Fed Needs Goldilocks for Roach Motel Check-Out Oct 5, 2009
If the Fed perceives spreads between Treasuries and mortgages, for example, to be distorted, or if long-term interest rates dont rise with increases in the Feds target rate, the Fed could consider sales of those assets, Kohn said. That statement presumes the Fed knows the right level for spreads, according to , managing director at Combinatorics Capital LLC, a hedge fund in New York. (Bloomberg -- Columnists)
Offshore: A good time? Oct 4, 2009
"With the improvement in the global economy set to gain momentum, long-term interest rates will begin to rise (the trend has already turned in the US), resulting in capital losses in the bond market," says Du Plessis. "Cash is also not an option as rates are low and will probably remain so for some time to come. The international property market offers some good opportunities." ( for information on buying international property. (iAfrica.com)
Transcript of the Global Financial Stability Report Press Conference with Jose Viñals, Financial Counsellor and Director of the Monetary and Capital Markets Department Oct 2, 2009
Our analysis indicates that a 1 percentage point increase in the deficit relative to GDP increases long-term interest rates by 10-60 basis points, thus compounding the risk of adverse public debt dynamics. Countries with high debt-to-GDP ratios and large contingent liabilities are particularly vulnerable in this respect. (IMF News)
Plosser: Fed Will be Aggressive Oct 1, 2009
Plosser said the central bank's freedom from political interests is critical to its ability to achieve its objectives of maximum employment and stable prices and moderate long-term interest rates. "Research has shown that countries with more independent central banks have lower rates of inflation on average, without sacrificing real economic growth," Plosser said. (Newsmax)
IMF Cuts Forecast for Global Losses on Loans, Investments to $3.4 Trillion Sep 30, 2009
Governments need to commit to medium-term plans to ensure fiscal sustainability and avoid an increase in long-term interest rates, the lender said. The IMF predicted that financing an increase in budget gaps of 5 percent to 6 percent of gross domestic product may raise long-term borrowing cost by 150 to 200 basis points. (Bloomberg -- Germany)
Age of Austerity Awaits G-20 as $9 Trillion Debt Haunts Rogoff, Greenspan Sep 25, 2009
If long-term interest rates go up, that could be a damper. . (Bloomberg -- Canada)
Saturdays protest: Fed up with deficits or Democrats? Sep 15, 2009
2 percent; over two million new jobs have been created in the past year; the service sector is growing; inflation is low, as are long term interest rates; and U.S. companies are increasingly optimistic, bolstered by unprecedented cash flows. according to Goldman Sachs. (Atlanta Journal-Constitution -- Opinion)
Green shoots may still wither Sep 11, 2009
Long-term interest rates have risen sharply, reflecting supply pressures. The US 30-year rate has increased by about 1. (Sydney Morning Herald -- Business)
Deadline Nears for First-Time Homebuyer Tax Credit and State's Down Payment Advance Loan Program Sep 4, 2009
"Potential homebuyers are in a position of strength in terms of financing into a secure, mortgage option program at a time when we are seeing improved affordability conditions, historically low long-term interest rates and solid inventory levels.". While the federal tax credit deadline officially ends at midnight on November 30, consumers should be aware that the closing, not the contract signing, must take place before the expiration date. (PR Newswire)
Beyond the Crisis: Sustainable Growth and a Stable International Monetary System, Speech by Dominique Strauss-Kahn, Managing Director of the International Monetary Fund Sep 4, 2009
Given the scale of the problem, plans for achieving this adjustment are needed now to anchor market expectations and contain long-term interest rates. The most important step is to contain pension and health care costs. (IMF News)
Failure Caucus Sep 2, 2009
Niall Ferguson recently told the that he "won the argument" he and Krugman had about "the future path of long-term interest rates." (As this shows, he's done no such thing. . (Slate)
Poor social care may bring landslide for DPJ Aug 28, 2009
However, some analysts are concerned the party's ambitious spending plans could inflate an already sky-high public debt and push up long-term interest rates. The opposition Democratic Party of Japan has promised to reverse some of the labor laws that many blame for the evaporation of Japan's much-vaunted job for life, as well as increasing spending on child support, healthcare and employment benefits. (Xinhuanet, China)
Ben Bernanke: The very model of a modern central banker Aug 28, 2009
He also used conventional monetary policy, eventually cutting short-term interest rates close to zero and attempting to lower long-term interest rates by purchasing bonds. But the Fed needed a functioning financial system to transmit the benefits of such actions to the broader economy. (The Economist)
Clippers kept happy Aug 26, 2009
