Showing posts with label Ben Bernanke. Show all posts
Showing posts with label Ben Bernanke. Show all posts
Friday, 21 June 2013
Friday, 14 September 2012
On 13 September 2012, Ben Bernanke announced a third round of quantitative easing also known as QE3. What the federal reserve will do is buy $40 billion in MBS and $45 billion in 10-30 year bonds per month. So a year from now, the federal reserve will have bought $480 billion in MBS and $540 billion in 10-30 year bonds.
So basically, the federal reserve will try to spur growth by helping the mortgage market and the bond market. But there is a catch in the deal. What investors need to pay attention to is the yearly interest payment on the U.S. government debt.
As you can see, the interest payments on total U.S. debt (blue dots) follow the total U.S. public debt outstanding (red dots). The higher the U.S. debt, the higher the interest payments on this debt.
What will this mean for investors? Read it here.
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What will this mean for investors? Read it here.
Friday, 7 September 2012
In a previous article in March 2012 I pointed out that it was the perfect time to get out of U.S. bonds and go into eurobonds. Just recently we have a huge confirmation that the market is favoring European bonds (EU) over U.S. bonds (TLT) (Chart 1). We see that the WisdomTree Dreyfus Euro ETF (EU) has shot upwards on 21 August 2012 on news that the ECB would buy Italian and Spanish bonds. That day, the euro jumped to a seven-week peak against the U.S. dollar.
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| Chart 1: TLT Vs. EU |
U.S. bonds yields have not kept pace (yields have not risen) with the rise of european bonds according to the correlation in Chart 1. So investors should quickly take action. Read more here.
Monday, 11 June 2012
While many investors want to believe that U.S. treasuries (TLT, DTYL) are a safe haven, I will use this article to debunk that myth with plain hard evidence. I believe holding U.S. bonds is the worst investment going forward.
I will make an in depth analysis on debt maturities in this article. I think all investors need to be aware of this trend that indicates looming default in U.S. bonds.
I will make an in depth analysis on debt maturities in this article. I think all investors need to be aware of this trend that indicates looming default in U.S. bonds.
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