Markets

Treasuries: A New Kind Of Giffen Good

In introductory economics one usually learns about Giffen goods, where people paradoxically consume more of it as the price rises, violating the law of demand.  Your demand for an item is influenced by its relative value, and your over all wealth: substitution and income effects. This is formalized in the Slutsky equation (as […]
Treasuries: A New Kind Of Giffen Good
Tech

WHAT IN GOD’S NAME HAPPENED TO THE MARKETS? The SAIcast Discuss

Today everything in the market tanked. The US faced its first day as a AA+ rated nation and Europe continued to get crushed as it seemed no one was safe from investors’ debt fears. Join Nicholas Carlson, Politics editor John Ellis, and Politics reporter Zeke Miller as they discuss the […]
WHAT IN GOD’S NAME HAPPENED TO THE MARKETS? The SAIcast Discuss
News

Senate Banking Committee Weighing Probe Of S&P Downgrade

[credit provider=”Wikipedia”] According to a Senate Banking Committee aide, the committee is gathering more information about the S&P downgrade of U.S. debt in preparation for a possible investigation.Earlier Monday, committee chairman Tim Johnson (D-SD) released the following statement on the downgrade:
Senate Banking Committee Weighing Probe Of S&P Downgrade
News

Obama To Deliver Statement At 1PM

[credit provider=”Flickr” url=”http://www.flickr.com/photos/nasahqphoto/4251318245/sizes/l/in/photostream/”] President Barack Obama will deliver a statement to the press at 1 p.m. today, according to the White House.Obama will address the deaths of 30 American servicemen in Afghanistan on Saturday, as well as the S&P downgrade of U.S. debt, and the general state of the economy.
Obama To Deliver Statement At 1PM
Markets

AA+ Is The New AA

[credit provider=”en.wikipedia.org” url=”http://en.wikipedia.org/wiki/File:Batteries_comparison_4,5_D_C_AA_AAA_AAAA_A23_9V_CR2032_LR44_matchstick-1.jpeg”] I have received many emails and a few calls from friends, asking one question: What are the consequences of the downgrade? So I decided to put my thoughts on paper.  I break up the consequences into three categories: fundamental (the impact on the economy), emotional (the short-term […]
AA+ Is The New AA
News

CHINA: “America Needs To Accept The Painful Fact That The Good Old Days Are Over”

[credit provider=”ap”] China’s official comment on the S&P downgrade was harsh and condescending. Released through Xinhua (via Reuters) the statement condemned America for its “debt addiction” and “short-sighted” political wrangling.”The U.S. government has to come to terms with the painful fact that the good old days when it could just […]
CHINA: “America Needs To Accept The Painful Fact That The Good Old Days Are Over”
Markets

What In The World Is The Bond Market Saying?

Few things have been more confusing to traders in the last few weeks than the action in the bond market. With the USA on the verge of a near default and QE2 now over, there are few investors who would have thought that bonds would be an outperforming asset class. […]
What In The World Is The Bond Market Saying?
News

You’ll Be Shocked Just How Close The Final Debt Deal Came To Falling Apart

[credit provider=”AP Photo/Charles Dharapak”] The markets — and the American people — always assumed Congress and President Barack Obama would reach a deal. But as late as Sunday, the White House considered economic collapse an increasingly likely outcome to months of failed talks.According to POLITICO, negotiations reached a stalemate on […]
You’ll Be Shocked Just How Close The Final Debt Deal Came To Falling Apart
News

HOUSE PASSES DEBT LIMIT INCREASE, SENATE TO VOTE AT NOON TUESDAY

The House of Representatives passed a bill to raise the debt limit and lower the deficit Monday night by a margin of 269-161.The bill will cut $917 billion from the federal deficit immediately through discretionary spending caps. Additionally, it authorizes the creation of a bipartisan fiscal committee which will report […]
HOUSE PASSES DEBT LIMIT INCREASE, SENATE TO VOTE AT NOON TUESDAY
News

Debt Deal Reached, But Path Through Congress Not Guaranteed

We have a deal that could avoid default — now can Congress pass it?That is the question many in both parties are asking themselves today on Capitol Hill, where both house of Congress are preparing to vote on legislation no one really wants to pass.
Debt Deal Reached, But Path Through Congress Not Guaranteed
News

