US government securities (GOVT) are considered to be risk-free with minimal credit risk. There shouldn’t be any problems with raising more capital—at least on paper, and for the time being.
The US Federal Reserve has accumulated huge quantities of fixed-income (BND) securities as part of its three quantitative easing programs, QEs 1, 2, and 3.
In this annual letter to shareholders, Buffett explained a bet between him and his counterpart, Protege Partners, to fund a charity, Girls Inc. of Omaha.
The failure of US Congress to raise the debt ceiling would result in a partial government shutdown. The US Treasury wouldn’t be able to issue any government debt, and it could end up borrowing from its retirement savings fund.
Most countries tend to issue debt to fund their deficits and keep paying interest on these borrowings. These revenues are generated through taxes from companies and individuals.
The United States holds the largest trade deficit in the world. The United States has had a trade deficit for more than four decades and continues to increase the deficit every year.
On January 10, 2018, Bloomberg News broke a story that the Chinese government could be planning to slow down its purchases of US government debt (GOVT).
Understanding the Leading Credit Index The Conference Board LCI (Leading Credit Index), a constituent in the LEI (Leading Economic Index), is published every month and tracks credit conditions in the US economy by following changes in six financial market instruments: the two-year swap (SHY) spread (real time) the three-month LIBOR[1.Intercontinental Exchange London Interbank Offered Rate] (SCHO) […]
In its December monetary policy statement, the Fed projected three interest rate hikes in 2018 and three in 2019, depending on the incoming economic data.
St. Louis Fed president and CEO James Bullard gave a presentation at a regional economic briefing on December 1. Throughout this series, we’ll analyze Bullard’s take on the risks of an inverted yield curve.
As per the September ADP National Employment Report, the US private sector added 135,000 jobs during the month. The figure is a sharp decrease from 228,000 in August.
Throughout this series, we’ll look at potential risks facing markets, and how they could impact global financial markets in the short-to-medium term if they end up materializing.
Understanding the Leading Credit Index The Conference Board LCI (Leading Credit Index), a constituent of the LEI (Leading Economic Index), is constructed based on the performance of six financial market instruments. These components track lending conditions in the US economy. Performance of the LCI Improving credit conditions are considered positive for the economy. When the LCI […]
The key reason for the debt ceiling deal was to approve aid to Hurricane Harvey victims. A US government shutdown could have adversely impacted relief operations.
Although the latest date that the US debt ceiling can be raised is September 29, there is usually a two-week extension to allow both sides to come to an agreement.
Understanding the Leading Credit Index The Conference Board Leading Credit Index (or LCI), which tracks lending conditions in the economy, is reported monthly. The index has six constituents: 2-Year Swap Spread (SHY) (real time) LIBOR[1.London Interbank Offered Rate] 3-month (SCHO) less 3-month Treasury-bill (VGSH) yield spread (real time) debit balances in margin accounts at broker dealers […]
A failure to raise the debt ceiling will likely result in a US government shutdown and a default by the US, which would be catastrophic for the global economy and financial markets (VTI) (USMV).
US government bonds gained after the FOMC (Federal Open Market Committee) indicated in its July 2017 statement that near-term inflation could remain below its 2% target.
After the July FOMC meeting statement was released, market participants came to believe that the Fed would begin the process of balance sheet normalization soon.
Bond markets continue to rally The US bond market (BND) continued its impressive rally last week. The possibility of a slower pace of rate hikes from the US Fed boosted bond market sentiment. Bond yields across the curve fell. The ten-year yield (IEF) closed at 2.2%, with a fall of 95 basis points. The two-year […]
The University of Michigan Consumer Sentiment Index is a measure of consumer expectations for future economic conditions. The index is prepared based on two different surveys.
In recent months, there’s been a lot of chatter about the flattening of the yield curve. The yield curve is constructed by plotting the yields of different maturities.
The Leading Credit Index is one of the constituents of The Conference Board Leading Economic Index (or LEI), which is reported by The Conference Board on a monthly basis.
The bond markets (BND) have survived better-than-expected US payroll additions last week. The US economy added 222,000 jobs in June 2017 amid broad-based gains.
The FOMC June meeting minutes that were released on July 5, 2017, indicated that the FOMC members were divided over when to begin shrinking the Fed’s bloated balance sheet.
New York’s Federal Reserve president, William C. Dudley, recently spoke at a business forum in New York and said that he was pleased with the current state of the US economy.
In this series, we’ll analyze Fed members’ comments in June 2017 to better understand their outlooks on the US economy and how they justify their hawkish or dovish stances.
US Treasuries (GOVT) had another roller coaster ride this week due in part to the conflicting views from Fed members and weaker-than-expected economic data.
In her post-meeting press conference, Janet Yellen warned that the Fed could implement its balance sheet unwinding process soon if the economy continues to perform as expected.
The possibility of a 25-basis-point rate hike in December is quite high since Donald Trump was elected president, and the markets are already pricing in a hike.
The issue of the Fed’s credibility is not a new one. The effectiveness of the prolonged monetary accommodation has sparked a lot of debate in the past.
The negative interest policy of the central banks is casting government bonds as a futile choice for investors compared to stocks and gold. As a result, bond prices dipped and yields started rising.
If you’re a bond (BSV) (AGG) investor or fund manager, fluctuation in interest rates is one of the key risk drivers for the returns you get from your portfolio.
Between Jan 2014 and September 2015, the break-even rate was higher than the CPI inflation rate, as markets were surprised by the sudden dip in oil (USO) prices.
