Salient to Investors: Pimco’s Bill Gross said Spanish Bonds are unattractive. The global economy is delevering. Best to look at the entire core of the euro zone and not the falling dominos. Rates at the core are still too high – Italy and France yield is too high versus their nominal GDP growth. There
READ MORE... →Salient to Investors: The Fed’s structure has its origins in efforts to find a balance of power between politicians in Washington, representing farmers and small businesses, and Wall Street financiers. Professor Allan Meltzer said the Fed’s image problem has been there for 100 years – Congress reduced the role bankers play on
READ MORE... →Salient to Investors: The Greek election bought Europe time without fixing the cleavages between the northern and southern Greek economies. Professor Niels Thygesen identifies eight clashes in economic philosophy between Germany and France. Predictions: Professor Paul de Grauwe expects Merkel to remain an incrementalist, temporarily pacifying markets until it is clear it is
READ MORE... →Salient to Investors: Barclays analysts predict any new buying of government-backed mortgage bonds by the Federal Reserve will be limited to no more than $500 billion to $600 billion per year by supply constraints, less than half of QE1. Barclays said most major overseas investors are unlikely to want to
READ MORE... →Salient to Investors: Bloomberg study of 314 upgrades, downgrades and outlook changes since 1974 shows interest rates moved in the opposite direction 47 percent of the time for Moody’s and for S&P. IMF studies show prices moved in the expected direction 45 percent of the time for developed countries and 51 percent for
READ MORE... →Salient to Investors: Foreign ownership of Japanese government debt rose to a record in 2011, signaling increasing dependence on investors abroad to finance the world’s largest public debt. The crisis in Europe has increased demand for the yen and Japanese bonds as a haven. Japanese household wealth funds has stagnated over
READ MORE... →Salient to Investors: Florida ’s jobless rate has fallen more than in 42 counterparts in the past two years, the extra yield on its muni-bonds has dropped 25 percent this year over the average AAA security Peter DeGroot at JPMorgan Chase says the yield spread will narrow more amid declining unemployment and climbing home sales.
READ MORE... →Salient to Investors: Douglas Swanson at JPMorgan Chase sees nothing in the short term to cure Europe. Hedge-funds and large speculators increased net-short position in 10-year T-note futures in the week ending June 12. Speculative short positions outnumbered long positions by 95,385 contracts on the CBT. The Fed’s term premium shows U.S. government bonds at almost
READ MORE... →Salient to Investors: Phil Flynn of Price Futures Group says the markets are betting that the anti-austerity forces in Greece will lose, which would boost oil prices, bus a win would see a deflationary downdraft impacting all markets. Sees increasing likelihood that the central banks will increase stimulus – the Fed has a lot of cover
READ MORE... →Salient to Investors: U.K. and France boosted holdings of U.S. Treasuries by over 26 percent in April, total international demand for U.S. financial assets slowed. Chinese holdings rose $1.5 billion to $1.15 trillion. Chris Rupkey of Bank of Tokyo-Mitsubishi UFJ said safe haven flows from Europe are driving T-yields down, and expects the trend to continue until Europe stems its crisis.
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