“Historic, Bipartisan Compromise” Reached To Raise Debt Ceiling

[credit provider=”AP Photo/Charles Dharapak”] President Barack Obama and Congressional leaders announced they have reached a “historic, bipartisan compromise” to raise the debt limit and lower the deficit.The debt ceiling will be hiked in two stages the first with cuts agreed to now, and the second with cuts agreed to by […]
“Historic, Bipartisan Compromise” Reached To Raise Debt Ceiling
News

Senate Vote Postponed To Allow White House Negotiations With GOP To Continue

[credit provider=”Wikimedia Commons” url=”http://commons.wikimedia.org/wiki/File:Bipartisan_Congressional_leadership_meeting_February_2010.jpg”] Another wasted day.Senate Majority Leader Harry Reid postponed a vote on his plan to raise the debt limit until Sunday after 43 GOP Senators pledged to oppose the bill.
Senate Vote Postponed To Allow White House Negotiations With GOP To Continue
News

Congress Finds Debt Limit Compromise Elusive, As Deadline Looms

[credit provider=”AP Photo/Charles Dharapak”] The House and Senate will convene Saturday afternoon as they continue negotiations to raise the debt ceiling. But with just days to act before one or more of the major credit ratings agencies downgrades U.S. debt, Democrats and Republicans can’t seem to work together.The plan put forward by […]
Congress Finds Debt Limit Compromise Elusive, As Deadline Looms
News

No Signs Of Compromise, As Senate Kills Boehner Bill

[credit provider=”AP”] The debt limit increase bill introduced by Speaker of the House John Boehner passed the House of Representatives, but was quickly rejected in the Senate.Reid is setting the stage for a 1 a.m. Sunday cloture vote on the bill, followed by a vote to pass it on Monday morning.
No Signs Of Compromise, As Senate Kills Boehner Bill
News

Timeline: How To Track The Next 80 Hours

Senator Harry Reid announced Friday that he will file cloture on his bill to raise the debt limit, setting the stage for final votes on the bill on Monday or Tuesday, before it would return to the House for final passage.
Timeline: How To Track The Next 80 Hours
News

Time Ticks Down As Boehner, House Prepare Another Vote To Nowhere

[credit provider=”Wikimedia Commons” url=”http://commons.wikimedia.org/wiki/File:Radium_Dial.jpg”] Speaker of the House John Boehner’s job is on the line as the House of Representatives prepares a vote on his plan to raise the debt limit today.”His being Speaker is clearly at stake here,” Sen. John McCain (R-AZ) said Thursday night on Fox News.
Time Ticks Down As Boehner, House Prepare Another Vote To Nowhere
News

NO VOTE ON BOEHNER PLAN AS TEA PARTIERS REVOLT

[credit provider=”AP Photo/Carolyn Kaster”] The House of Representatives postponed a vote on Speaker of the House John Boehner’s plan to raise the debt limit Thursday night, due to a revolt from the tea party.Boehner pulled his plan off the House floor around 5:15 after it became clear he could not […]
NO VOTE ON BOEHNER PLAN AS TEA PARTIERS REVOLT
News

This Is How The Debt Deal Might Happen

[credit provider=”centre for American Progress via Flikr”] The House of Representatives will vote today on Speaker of the House John Boehner’s plan to raise the debt limit and lower the deficit. Regardless of whether it passes, it is certain to fail in the Senate—where all 51 Democrats and two Independents have […]
This Is How The Debt Deal Might Happen
News

Treasury: We Will Unveil Our Secret Plan To prioritise Payments Before August 2nd

[credit provider=”AP”] Earlier White House Press Secretary Jay Carney said the government would be releasing plans for what happens after August 2nd if the debt limit isn’t raised. Now the Treasury Department confirms.Deputy Assistant Secretary for Public Affairs Anthony Coley said the department would release its plans for what bills would […]
Treasury: We Will Unveil Our Secret Plan To prioritise Payments Before August 2nd
News

DEFAULT OFF: White House Admits Treasury Will prioritise Payments

[credit provider=”gurdonark via Flickr” url=”http://www.flickr.com/photos/rasputin243/3690255919/sizes/l/in/photostream/”] According to the White House, the Treasury Department will disclose its list of spending priorities in the event the debt limit isn’t raised before August 2nd.Both the White House and Treasury have previously denied that they had the authority to prioritise payments, but apparently they […]
DEFAULT OFF: White House Admits Treasury Will prioritise Payments
News

Delayed Debt Ceiling Vote Means Wasted Day, And Perhaps Much Worse

[credit provider=”AP Photo/Harry Hamburg”] Tuesday night’s announcement that the vote on Speaker of the House John Boehner’s plan to raise the debt limit would be postponed is a significant setback for the negotiations, with only days until the August 2nd deadline set by the Obama administration.Yesterday afternoon the Boehner plan […]
Delayed Debt Ceiling Vote Means Wasted Day, And Perhaps Much Worse
News

