BTC iShares U.S. Treasury Bond ETF

The Fed is scheduled to meet this week. With the S&P 500 at record highs, could the Fed play spoilsport at this week’s meeting?

Ray Dalio discussed his take on the slowdown in China and how it could impact worldwide growth at the World Economic Forum in Switzerland.

In an interview with Reuters on August 20, President Trump mentioned that he was “not thrilled” with the Federal Reserve for raising rates.

The Leading Credit Index expanded for the first time in four months in May with a reading of -0.86.

There is one economic measure at China’s dispense that could force the Trump administration to back away from its aggressive trade policy.

China invests the trade surplus it has with its trading partners in US government securities (GOVT).

The Conference Board uses credit conditions in the economy as one of the components of the leading economic index (or LEI) economic model.

US ten-year Treasury note yields (IEF) hit a high mark of approximately 3.1% today—a record since July 2011.

The frequency of an asset class making financial headlines is indicative of investor interest.

The April retail sales report was released on May 15, and the surprise reaction to this report was an increase in bond (BND) yields across the board.

In March, the Leading Credit Index recorded a reading of -0.46, declining, compared to the February reading of -0.79.

Fed member Loretta Mester has sided with Fed Chair Jerome Powell that a flattening yield curve doesn’t signal a weakness.

The spread, or the difference between the ten-year and two-year US Treasury bonds, has fallen below 50 bps for the first time since 2007.

In the recent weeks, the performance of the US bond markets (BND) has been influenced by trade conflicts between the US and other nations.

China owns close to 20% of the total outstanding US debt, and the total value of these securities is close to $1.2 trillion.

An economy records a budget deficit when its annual revenue generated is lower than its expenditure.

The Conference Board uses credit conditions in the economy as one of the key constituents in its LEI (Leading Economic Index).

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.

The US Treasury manages the US government’s payments, and whenever there’s a shortfall in meeting expenses, the Treasury borrows and pays interest.

A government budget deficit occurs when an economy’s annual revenue is less than its total expenditure.

The recent market turmoil that shook investors’ confidence has settled for the time being, but…

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.

In his latest shareholder letter, dated February 24, legendary investor Warren Buffett shared his views on financial markets.

The FOMC staff review indicated that the US investor sentiment has improved in the inter-meeting period.

According to the latest communication from the Fed, the pace of the balance sheet unwinding program has been increased to $20 billion per month.

This constituent of the LEI is an economic model, constructed by modeling changes in six financial market instruments.

The latest US government shutdown only lasted for three days and is unlikely to have a major impact on the US economy.

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 current debt ceiling is likely to be breached on January 19, and once that happens, the US Treasury must stop issuing any new debt (SHY).

If the Chinese government decides to sell its US debt (GOVT) holdings, it could lead to another possible global financial crisis.

The process of China buying US debt is beneficial for both the United States and China.

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.

The Leading Credit Index for October was reported to be -0.70, improving from the revised September reading of -0.64.

The FOMC staff review indicated that domestic financial asset prices between meetings reacted to lower accommodation from the US Federal Reserve.

The US FOMC left rates unchanged after the November 2017 meeting, as expected, setting the stage for a potential rate hike in December.

The Leading Credit Index is an economic model that’s modeled on the performance of six major financial market instruments.

The US Fed has amassed a huge number of fixed income (BND) securities as part of its quantitative easing (or QE) programs 1, 2, and 3.

In this series, we’ll discuss the September FOMC meeting minutes in detail and decide how the meeting minutes have changed the outlook for markets.

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.

In the long run, Williams said it would be difficult to predict how markets would react to the Fed’s balance sheet unwinding program.

Since the September 20 statement, markets have turned skeptical about whether the Fed will be able to go ahead with its December rate hike plan.

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 US dollar rallied after the latest FOMC (Federal Open Market Committee) meeting statement was released on September 20.

This week volatility (VXX) has continued to stick to its trend of sudden spikes and then dropping immediately.

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.

Risk aversion is likely to weigh on riskier assets like equities (QQQ) and cause bond spreads to widen.

US bond markets were the center of attention last week as central bankers’ comments at Jackson Hole could have induced volatility in the bond markets.

In the financial markets, there are a few financial assets whose demand increases dramatically in times of uncertainty.

US bond markets (BND) remained volatile (VXX) in the week ending August 25. Investors reacted to US political developments and Yellen’s speech.

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).

The key risk faced by bond markets is a sudden fall in prices.

The US bond markets (BND) turned volatile (VXX) in the week ending August 18 but remained close to their August 11 close.

The US Dollar Index (UUP) managed to recover some of the losses it saw in the last few weeks.

Equity markets in the US and across the globe reported heavy losses as risk aversion set in.

US bond markets (BND) rallied in the previous week as tensions between the US and North Korea escalated.

Bonds, especially U.S. Treasuries (GOVT), are considered one of the safest assets in which to park your funds in times of uncertainty.

The safe havens that benefit the most in times of uncertainty include gold (GLD) and U.S. Treasuries (GOVT).

FOMC members Neel Kashkari, William Dudley, and Robert Kaplan are scheduled to speak this week.

US bond markets (BND) continued to recover with fewer chances for another rate hike from the US Fed this year.

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.

Bond markets (BND) rebounded sharply after disappointing data on June retail sales and inflation (TIP).

Bond yields were all over the place during US Federal Reserve Chair Janet Yellen’s testimony to the Congress.

In its June policy meeting, the Fed has signaled that it will stop replacing maturing securities and slowly reduce the size of its balance sheet.

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.

FOMC members after the latest policy statement have remained biased toward further rate hikes, but markets have questioned the Fed’s hawkishness.

In terms of Treasury auctions, the three-year, ten-year, and 30-year (TLT) bonds worth $56 billion are scheduled to be offered this week.

The US Dollar Index (UUP) sank below the 96.0 mark on Tuesday, marking the continued depreciation of the US dollar against other major currencies.

Dallas’s Federal Reserve president, Robert S. Kaplan, said that the rebound in the US economy is likely to continue for the rest of 2017.

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.

US Treasuries (GOVT) had a mixed response to the FOMC statement and the Fed’s interest rate hike.

The US ten-year yield fell to 2.1% after the weak US data report, US inflation showed a decline of 0.1%, and retail sales fell by 0.3% for May 2017.

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.

Bond yields of U.S. Treasuries managed to recover from the losses of the previous week. Demand for US bonds receded.

Loretta J. Mester, president of the Federal Reserve Bank of Cleveland, said she doesn’t want the Fed to fall behind the curve.

Demand for fixed income securities will likely be subdued because of excess supply this week, which would mean additional support for bond yields.

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 Federal Reserve’s second last meeting of 2016 is now over, leaving only one meeting left in which the central bank can enact a rate hike.

Saudi Arabia has also been involved in the sale of US Treasuries. The country is the 15th-largest holder of US Treasury bonds in the world.

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 yield on US ten-year Treasury securities fell below the 1.6% mark for the first time on September 26, 2016 due to a rise in demand.

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.

The UK has taken over other countries as the most sought-after bond market destination, especially after the Brexit vote.