(They also move in reaction to changes in long-term interest rates, but not to the same extent as do government bonds. . (Asia Times Online)
Bernanke faces criticism and a tough job, once again Aug 26, 2009
But ultimately, when the economy plunged following the failure of Lehman Brothers last fall, Bernanke and the Fed took creative, aggressive actions, including providing loans to bolster money market funds under pressure from investor runs, buying short-term debt to allow companies to finance day-to-day operations, and purchasing Treasury, mortgage-backed, and other securities to lower long-term interest rates and keep credit flowing. Each of these programs was a parachute deployed to get us to... (Boston Globe)
Trichet Says He Can't Rule Out `Very Bumpy Road Ahead' as `Free Fall' Ends Aug 23, 2009
Trichet said the ECBs approach was aimed at meeting its primary aim of price stability, influencing long-term interest rates and encouraging bank lending, which plays a bigger role in the European economy than elsewhere. It had succeeded in leaving no discernable doubt that it would deliver stable prices, while also easing the liquidity constraints at banks, he said. (Bloomberg -- Europe)
Bernanke optimistic about recovery Aug 22, 2009
The massive amount of borrowing could push up long-term interest rates, if foreign investors balk at buying up U.S. debt. Assessing the extraordinary events of the last year, Mr. Bernanke argued that aggressive action by countries around the world prevented a collapse that would have been even more catastrophic than the meltdown that actually occurred. (Pittsburgh Post-Gazette, PA)
U.S. to trim billions off deficit estimate Aug 21, 2009
Investors are worried that record budget deficits will need to be funded by issuing massive amounts of government bonds, which could drive up long-term interest rates and undermine a sustainable economic recovery. Obama has vowed to halve the deficit by the end of his four-year term, but he says massive government spending is needed now to end the country's worst recession since the Great Depression of the 1930s. (MSNBC -- Politics)
* Chinese arent going to end the economic crisis Aug 19, 2009
To make matters worse it now has an exploding budget deficit and gently rising long-term interest rates. There is a very real risk of a double-dip recession in the US.. (Taipei Times, Taiwan -- World Business)
Trouble Ahead: Obama And The Fed Aug 18, 2009
That might push long-term interest rates up, making it more expensive for businessmen to invest, and more costly for consumers to take their already-decreasingly deployed credit cards out of their purses and wallets, perhaps aborting the recovery. The rise in interest rates would, under those circumstances, undoubtedly be accompanied by a rise in the presidential blood pressure. (CBS News)
Rush is on to lock in fixed-rate loans Aug 15, 2009
Fixed-rate loans are priced on long-term interest rates, which generally start moving higher before official rates. Unfortunately for borrowers, global money markets started betting on a recovery about a month ago, which meant banks such as Commonwealth and Westpac started lifting fixed rates then. (Sydney Morning Herald -- Business)
Rand range bound Aug 14, 2009
Dow Jones Newswires reports that the euro and dollar fell against the yen in Asia on Friday as weak Chinese stocks and lower US long-term interest rates prompted players to sell those units for the Japanese currency. Japanese exporters joined in the selling on a regular settlement day, dealers said, while the dollar came under further pressure ahead of the redemption of US Treasuries on 17 August. (iAfrica.com)
Fed Steps Back (Slowly) Aug 14, 2009
Almost after launching what would eventually become an unprecedented intervention in the U.S. economy, the central bank announced it would end its purchases of $300 billion in U.S. , which was designed to decrease long-term interest rates, by the end of October. The Fed said economic activity is "leveling out" but also cautioned it is still "likely to remain weak for a time.". (Slate)
Fed begins rolling back the rescue Aug 13, 2009
With that bad public image, and mixed evidence on whether the program was succeeding at pushing down long-term interest rates and improving market functioning, the Federal Open Market Committee indicated Wednesday that it will "gradually slow the pace of these transactions" and complete the purchases by the end of October ... Substantively, the purchase of mortgage securities should have a similar economic impact to the purchase of Treasury bonds: Both consist of printing money and expanding the... (MSNBC -- Race)
* Another stimulus is crucial for the global economy Aug 12, 2009
Nevertheless, there is some concern that growing inflationary expectations might result in rising long-term interest rates, offsetting the benefits of the stimulus. Here, monetary authorities must be vigilant and continue their non-standard interventions X managing both short-term and long-term interest rates. (Taipei Times, Taiwan -- Sports)
Immediate Annuities: A Safe Way to Boost Your Retirement Income Aug 11, 2009
