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Interest Rates, Local interest rate discussions
nipper
post Posted: Jun 10 2021, 05:31 PM
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The federal government has paid a negative interest rate on $1 billion borrowed from institutional investors, the first time on record the total cost of a Treasury debt sale has fallen below zero. Institutional investors such as foreign pension funds, insurers and banks need to park their money for short periods of time in safe assets and will pay the Australian government to hold their funds for the next three months.

The historic financing reflects central banks suppressing interest rates by buying government bonds in the secondary market and huge amounts of cash sloshing around the worlds financial system.

It also suggests debt investors have become less worried about a potential breakout in global inflation, after a temporary spike in bond yields in February on bets of higher inflation from the Biden administration's $US1.9 trillion ($2.5 trillion) spending stimulus.

The the Australian Office of Financial Management (AOFM), sold a three month Treasury note attracting a weighted average yield of -0.0034 per cent on Thursday.

The negative yield on short-term government debt is partly being driven by foreign investors engaging in a currency arbitrage, market sources said. Investment banks are buying the debt on behalf of offshore investor clients, making a loss on the yield but earning a profit on three month forward foreign exchange contracts.



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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

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early birds
post Posted: Apr 16 2021, 08:27 AM
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What is a short squeeze?

Since the beginning of April and the beginning of the second quarter, bonds have become a “buy” for the markets. Yields move inversely to bonds. Therefore, as bonds rose in price, yields fell. 10-year yields put in new recent highs on March 30th near the 50% retracement level from the November 2018 highs to the March 2020 lows, at 1.774 and have been moving lowed since. Note that at the highs, the RSI was diverging with price while in overbought territory.

One can also argue that the move in yields was purely technical driven. On a 240-minute timeframe, as 10-year yields were moving higher into late March they formed the left shoulder of a head-and-shoulders pattern. Today, with the move lower, yields broke the below the neckline of the pattern. The target for a head-and-shoulders pattern is the height from the head to the neckline, added to the breakdown point of the right shoulder, which in this case is near 1.437. However, the RSI has moved into oversold territory, which indicates a near-term bounce is possible. Horizontal support is just above the target at the March 11th lows near 1.475 and then way below the target at 1.20 (see daily). Resistance is now back at the neckline at 1.618 (not the Fib level!) and then the top of the right shoulder at 1.701.

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finally the wide spread between Fed fund rate and 10 years got someone's attention!!!!! wink.gif



 
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

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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



--------------------
"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
 
 


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