Comments on: The U.S. Treasury is getting ready for the day the Fed raises interest rates http://jubakpicks.com/2009/11/06/the-u-s-treasury-is-getting-ready-for-the-day-the-fed-raises-interest-rates/ Sat, 19 May 2012 20:47:22 +0000 hourly 1 http://wordpress.org/?v=3.3.1 By: Jim Jubak http://jubakpicks.com/2009/11/06/the-u-s-treasury-is-getting-ready-for-the-day-the-fed-raises-interest-rates/comment-page-1/#comment-1713 Jim Jubak Tue, 10 Nov 2009 17:24:09 +0000 http://jubakpicks.com/?p=2065#comment-1713 kelvinator, That's exactly what a rational expectations economist would argue. Investors anticipating that rae increases are coming are acting now on those expectations, which pretty much guarantees that actual interest rates will move higher well in advance of any move by the Fed. kelvinator, That’s exactly what a rational expectations economist would argue. Investors anticipating that rae increases are coming are acting now on those expectations, which pretty much guarantees that actual interest rates will move higher well in advance of any move by the Fed.

]]> By: grindy2424 http://jubakpicks.com/2009/11/06/the-u-s-treasury-is-getting-ready-for-the-day-the-fed-raises-interest-rates/comment-page-1/#comment-1703 grindy2424 Mon, 09 Nov 2009 05:36:46 +0000 http://jubakpicks.com/?p=2065#comment-1703 The Chinese haven't shown a ton of savvy in this area as they lost quite a bit before the downturn. Jim has discussed the end of the carry trade as soon as this happens and it is looking more and more like this will be an explosive one. In my opinion as well this is China and India using more of a "power" approach to the US tightening its monetary policy. If there is serious worry about the dollar following and central governments can somewhat force the US into a tighter policy IMO. Also I'm not so sure the interest rate hikes will kill the stock market rally, but it will definitely dampen the carry trade and put a large correction in commodities. Even if we go up to 2% interest rates those will be low on a historic level. I think we will see rates go up, commodities/emerging markets correct 25-35%, and the market stay in a trading range until banks repair their balance sheets. There are still great opportunities in the alternative energy sector as well. I suspect a lot of speculative money from oil will start shifting into here as traders anticipate the interest rate rise. The Chinese haven’t shown a ton of savvy in this area as they lost quite a bit before the downturn.

Jim has discussed the end of the carry trade as soon as this happens and it is looking more and more like this will be an explosive one.

In my opinion as well this is China and India using more of a “power” approach to the US tightening its monetary policy. If there is serious worry about the dollar following and central governments can somewhat force the US into a tighter policy IMO.

Also I’m not so sure the interest rate hikes will kill the stock market rally, but it will definitely dampen the carry trade and put a large correction in commodities. Even if we go up to 2% interest rates those will be low on a historic level.

I think we will see rates go up, commodities/emerging markets correct 25-35%, and the market stay in a trading range until banks repair their balance sheets.

There are still great opportunities in the alternative energy sector as well. I suspect a lot of speculative money from oil will start shifting into here as traders anticipate the interest rate rise.

]]> By: robert1234 http://jubakpicks.com/2009/11/06/the-u-s-treasury-is-getting-ready-for-the-day-the-fed-raises-interest-rates/comment-page-1/#comment-1700 robert1234 Sat, 07 Nov 2009 22:58:44 +0000 http://jubakpicks.com/?p=2065#comment-1700 The interest rate hike thing really worries me. I know it will kill the stock market, but will also kill the rally in gold, and commodities ? Gold is being pushed up by a global surplus of money, but rates across the planet are going up. But, India just bought 200 tons of gold, and china is buying 200 more. And China is on a commodities buying binge. IE: getting out of US dollars. That would imply no faith in the dollar.. Butt, US rates are going to go up , so, are China and India stupid ? Or, am I missing somthing ? Did China and India just make the horrundus financial mistake of going against the dollar, just before a dollar rally ? The interest rate hike thing really worries me. I know it will kill the stock market, but will also kill the rally in gold, and commodities ?
Gold is being pushed up by a global surplus of money, but rates across the planet are going up.

But, India just bought 200 tons of gold, and china is buying 200 more. And China is on a commodities buying binge. IE: getting out of US dollars. That would imply no faith in the dollar..

Butt, US rates are going to go up , so, are China and India stupid ? Or, am I missing somthing ?

Did China and India just make the horrundus financial mistake of going against the dollar, just before a dollar rally ?

]]> By: kelvinator http://jubakpicks.com/2009/11/06/the-u-s-treasury-is-getting-ready-for-the-day-the-fed-raises-interest-rates/comment-page-1/#comment-1693 kelvinator Sat, 07 Nov 2009 00:40:48 +0000 http://jubakpicks.com/?p=2065#comment-1693 Doesn't it seem likely, Jim, that the bond market itself will react to the fact that the Treasury is beginning to anticipate increasing rates by adding momentum to the rate increases? Already, I understand the Chinese have shown less interest in the longer term debt, so moving further out in maturity may find less auction interest, even if they try to ease the process using TIPs for the longest term. I would guess that most bond investors know that TIPs are better than regular bonds in an inflationary environment, but that they aren't likely to come close to addressing the damage of real world price inflation since the government has fiddled with the CPI so much in the last 20 years. If the market catches a whiff of the fact that the gov't think rates are going up and are offering less short term debt, it seems the move could snowball. Doesn’t it seem likely, Jim, that the bond market itself will react to the fact that the Treasury is beginning to anticipate increasing rates by adding momentum to the rate increases? Already, I understand the Chinese have shown less interest in the longer term debt, so moving further out in maturity may find less auction interest, even if they try to ease the process using TIPs for the longest term. I would guess that most bond investors know that TIPs are better than regular bonds in an inflationary environment, but that they aren’t likely to come close to addressing the damage of real world price inflation since the government has fiddled with the CPI so much in the last 20 years.

If the market catches a whiff of the fact that the gov’t think rates are going up and are offering less short term debt, it seems the move could snowball.

]]> By: Billy T http://jubakpicks.com/2009/11/06/the-u-s-treasury-is-getting-ready-for-the-day-the-fed-raises-interest-rates/comment-page-1/#comment-1688 Billy T Fri, 06 Nov 2009 18:13:46 +0000 http://jubakpicks.com/?p=2065#comment-1688 "That’s the kind of move you’d make if you thought that investors might be getting worried about inflation and be looking for really long-term inflation protection." Buying TIPs may be the only way China will keep financing the US deficits for a few years more. “That’s the kind of move you’d make if you thought that investors might be getting worried about inflation and be looking for really long-term inflation protection.”

Buying TIPs may be the only way China will keep financing the US deficits for a few years more.

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