How MuchThe amount of monthly income you'll receive from an immediate annuity will depend on your age (the older you are the more you'll get), gender (women receive slightly less because they tend to live longer), the size of your investment, long-term interest rates and any special features you choose. For example, in exchange for a $100,000 lump-sum payment, a 70-year-old woman could get around $700 every month for the rest of her life. (Human Events Online)
New Zealand's Economy Can Recover as Currency Rises, Westpac Banking Says Aug 10, 2009
Bollard on July 30 said he an economic recovery based on a lower currency and long-term interest rates. If the recovery is put at risk, the central bank may reassess policy settings, he said. (Bloomberg -- Australia & New Zealand)
Freddie Mac Releases Second Quarter 2009 Financial Results Aug 8, 2009
2 billion, mainly related to net mark-to-market gains due to increases in long-term interest rates ... 2 billion in gains on the company's derivative portfolio and guarantee asset, which were primarily driven by net mark-to-market gains due to increases in long-term interest rates ... 2 billion on its derivative portfolio and guarantee asset, compared to gains of $25 million recorded in the first quarter of 2009, primarily driven by net mark-to-market gains due to increases in long-term interest... (PR Newswire)
Upbeat ECB keeps rates steady Aug 7, 2009
He also said the ECB had no intention of scaling back its plan to buy 60 billion euros in covered bonds - one of its unconventional policies to revive growth by lowering long-term interest rates - despite a fairly slow start. The euro zone's gross domestic product plunged 2. (Sydney Morning Herald -- Business)
BofEs shock move Aug 7, 2009
The measure, known as quantitative easing, is a drastic way to push down bond yields, and with them the long-term interest rates that prevail in the economy. The news was preceded by a debate between those who thought the bond purchases were over, and those who thought the Bank would buy another 25bn. (FT.com -- Markets)
Greenspan sees US recovery quickening Aug 3, 2009
Greenspan has responded that a surge in growth in China and other emerging markets led to an excess of savings that pushed global long-term interest rates down between early 2000 and 2005, contributing to the housing boom. In congressional testimony last October, he conceded his free-market ideology shunning regulation was flawed, adding he was partially wrong in opposing regulation of derivatives. (Sydney Morning Herald -- Business)
No escape for Fed Jul 30, 2009
"Moreover, agreeing on a sustainable long-run fiscal path now could yield considerable near-term economic benefits in the form of lower long-term interest rates and increased consumer and business confidence. Unless we demonstrate a strong commitment to fiscal sustainability, we risk having neither financial stability nor durable economic growth.". The last sentence of the quote could have been re-worded as: "Unless we demonstrate a strong commitment to monetary sustainability, we risk having... (Asia Times Online)
Rand in consolidation period Jul 29, 2009
The market will be watching US economic data and a US Treasuries auction later in the day, with weak US data or a rise in long-term interest rates on a poor auction likely to weigh on the dollar, traders said. Related Articles. (Business Report, South Africa)
Public Information Notice: IMF Executive Board Concludes Article IV Consultation with Brazil Jul 29, 2009
While the net debt ratio is expected to increase this year and public financing needs remain large, at approximately 19 percent of GDP, long-term interest rates have remained below the levels prevailing a year ago. Executive Board Assessment. (IMF News)
S&P not as upbeat on deficit as other agencies Jul 28, 2009
This has consequences for domestic interest rates, as the government's demands on the local capital market will drive long-term interest rates higher, which, in turn, will raise the state's borrowing costs. "Furthermore, if the public sector's fiscal expansion were perceived to be excessive, this could affect the risk appetite of non-residents, increasing the risk of a renewed exchange rate adjustment," S.. (Business Report, South Africa)
Matt Reed: Economist weighs in on issues Jul 26, 2009
The con is if you run a legacy of deficits through the years, that can impact long-term interest rates, which can impact growth potential. You have to make a decision. (Florida Today)
Town issues low interest bonds Jul 24, 2009
He described this practice as, "a strategy for avoiding long term interest rates." Current annual bonds mature with interest of approximately 4 percent compared with long term bonds which have interest rates between 3 and 4 percent. The difference is that the long term rates are guaranteed in the bond agreement. (Fairfield Minuteman, CT)
First Financial Northwest, Inc. Reports Second Quarter 2009 Financial Results Jul 24, 2009
Our actual results, performance, or achievements may differ materially from those suggested, expressed, or implied by forward-looking statements as a result of a wide variety or range of factors including, but not limited to: the credit risks of lending activities, including changes in the level and trend of loan delinquencies and write-offs that may be impacted by deterioration in the housing and commercial real estate markets and may lead to increased losses and nonperforming assets in our... (Primezone Releases)
