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Tag Archives: Interest rates

Brian Romanchuk — Japan And The Costs Of Bond Yield Control

The dangers of distorting free market interest rates is one of the bits of market folklore that keeps getting passed around. There is actually not a whole lot of data to defend this view; it is best viewed as faith-based reasoning. This topic is particularly interesting in the case of Japan. I am somewhat agnostic on this issue; I do not see particular risks from manipulating the yield curve in the current environment, yet I can see some plausible dangers. This article was triggered by the...

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What Is Wrong with the Bank of England’s Decision Today?

The BoE’s decision to raise the Bank Rate to 0.75% is a mistake. It is a mistake comparable to those made by Alan Greenspan’s Federal Reserve in the years between 2003 and 2006.  It is a mistake that must be understood in a wider context. Not just the political context – which promotes ‘monetary radicalism and fiscal conservatism’ – to quote David Cameron and George Osborne. But also in a wider monetary policy context.  As the governor of the Bank pointed out recently: ‘the Bank is the only...

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Zero Hedge — Bank Sector In Peril As Refi Activity Crashes Amid Rising Rates

As Black Knight writes, it looks at the – quite dramatic – effect the mortgage rate rise has had on the population of borrowers who could both likely qualify for and have interest rate incentive to refinance. It finds that the number of potential refinance candidates has tumbled to the lowest since December 2008.... To be sure, it is hardly a shock that after a decade of record low rates, the current rise in rates means a collapse in refi activity: after all anyone who could, and would,...

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US Rates: Real or Expectations?

By Marc Chandler Originally published on Marc to Market There is a general understanding of what happened last week. The 2.9% rise in average hourly earnings in the US reported, the fastest since 2009 spurred fears of rising inflation. The jump in US interest rates triggered equity sales and a spike in volatility, which in turn spurred the unwinding of low vol bets that had been paying off handsomely. While this consensus narrative has much to recommend itself, there is a...

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US Rates: Real or Expectations?

By Marc Chandler Originally published on Marc to Market There is a general understanding of what happened last week. The 2.9% rise in average hourly earnings in the US reported, the fastest since 2009 spurred fears of rising inflation. The jump in US interest rates triggered equity sales and a spike in volatility, which in turn spurred the unwinding of low vol bets that had been paying off handsomely. While this consensus narrative has much to recommend itself, there is a...

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Italian Election–Two Months and Counting

By Marc Chandler (originally published at Marc to Market) Germany does not have a government, though the election was more than three months ago.  Spain, Portugal, and Ireland have minority government.  Austria is the first government since the financial crisis to include the populist right.  The EU is trying to press Visegrad group of central European countries to conform to the values of...

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