More Hints That QE Will Not Be Unwound Any Time Soon; Implications May Continue To Be Bullish For Treasury Bond Prices

The Fed is hinting that quantitative easing is here to stay:  there may be no unwinding of its expanding balance sheet in 2015.  Bloomberg.com reports (LINK):

A decision by the Federal Reserve to expand its bond buying next week is likely to prompt policy makers to rewrite their 18-month old blueprint for an exit from record [...]

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Are Chinese Stocks Signaling Yet Lower Lows In U.S. Interest Rates?

What do Chinese equities have to do with U.S. interest rates?  Perhaps more than one would think.  This is a multi-year chart of the Shanghai Composite (stock) Index:

 

Anyone who has a passing familiarity with what’s happened to U.S. interest rates the last several years can see there is a close correlation between [...]

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In A Paper Money System, All Assets Are Backed by the Treasury Bond

What backs the money in the present irredeemable paper system?  Start by considering this brief anecdote.  Joe buys some equipment from John, to be paid Net 30.  We say that Joe owes John $10,000.  Next month, Joe comes back and gives the money to John.  Joe is out of debt, but [...]

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Flight To Safety Broadens From Government Bonds To Include a Non-Barbarous Non-Relic

Gold was up 2+% along with a record low closing yield on the 10-year Treasury bond today as news out of Europe deteriorated.  Yet, inflation-linked assets such as oil and copper were down in price.  Thus we are seeing a rerun of periods in 2008 and 2011.  In both those summers and into the fall, [...]

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Here’s The Really Important Financial Market News Of the Day

The real news to investors and traders is not the latest protestation out of the Greek government that its finances are even worse than previously stated and that private investors need to think even smaller.  It is not the “resiliency” of the stock market that again opened down a little and then “showed strength” by [...]

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Goldman Says ‘Operation Twist’ Is Going To Be $300-$400 Billion

Will the Fed adopt “Operation Twist”, that failed policy tried in the 1960s? Goldman Sachs thinks so:

Economists at Goldman Sachs said in a note late Monday that they expect the Fed, in increasing the average maturity of its bond holdings to stimulate the economy, to purchase a net $300-$400 billion in 10-year equivalent debt — [...]

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A Historical Look At Dividend Yields and Stock Prices

The chart below is a chart of the dividend yield on the S&P 500 (or a synthetic version of such before the modern version began in 1950.  This courtesy of the excellent site multipl.com.

 

 

The above chart is for those many people who won’t buy a Treasury or high-grade corporate bond . . [...]

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