Why The Boehner Plan Won’t Pass

[credit provider=”Flickr” url=”http://www.flickr.com/photos/medilldc/5430941803/in/photostream/”] Update: POLITICO is now reporting that the Congressional Budget Office has found that Boehner’s plan falls $150 billion short of the $1 trillion in advertised savings. This development will only make it easier for GOP lawmakers to buck their party leadership and oppose the bill.Original: A day before the […]
Why The Boehner Plan Won’t Pass
News

As Final Week Of Negotiations Begin, A Debt Deal Nears

[credit provider=”Wikimedia Commons” url=”http://commons.wikimedia.org/wiki/File:Bipartisan_Congressional_leadership_meeting_February_2010.jpg”] President Barack Obama and Speaker of the House John Boehner addressed the nation Monday night on the status of the debt and deficit talks — but through the rhetoric, an outline of a deal has emerged.Their speeches didn’t change anything. While each undoubtedly helped the leaders with […]
As Final Week Of Negotiations Begin, A Debt Deal Nears
News

The Boehner Debt Ceiling Plan

[credit provider=”flickr” url=”http://www.flickr.com/photos/republicanconference/4056826266/sizes/l/”] Speaker of the House John Boehner’s deficit reduction plan was posted by the House Rules Committee last night, setting the stage for a vote on the bill on Wednesday.His proposal would introduce statutory spending caps for the next 10 years, and requires that Congress consider a balanced […]
The Boehner Debt Ceiling Plan
News

Obama: “The Entire World Is Watching”

[credit provider=”Flickr” url=”http://www.flickr.com/photos/nasahqphoto/4251318245/sizes/l/in/photostream/”] President Barack Obama addressed the nation on the status of negotiations to raise the debt limit Monday night, saying “the entire world is watching.”Obama devoted most of his speech to calling for both parties to compromise to raise the debt ceiling through the end of 2012.
Obama: “The Entire World Is Watching”
News

T-Bills No Longer Considered Risk Free By Chicago Mercantile Exchange

[credit provider=”CME”] CME Group announced Monday that as part of a “normal review of market volatility,” it has determined that T-Bills should no longer be treated as risk-free when used as collateral.Haircuts on T-Bills will rise from 0.0 per cent to 0.5 per cent on Thursday, according to the statement. […]
T-Bills No Longer Considered Risk Free By Chicago Mercantile Exchange
News

Obama Endorses Reid Plan, Democrats Call It “Offer Republicans Can’t Refuse,” Boehner Says “It’s Full Of Gimmicks”

[credit provider=”Flickr” url=”http://www.flickr.com/photos/davidsilver/5227589198/sizes/m/in/photostream/”] August 2nd is rapidly approaching, and Congress remains nowhere near an agreement to raise the debt limit and lower the deficit.We’ll be bringing you the latest on the negotiations here all day. (You can view our live blog from Sunday here.)
Obama Endorses Reid Plan, Democrats Call It “Offer Republicans Can’t Refuse,” Boehner Says “It’s Full Of Gimmicks”
News

Senior White House Official: Only A 50-50 Chance Debt Deal Is Done By Next Week

[credit provider=”Flickr” url=”http://www.flickr.com/photos/soldiersmediacenter/2999982340/sizes/z/in/photostream/”] A senior White House official tells ABC News’ Jake Tapper that there is a 50-50 chance that by this time next week we will be no closer to reaching a deal to raise the debt limit.”We may be here as we tick down to midnight,” the official […]
Senior White House Official: Only A 50-50 Chance Debt Deal Is Done By Next Week
News

Two Deals, No Time

It’s crunch time. Congressional leaders have at most two days to days to reach an agreement to raise the debt limit, and lawmakers have made little progress on preventing the unthinkable.
Two Deals, No Time
News

Congress Looks For New Debt Deal To Prevent Monday Panic

[credit provider=”AP”] Update: Democratic lawmakers have rejected an offer from Republican lawmakers.Original: Lawmakers and President Barack Obama met at the White House Saturday, once again looking to renew talks to raise the debt limit and lower the deficit after a highly public breakdown.
Congress Looks For New Debt Deal To Prevent Monday Panic
News