Beacon Hill Roll Call Jul 24, 2009
The MTA was betting that short-term interest rates would stay below long-term interest rates. It was wrong. (Hamilton Wenham Chronicle, MA)
Bernanke Defends Fed's Actions Before Congress Jul 22, 2009
Congressional meddling in Federal Reserve decision-making there are proposals to increase Congress's audit authority over the Fed could bring a "perceived loss of monetary policy independence" that "could raise fears about further inflation, leading to higher long-term interest rates and reduced economic and financial stability." And so on. It's hard to tell whether the Fed is in any actual danger from its congressional critics. (Time.com)
READ THE TESTIMONY: Bernanke's semiannual monetary report Jul 22, 2009
Moreover, agreeing on a sustainable long-run fiscal path now could yield considerable near-term economic benefits in the form of lower long-term interest rates and increased consumer and business confidence ... A perceived loss of monetary policy independence could raise fears about future inflation, leading to higher long-term interest rates and reduced economic and financial stability. (USA Today -- Money)
Was Enron right? Jul 22, 2009
Indeed, since long-term interest rates declined steadily from 1981 to December 2008, many traders in the debt area were able to spend their entire careers in an arena in which a modest level of profit, year after year, was built into the structure of their operations. Yes, there was the occasional year in which short-term and long-term interest rates backed up, but the last such year in which debt trading was economically unattractive was as long ago as 1994. (Asia Times Online)
Bernanke Is Ranked World's Best at Handling Financial Crisis, Survey Shows Jul 22, 2009
More than half the investors polled expect long-term interest rates to rise over the next six months as global growth picks up. Among equity investors, 52 percent foresee higher yields, compared with 49 percent of fixed-income investors. (Bloomberg)
Bernanke not yet ready to ease accelerator Jul 22, 2009
"A perceived loss of monetary policy independence could raise fears about future inflation, leading to higher long-term interest rates and reduced economic and financial stability," he said. Recommend. (Yahoo! Asia News)
IBERIABANK Corporation Reports Second Quarter 2009 Results Jul 22, 2009
Due to significant unrealized gains in the Company's investment portfolio and management's expectations of higher long-term interest rates, the Company previously disclosed its intent to sell selected investment securities which would likely generate realized gains on the sale of those instruments. During the second quarter of 2009, the Company recorded investment security sales (net of purchases) totaling approximately $62 million in market value resulting in realized gains of $5. (PR Newswire)
Bank of Japan Will Consider Length of Each New Credit Policy Individually Jul 21, 2009
Some members said an increase in long-term interest rates owing to concern among investors about fiscal discipline might hurt the economy. If rates rise too fast relative to the pace of economic recovery, this might pose a downside risk to the outlook for the economy, they said. (Bloomberg -- Japan)
Deloitte: Consumer spending rises in June Jul 15, 2009
However, recent increases in long-term interest rates could have a negative impact on the housing market. Reader Comments. (Charlotte Business Journal, NC)
Worst yet to come: White House economic advisor... Jul 12, 2009
I actually think that the right measures for doing the right things about the long-run deficit will also increase confidence, hold down long-term interest rates and capital costs, make mortgages cheaper, make mortgage rates lower and so will contribute directly to recovery. So I dont buy the notion that there is some conflict between the budget imperative for growth and some other budget imperatives. (The Drudge Report)
9 comments Jul 11, 2009
It warned of the nation's growing debt and deficit, calculating their impact on long-term interest rates. The Fed's conclusion. (Human Events Online)
Kohn Warns Congress on Meddling in Fed's Affairs Jul 10, 2009
Fed Vice Chairman Donald Kohn said opening up some of the U.S. central bank's most sensitive decisions to political scrutiny could result in higher long-term interest rates and hurt the United States' credit rating ... "Any substantial erosion of the Federal Reserve's monetary independence likely would lead to higher long-term interest rates as investors begin to fear future inflation," Kohn told a House subcommittee. (ABC News -- Wire)
* Fed more worried about deflation than inflation Jul 5, 2009
Risk premiums, rather than inflationary concerns, have caused recent gains in long-term interest rates, Edelberg said. Investors are rediscovering their appetite for risk and they are getting out of Treasuries into other kinds of investments, she said. (Taipei Times, Taiwan -- Business)
Did the Banks Eat Our Cookies? Jul 4, 2009
