were locking in investment returns for their year-end.

The yield on the 10-year Treasury rose from close to 1% at the end of January to an intraday peak of over 1.77% on Tuesday.


https://www.wsj.com/articles/how-japanese-i...re_below_a_pos1

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when comes to money-----no one murk around .....


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early birds
post Posted: Mar 31 2021, 08:37 AM
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The rise of yields hit a technical speedbump
US 10-year treasury yield hit its highest level since January 2020, yet later reversed to produce a bearish pinbar and settle at 1.7%. Two technical factors they may be part of the reversal are that yields are now trading around their 200-week eMA and the 10-year treasury note (which moves inversely to yields) is trading around a historical support level around 94’14.

Interestingly the 30-year yield (long end of the curve) failed to retest its March high and closed with a bearish outside day at 2.36%. So given these early signs, this is certainly something to watch for a potential trend reversal even if it is not the consensus at present.

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worth a look at it. at least for a short term long bet fpr US 10 years. imho it is risk though!!



 
early birds
post Posted: Mar 21 2021, 08:54 PM
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https://www.afr.com/companies/agriculture/f...20210321-p57cnh

Farmers are warning of food price rises in the wake of widespread floods that have caused stock, crop and infrastructure losses in NSW, as well as widespread property damage.

Cattle producer Robert Mackenzie said the floods were devastating for all farmers along the mid-north coast.

“When you look at how widespread this is, it is just horrendous,” he said.

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another drive up for inflation!!
what hecks going on??? bush fire, virus, now flood!! can we have a f£$%$%^king break????????!!!!!!!!!! sadsmiley02.gif weirdsmiley.gif



 
nipper
post Posted: Mar 12 2021, 11:18 AM
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Sometimes, one of the AFR columnists, Christopher Joye, tells it how it is. While his communications carry an element of I told you so, at times, he does have his finger on the pulse, and on the trading button, often enough to exhibit a real feel (fixed income securities manager).

QUOTE
On Tuesday, the RBA delivered a .... blow to the short sellers....First, it stopped the Commonwealth treasury lending out three-year government bonds, which partially denied short sellers access to these assets to dump on market. This meant the main lender of three-year bonds was the RBA itself, as it's single largest owner (via QE).
QUOTE
The second hammer was the RBA massively increasing the cost of borrowing these bonds, making it prohibitively expensive to short-sell them.
...and three-year government bond yields rapidly converged back to the 0.1 per cent target!

On Wednesday, Governor Philip Lowe's speech at a conference was designed to deliver some "clear messages" to investors.

The first was that contrary to widely held expectations, "the bank remains committed to the three-year yield target".
QUOTE
We are not considering removing the target or changing the target from 10 basis points. The only question was whether to keep the April 2024 bond as the target bond, or to move to the next bond, that is the November 2024 bond, later this year .

Lowe's second message was that (silly) expectations for possible increases in the cash rate as early as late next year and then again in 2023 were plainly wrong. Or, in his blunt words: "This is not an expectation that we share." And by "we" he means the people that set interest rates!

A third message was that the RBA is comfortable with the idea of increasing QE whenever it needs to, as it did a couple of weeks ago when it bought $4 billion of bonds on a single day.

The fourth message was that markets should be pricing in a high likelihood of QE3 after the second $100 billion bond-buying program ends.
QUOTE
Later in the year, the board will also consider the case for further extending the bond purchase program.... We are prepared to undertake further bond purchases if that is required to reach our goals.

The final, and arguably most significant message, was that the RBA has materially lowered its estimate of its full employment target down to a jobless rate in the low 4 per cent range. Only a few years ago this was figured to be 5 per cent.



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"Every long-term security is nothing more than a claim on some expected future stream of cash that will be delivered into the hands of investors over time. For a given stream of expected future cash payments, the higher the price investors pay today for that stream of cash, the lower the long-term return they will achieve on their investment over time." - Dr John Hussman

"If I had even the slightest grasp upon my own faculties, I would not make essays, I would make decisions." ― Michel de Montaigne
 


mullokintyre
post Posted: Mar 1 2021, 09:05 AM
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In Reply To: nipper's post @ Mar 1 2021, 08:44 AM

QUOTE
This time its different.