Democrats Reject Republican Debt Deal As Talks Fracture

[credit provider=”AP Photo/Harry Hamburg”] Congressional efforts to remove President Barack Obama from negotiations to raise the debt limit and lower the debt ceiling failed Saturday, after Democratic lawmakers rejected a GOP offer to raise the debt ceiling in two stages.In a tersely worded statement, Senate Majority Leader Harry Reid (D-NV) […]
Democrats Reject Republican Debt Deal As Talks Fracture
News

Meet The S&P Executive Who May Downgrade U.S. Debt

[credit provider=”CNBC”] David Beers will be one of the Standard and Poors executives deciding whether the United States will lose its AAA rating at the end of the month — and he has no qualms about it.”If you want your ratings to do what they are designed to do, you […]
Meet The S&P Executive Who May Downgrade U.S. Debt
Markets

The Truth About China’s Increase In Treasury Buying

[credit provider=”Spoiler: Click here for source” url=”http://www.designflavr.com/resources/12-Photo-Real-Computer-Generated-People-i109″] In May China increased its holdings of U.S. Treasuries for the second month in a row.Via Shanghai Daily:
The Truth About China’s Increase In Treasury Buying
Markets

The Great “Collapse” In US Treasury Bonds

The “surge” in yields this week has many pointing to the end of QE2 as the beginning of the awakening of the bond vigilantes or even the beginning of the collapse of the mythical “bond bubble”.  But I went to find this “surge” in yields or “collapse” in the bond […]
The Great “Collapse” In US Treasury Bonds
Markets

How The U.S. Treasury Changed Its Rules Because It Caught China Buying More Bonds Than It Disclosed

[credit provider=”Yuri Obukhov via Flickr” url=”http://www.flickr.com/photos/yuriobukhov/3818579392/sizes/l/in/photostream/”] Remember when the Treasury Department modified its rules for government bond auctions two years ago? Turns out “technical modernization” was a euphemism for China buying more treasuries than it had disclosed, according to a new report from Reuters.The Chinese government buys most of its […]
How The U.S. Treasury Changed Its Rules Because It Caught China Buying More Bonds Than It Disclosed
Markets

Man Vs. Nature In The US Treasury Market

I think quite a bit about causation. Predominantly because we tend to get it wrong so often – yet find what we need in what we see. You can do quite well not worrying about causation as a trader and focus on what actually is right in front of you. Ignorance is […]
Man Vs. Nature In The US Treasury Market
Markets

Poll Shows How Investors Are Thinking About The End Of QE2

[credit provider=”i_yudai via Flickr” url=”http://www.flickr.com/photos/y_i/2330044065/”] A majority of investors believe the end of QE2 means treasury yields will rise, according to a poll from Bloomberg. A smaller 43% of investors believe the S&P 500 will drop as quantitative easing ends.But while 54% of respondents do believe treasury yields will rise […]
Poll Shows How Investors Are Thinking About The End Of QE2
Markets

Bill Gross: About That Treasury Short….

[credit provider=”via PIMCO”] We’ve been chronicling the steady failure of Bill Gross’ attempt to short Treasuries lately, using the dubious idea that the end of QE will shoot rates higher.Well, it sounds like he’s less and less enamoured with that on.e
Bill Gross: About That Treasury Short….
Markets

Why You Shouldn’t Join Those Betting Against Treasuries

[credit provider=”AP Images” url=”http://www.apimages.com”] When PIMCO Total Return (symbol PTTAX), the largest bond fund in the world, not only sells, but shorts—or bets against—treasuries, it is as if Moses has descended with tablets and has a frown on his face.True to herd mentality, large bond funds like the Loomis Sayles […]
Why You Shouldn’t Join Those Betting Against Treasuries
Markets

PIMCO Officially Goes SHORT The US Treasury Market

[credit provider=”AP Images” url=”http://www.apimages.com”] Last month bond giant PIMCO officially abandoned Treasuries completely.In the meantime, its chief Bill Gross has been warning of a US debt default, while wondering who would stick around to buy Treasuries following the end of QE2.
PIMCO Officially Goes SHORT The US Treasury Market
Markets

Three Drivers And A ‘Big Hammer’ That Will Propel The Markets In April

[credit provider=”gruntzooki on flickr” url=”http://www.flickr.com/photos/doctorow/1371720114/”] It’s one of the most shocking behavioural displays I’ve seen in my (now long) life. Market participants are wandering in a jungle ignoring all the warning sights and sounds.As a big believer in the rational-thought approach to events, I will be the first to admit […]
Three Drivers And A ‘Big Hammer’ That Will Propel The Markets In April
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