Why Yields Stayed Low Despite The End Of Quantitative Easing
Global slowdown and the Greek debt fiasco kept the Treasury yields down in 2014.
Lower oil prices could fuel global growth. The dip in inflation led to an increase in consumer sentiment. Lower inflation also acts like a tax cut for consumers.
Lower crude oil prices could hurt the growth of oil-rich economies. Russia’s fortunes are heavily linked to oil prices. A slump in oil prices is negative for Russia’s economy.
The fall in consumer confidence in February was primarily because Americans are less optimistic about job prospects and wages.
In the 12 months leading up to January, prices fell 0.1%, the first decline since October 2009. In December, consumer prices rose by 0.8% year-over-year.
The durable goods orders report is important because it indicates the mood of businesses. A rising number indicates more confident businesses.
Business investment rose by 4.8% in 4Q14. Though it was much slower than the 8.9% rise reported in 3Q14, it was higher than the 1.9% growth estimate.
The slower-than-anticipated increase in business inventories was primarily responsible for the downward revision to the US economic growth rate.
Greece’s humanitarian crisis may be caused by 98% of the bailout funds being directed back to Greece’s lenders. Only 1.6% entered the real Greek economy.
As part of the bailout extension, Greek Finance Minister Yanis Varoufakis pledged to boost growth in the country.
In order to secure a four-month extension to its bailout loan, Greece (GREK) pledged to undertake certain reforms, including fiscal and structural measures.
Greece’s economic and structural reforms in its bailout extension are intended to bring about a compromise between Greece’s creditors and Greece’s government.
Europe-tracking ETFs gained significantly from February 19 to February 24, when the bailout extension to Greece was approved.
On Friday, February 20, Greece (GREK) managed to get an agreement with its Eurozone creditors for a four-month extension on its loan.
Germany rejected Greece’s request letter. According to a spokesman for Germany’s finance minister, the plea was “not a substantial proposal for a solution.”
Upon winning the election, Tsipras declared an end to the Troika era. The bailout extension implies that Greece will still be subject to the Troika.
Greece’s mounting debt has created fear of a new crisis. As a result, cash withdrawals in Greece have been escalating at a rate not seen since 2012.
Greece needs to focus on two key areas in order to destress its financial situation; namely, debt and deficit.
As part of Greece’s bailout program, the Troika imposed mandatory economic reforms or austerity measures to help Greece reduce its debt.
Greece is the most indebted country in Europe with a debt-to-gross domestic product ratio of 175%. Greece had to ask the Troika for a bailout extension.
But if I knew how to manage my portfolio safer and smarter than most hedge fund managers, I could realistically grow my wealth.