It was founded in the 1913 Federal Reserve Act "to promote effectively the goals of maximum employment, stable prices, and moderate long-term interest rates." In other words, its job is to make sure everyone in the country has a job and keeps earning, spending, and investing. Sounds like a tall order, doesn't it. (Slate)
No time to cut state spending despite rising budget deficit Jul 4, 2009
The gap between state spending and revenue is widening rapidly, according to the latest Treasury figures for May, but economists agree that the government should not cut spending now even though a growing budget deficit will put pressure on long-term interest rates ... Schussler said: "We'll struggle to come in under a 5 percent deficit. We will have to borrow more, and that will push long-term interest rates up. That is a concern when we are putting big capital projects in place.". (Business Report, South Africa)
Recession's End Close but Recovery Slow to Gather Strength, BNA Survey Finds Jul 3, 2009
Long-term interest rates as measured by the yield of the 10-year Treasury bond will rise to 4. 33 percent by the end of 2010 from an average 3. (PR Newswire)
S Korea's annual growth likely to hit 4.9% in 2011-2017: OECD Jun 29, 2009
The OECD, however, expected South Korea would see a sharp rise in consumer inflation and long-term interest rates, which will stand at the peak in 2017. South Korea's consumer inflation rate is expected to come in at 2 percent and 3 percent in 2010 and 2017, respectively, which is the second-highest among the OECD members, the OECD said. (Xinhuanet, China)
What the Fed's Decision Means for Mortgage Rates Jun 27, 2009
"This indicates that the committee will now wait and see how the implemented monetary (and fiscal) policies will work out and that it will likely refrain from expanding the existing monetary policy programs designed to bring down long-term interest rates, unless the economic conditions take a turn for the worse," Katrin O'Connor, a staff economist at the National Association of Federal Credit Unions, said in a report. 4. (Yahoo News -- Top Stories)
OECD says recession near low-point Jun 25, 2009
At the same time, the OECD noted that long-term interest rates, as determined by bond yields, would be under pressure to rise as governments issued more bonds to raise funds for stimulus packages and other measures. "The economic crisis will cast a long shadow," the OECD said, noting that economies would emerge from it with a lower potential for sustainable growth than they had before the crisis. (Yahoo! Asia News)
FOMC Likely to Stand Pat on Federal Funds Rate Jun 24, 2009
After its two-day meeting Wednesday, the Federal Open Market Committee might tweak plans to purchase billions of dollars worth of U.S. Treasurys, an ambitious initiative to help keep long-term interest rates in check. And the policy panel might provide a slightly more upbeat description of the economy. (SmartMoney)
Leading indicator signals growth cycle Jun 23, 2009
Also positive was that long-term interest rates were higher relative to short-term rates - a sign that economic activity is expected to improve. There have been similar signs in the global economy. (Business Report, South Africa)
Wonk Watch 6.22.09 Jun 23, 2009
Brad DeLong seconded Paul Krugman in a fear mongers, supporting his fellow economist's argument that long-term interest rates rise, rather thanfall,with optimism. He also stood beside Krugman against Washington Post columnist Robert Samuelson's take on a , (gleefully) gleaning an opportunity to and repeat his favorite mantra: "Why, oh why, can't we have a better press corps?". (Slate)
Obama pitches Fed plan Jun 23, 2009
Concern is growing about both long-term interest rates, and inflation related to the extraordinary interventions of past months. Reader Comments. (Denver Business Journal, CO)
Fed unlikely to launch new efforts after meeting Jun 22, 2009
"Some Fed members worry additional action could be counterproductive and actually push long-term interest rates higher because investors will fear that the Fed's actions could lead to runaway inflation down the road," said Mark Zandi, chief economist at Moody's Economy. com. (MSNBC -- Business)
India's fiscal position suggests caution: Moodys Jun 19, 2009
Excess capacity, slowly recovering external demand, and relatively high long-term interest rates will drag on investment. Although the government has a strong majority in parliament, political will is required to cut popular subsidies and modernise labour laws. (India Times)
Canadian Consumer Prices Recorded an Unexpected Annual Increase Last Month Jun 19, 2009
The time commitment can help reduce long-term interest rates, which are largely a reflection of expected future short rates, , deputy governor of the Bank of Canada, said in a speech last month. Swap Rates Rising. (Bloomberg -- Canada)
No conundrum, again Jun 16, 2009
And, importantly, the perception that the Fed could set artificially low long-term interest rates - hence Treasury funding costs - worked to bolster a more optimistic reading of the US fiscal position (not to mention the US household balance sheet). Yet a much more uncertain world is emerging. (Asia Times Online)