One of the great untruths of the world, along with the following
"I'm from the government, I am here to help you"
"of course I will still respect you in the morning"
"The cheque's in the mail"
"Only while stocks last".
Mick



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sent from my Olivetti Typewriter.
 
nipper
post Posted: Mar 1 2021, 08:44 AM
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In Reply To: nipper's post @ Mar 1 2021, 08:27 AM

A Tiger by the Tail
QUOTE
In essence, Haldane argues, it is different this time.

The policy setting is completely different.

The fiscal policy setting is completely different.

The monetary policy setting is completely different.

Everything is different.

Bank of England Governor speech



https://edu.bankofengland.co.uk/-/media/boe/files/speech/2021/february/inflation-a-tiger-by-the-tail-speech-by-andy-haldane.pdf



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"Every long-term security is nothing more than a claim on some expected future stream of cash that will be delivered into the hands of investors over time. For a given stream of expected future cash payments, the higher the price investors pay today for that stream of cash, the lower the long-term return they will achieve on their investment over time." - Dr John Hussman

"If I had even the slightest grasp upon my own faculties, I would not make essays, I would make decisions." ― Michel de Montaigne
 
nipper
post Posted: Mar 1 2021, 08:27 AM
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In Reply To: nipper's post @ Aug 7 2020, 12:00 PM

Why interest rates are soaring and what it means for you


QUOTE
Last November, if you bought an Australian government 10-year bond (essentially a government IOU) on the open market, you'd have been lucky to get an interest rate of 0.8 per cent.
A fortnight ago, you could get a touch above 1.2 per cent. By Friday, it was just shy of 2 per cent. To put that into perspective, that's the equivalent of almost five official RBA interest rate hikes in four months, with two and a bit just last week.

You'd expect rates to move higher as the economy recovered. But it was the speed and the severity of the movements, the likes of which haven't occurred for decades, that stunned onlookers.

If sustained, it will lead to higher borrowing costs because banks will have no option but to pass those rate hikes on. And should Federal Treasurer Josh Frydenberg need to raise more debt, to extend JobKeeper for instance, he'll suddenly be confronted with a much higher bill.

Then there are the follow-on effects. Stock markets hate higher interest rates. Suddenly, the boom that has been underway ever since central banks cut rates to zero last year has been knocked sideways.


https://www.abc.net.au/news/2021-03-01/why-...or-you/13201602

but the 10 year is down 22 bips over the weekend, so the market will kick up



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"Every long-term security is nothing more than a claim on some expected future stream of cash that will be delivered into the hands of investors over time. For a given stream of expected future cash payments, the higher the price investors pay today for that stream of cash, the lower the long-term return they will achieve on their investment over time." - Dr John Hussman

"If I had even the slightest grasp upon my own faculties, I would not make essays, I would make decisions." ― Michel de Montaigne
 
nipper
post Posted: Aug 7 2020, 12:00 PM
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In Reply To: nipper's post @ May 12 2020, 08:22 AM

and Howard Marks tossing it out there. (this may only be applicable if the Old Rules of Valuation still apply)
QUOTE
A clear driver of the rally is the actions of the Fed, and Marks argues many investors have underestimated the impact of low rates on valuations.Simplistically, when Treasuries yield less than 1 per cent and you add in the traditional equity premium, perhaps the earnings yield should be 4 per cent, Marks explains.

That yield of 4/100 suggests a price to earnings ratio (the inverse) of 100/4, or 25. Thus the S&P 500 shouldn't trade at its traditional 16 times earnings, but roughly 50 per cent higher."

But even that underestimates the impact of low rates, because it ignores the fact that company earnings grow, and bond interest does not.

If the earnings on the S&P 500 will grow to eternity at 2 per cent per year, for example, the right earnings yield is not 4 per cent, but 2 per cent (for a P/E ratio of 50). And, mathematically, for a company whose growth rate exceeds the sum of the bond yield and the equity premium, the right P/E ratio is infinity. On that basis, stocks may have a long way to go.

Until they do not. Key words: Simplistically. May. (oh, and eternity)



--------------------
"Every long-term security is nothing more than a claim on some expected future stream of cash that will be delivered into the hands of investors over time. For a given stream of expected future cash payments, the higher the price investors pay today for that stream of cash, the lower the long-term return they will achieve on their investment over time." - Dr John Hussman

"If I had even the slightest grasp upon my own faculties, I would not make essays, I would make decisions." ― Michel de Montaigne

Said 'Thanks' for this post: rlane  
 
 


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