David Kirkpatrick

January 26, 2010

Four new asset bubbles to watch

Filed under: Business — Tags: , , , , , , — David Kirkpatrick @ 3:15 pm

Oh, man.

From the link:

Less than two years after the housing market collapsed, the U.S. economy is threatened by a new bubble in asset prices. This time, four billowing balloons are hovering: two commodities — gold and oil — stocks, and government bonds.

Don’t be fooled into thinking that last week’s 5% drop in the S&P, and the recent sell-off in oil, remotely makes them fairly valued, let alone bargains. Equities and commodities, as well as Treasuries, which actually rallied as stocks dropped, still have a long way to fall. The reason: They’ve already seen huge run-ups that put their prices far above their historic averages, and far above the levels justified by fundamentals.

November 20, 2009

The T-bill collapse is troubling

Filed under: Business — Tags: , , , , — David Kirkpatrick @ 1:58 pm

Very troubling, actually …

From the link:

IT’S THE CRASH YOU DIDN’T HEAR. Not in the price of any security market, but in short-term U.S. Treasury yields.

Treasury bills once again were trading at negative interest rates Thursday, a mind-boggling state of affairs that hasn’t existed since the panic late last year. That followed the collapse of Lehman Brothers and the assorted knock-on effects, notably the run on money-market funds after the Reserve Fund “broke the buck.”

More significantly, the yield on the two-year Treasury note — the most actively traded security on the planet — fell to 0.669% Thursday, within a hair of the low of 0.657% set in the dark days of last December, according to data on Barrons.com’s Market Data Center.

But now, the economy is supposed to be well on the way to recovery, in contrast to late last year when it seemed we stood on the precipice of a second Great Depression. The Dow is back above 10,000 and bulls claim all’s right with the world. Why, then, would any rational investor be willing to lock up money for two years for the paltry return of less than two-thirds of 1%?

December 7, 2008

Treasury yields almost nil

Filed under: Business, Politics — Tags: , , , — David Kirkpatrick @ 7:48 pm

This news is just nuts. I don’t even have anything to add …

From the link:

The panic in global financial markets has sparked an unprecedented rush into safe US Treasury securities, driving yields on short-term government notes down to almost zero.

Due to stampeding demand for safe short-term investments, the US Treasury’s four-week and three-month bills on Friday yielded an effective rate of 0.01 percent — down sharply from 1.515 percent and 1.785 percent, respectively, in early September.

Other Treasuries are also showing record low yields. The 10-year bond yield fell as low as 2.505 percent and the 30-year bond yield slid to 3.005 percent at one point on Friday. The six-month bond yielded a mere 0.20 percent.

The low yields reflect a surge in demand for these instruments, seen as the safest in the world during times of turmoil.

December 2, 2008

T-bills lookin’ good, interest under one percent looming?

Filed under: Business, Politics — Tags: , , , , — David Kirkpatrick @ 2:44 pm

The Fed has gone all topsy-turvy. I’m not certain what to make of this news.

From the link:

Federal Reserve Chairman Ben S. Bernanke signaled he’s ready to dig deeper into the central bank’s toolkit after cutting interest rates almost as much as he can, opening the door to a shift by policy makers this month.

Bernanke yesterday said he may use less conventional policies, such as buying Treasury securities, to revive the economy, because his room to lower the main U.S. rate from the current 1 percent level is “obviously limited.” Even so, reducing the rate is “certainly feasible,” he said.

Policy makers may decide at their next meeting Dec. 15-16 on the details of carrying out such a shift, which might resemble the “quantitative easing” strategy the Bank of Japan pursued in 2001-2006 after driving interest rates close to zero. The Fed chief’s readiness to rely more on adding reserves to the banking system prompted JPMorgan Chase & Co. economist Michael Feroli to refer to him as “Bernanke-san” in a note yesterday.