News 

10-year Treasury yield surges to highest level since early 2014

“The 10-year Treasury yield hit its highest level since January 2014, nearing the critical 3pc milestone, on signs the US Federal Reserve looks set to hike interest rates at least two more times this year” writes Alan Kirkland for telegraph.co.uk. The yield on the 10-year Treasuries – the benchmark borrowing cost for international finance – hit 2.96pc, up 5 basis points, on Friday evening.Bond prices also move in an opposite direction to interest rates and the surge in yields on Friday came on the back of comments by Fed governor Lael Bainard that the…

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Markets News Stocks 

Stock market trades near session lows as rise in U.S. government bond yields spooks Wall Street

“In other, higher yields can mean higher costs for U.S. corporations” writes Mark Decambre for marketwatch.com. LeBas said higher inflation expectations, notably fueled by a rise in crude-oil futures CLK8, +0.22% also was nudging yields on long-dated government debt higher.The Dow Jones Industrial Average on Thursday was trading near the lows of the session as a steady rise in the rates of long-dated Treasurys weighed on buying appetite for stocks.However, the jump in yields was causing a broader reassessment of of equity values against other asset considered less risky, market…

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Tax policy is a bore, until they take your Social Security and Medicare away

“In other words, the tax act subsidizes firms that buy robots over firms that hire new workers” writes Edward Kleinbard for latimes.com. The U.S. did need business tax reform.A 25% business tax rate combined with a phase-out of interest expense deductibility would yield a more economically neutral system that still would be highly competitive on the world stage.But what Congress delivered went far beyond any economic rationale: a corporate tax rate of 21%, immediate expensing (write-offs) of all investments and the continued deductibility of most business interest expenses. And the…

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News Regulators 

Fed’s minutes got it wrong, says Bullard: Not all members see need for higher interest rates

“Treasury yields TMUBMUSD10Y, -0.45% have moved higher this week as investors brace for higher interest rates” writes Senior Economics Reporter for marketwatch.com. There is not need to have a “permanent” move in interest rates to counter a “temporary” fiscal impulse, he added.The current level of rates “is quite close to neutral right now,” Bullard said, neither boosting or dampening inflation. Source: marketwatch.com Share This:

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These beaten-down stocks look like bargains — and yield up to 8.1%

“Now it looks as if investors could be underappreciating another Swedish strength: its big banks” writes Markets Writer for marketwatch.com. Challenger banks – newcomers to the mortgage business – have taken market share from Sweden’s big four over the past three years.Check out: Spotify’s non-IPO may serve as a model, but only for certain companies Bulls on Sweden’s banks are also talking up a boost from rising interest rates.In a recent note JPMorgan analyst Vivek Gautam argued that market concerns about Swedbank’s loan growth and profit margins are overblown.Investor should…

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News Regulators 

Treasury yields pull back ahead of inflation report, Fed minutes

“Treasury prices rose and yields pulled back on Wednesday as rising political tensions lured haven bids ahead of the latest update on U.S. inflation and central-bank monetary policy” writes Mark Decambre for marketwatch.com. The 10-year Treasury note yield TMUBMUSD10Y, -1.17% slipped 0.9 basis point to 2.790%, and the two-year note yield TMUBMUSD02Y, -0.71% retreated by 1.6 basis points to 2.299%, coming off its highest level since March 20.The 10-year German bond yield TMBMKDE-10Y, -4.21%  fell to 0.499%, compared with 0.515% in the previous session, according to FactSet data.Meanwhile, the 30-year…

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4 risk factors could reset the yield curve

“However, we are also closely watching four important risk factors that could cause a re-set in the long-end of the yield curve as well” writes Kelsey Berro for businessinsider.com. For a Treasury curve trader, a view on Fed policy is crucial because monetary policy is a major driver of yield curve volatility.The Treasury yield curve attracts a great amount of attention because of the important information embedded within it.To achieve a positive return on a curve flattening trade, the actual treasury curve must flatten even more than the forwards imply.Despite a softening…

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Proper cloud seeding can yield economic benefits: expert

“He further explained that by employing cloud seeding techniques precipitation amounts can be increased by 20 percent in some regions” reports tehrantimes.com. In the end, cloud seeding has strong supporters, but it remains controversial.Scientists may not be sure if cloud seeding actually works, but despite the skepticism, China is moving forward.Nonetheless, the American Meteorological Society claims that some studies on cloud seeding show a 10 percent increase in rain volume. Source: tehrantimes.com Share This:

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Markets News Stocks 

Why stocks could fall nearly 40% over the coming 18 months

“The yield curve refers to the line plotting yields across all Treasury maturities, shortest to longest” writes Markets Reporter for marketwatch.com. No doubt, many investors are wondering how bad things could get, and how far the market could reasonably fall.The third scenario—where stocks are discounted for the prospect of a recession in the coming two years—“feels the most logical right now, if only because the US Treasury yield curve continues to flatten,” he wrote. Source: marketwatch.com Share This:

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Here’s why you shouldn’t blame Washington for recent market volatility

“Since the start of February equity volatility, as measured by the VIX Index, has averaged nearly 21” writes Russ Koesterich for businessinsider.com. As discussed in previous blogs, high yield spreads are one of the best coincident indicators of equity volatility.Since then, high yield spreads have widened by approximately 40 basis points (bps, or 0.40%), the largest jump since last August.All of the above suggests higher volatility, particularly when compared to last year.High yield spreads bottomed in late January, coincident to the peak in equity markets. Source: businessinsider.com Share This:

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