The Fed-led Long Bond Rally That Never Was

Interest Rates: Think Central Banks in Control? Think Again.
What do the Fed, European Central Bank and Reserve Bank of Australia have in common? Answer: They don't control interest rates.

If you believe that central banks' "potent directors" carefully watch economic indicators and deftly adjust interest rates accordingly, this will come as a shock: Central banks are no more in control of interest rates than they are of the weather. Three examples prove this point.

Paper Trading Heroine
and paper trading hero

High-Yield Debt: Is It Time To Fill Your Trunk With Junk?

June 24 FOMC Meeting: Can the Fed Defeat the Bear?

t's Federal Open Market Committee time again. And, even before the June 24 meeting adjourned, word-parsers were dissecting the "minutes" like a high school biology student with a frog. In short: While everyone with a pulse guesses at the meaning of Bernanke-speak, ALL of them hope his words give the stock market something to celebrate.

Prechter on T-Bonds, THEN and NOW
Yes, Interest Rates DO Drive the Fed

That was in 2002. Jump ahead to 2008 and early 2009 -- we've seen the gargantuan size of the U.S. government's bailout schemes, and watched the Federal Reserve's unprecedented steps to keep interest rates low. Clearly the time had come for Prechter to focus again on government debt...

The Fed Does Not Lead the Bond Market, It FOLLOWS

U.S. Bond Market Stays One Step A-"Fed"

The Story Told By Treasury Yields: Deflation

As the year 2007 rolled into 2008, the mainstream financial experts were certain of one thing (if you don't count death and taxes): Inflation would take the U.S. economy by storm. The picture of Treasury Yields, however, foretold an entirely different story: Deflation.

T-Bills Are Telling You What The Media Won't
Who, exactly, was crazy enough to purchase securities with a yield of zero (or less)?

A Picture Of Treasury Yields Is Worth One Word: DEFLATION

As the year 2007 rolled into 2008, the mainstream financial experts were certain of one thing (if you don't count death and taxes): Inflation would take the U.S. economy by storm and trigger an across-the-board flight out of the rate-sensitive bond market. The very opposite -- DEFLATION -- has occurred.

Fear-Based Trading
Even in the toughest markets, Elliott wave analysis gives you a distinct advantage.

Corrective Elliott wave patterns – that is, waves 2 and 4 – often have overlapping, jittery internal wave subdivisions are notoriously difficult to count. Forecasting their termination points is just as hard. However, even during the toughest market corrections, the Elliott Wave Principle gives you a distinct advantage. Here's how...

Saint Albert the Great… and Merrill Lynch
How do you turn a risky asset into "gold"?

I have spoken in this column before that it is the insidious nature of deflation to undermine all asset classes and erode the capital base of an economy. As we unwind this credit cycle, cash is king, and commercial and investment banks are scrambling for capital – capital that has not been forthcoming while writedowns continue into Q4...

Zeno of Elea
The foreign appetite for US debt will be tested, as will the pocketbooks of American taxpayers.

I was surprised to see today that the U.S. Treasury Secretary Henry Paulson had created the infinite from the finite. Last I heard regarding the Fannie and Freddie saga was for the Treasury to buy $2.5 billion of equity in the corporations, if needed. But today, that number became "undefined" or, if you will, infinite, as Congress hammered out details. More...

"I Like Rocks"
What's common between an over-stuffed backpack and the U.S. government's interference with the markets?

It is late July, and around my house, that means it’s time to send the kids off to summer camp. My youngest boy, 9 years old, is going away for a week for the first time. And while we were packing, it suddenly occurred to me what a perfect metaphor that was for the U.S. Treasury’s plan to bail out the government-sponsored enterprises like Freddie Mac and Fannie Mae...

Munis 'Back to Normal' or Looking at a Bear Market?

Back to normal, status quo … Well, that may sound good to those who deal in municipal bonds, particularly since it's a $2.6 trillion market. But our analysts at Elliott Wave International see the future for the muni bond market as anything but normal.

Fed Rate Cut History – as Predictable as Spam in Your Inbox

"And forecasting fed rate cuts isn’t all it's cracked up to be, or at least it doesn’t appear to warrant the countless hours of discussion devoted to it on financial television. As we’ve discussed numerous times in our newsletters, the Fed follows the market, not leads it."

Treasury Notes, Trends, and Subprime Mortgages (revisited)
Or, the Latest Chapter in the Story of "What The Fed Can't Do"

All of that brings us to this week -- or, to be succinct, "new chapter, same story." On Wednesday (April 30), the Fed cut its key lending rate again; according to The Wall Street Journal, this latest cut means that the current campaign "exceeds even the rapid rate cutting of the first eight months of 2001, before the economy was shocked by 9/11." But, after a brief bout of volatility, 10-year Treasury Note yields resumed their upward path, with Friday's yields reaching the highest level on the week. As for mortgage rates, here's the latest from Bankrate.com...

Today at the Fed: “Fixing” the Financial System or Creating a Monster?

According to our Elliott Wave Financial Forecast's not-very-proprietary model for forecasting Fed rate cuts -- otherwise known as the spread between the Federal Funds rate and short-term Treasuries -- the Fed will lower rates again today. And as usual, Wall Street may well acknowledge the move by breaking out the party hats. But investors had better be careful,...

Credit Crunch: We're From the Government, We're Here to Help
No, Really, They Are -- Read It For Yourself

Naturally, the same bunch that said We're From the Government, We're Here to Help, are back to say and do more of the same. Congress is patching together something to fix the system it broke. You can look it up, but what you'll find is a ton of articles about how the "Credit Crunch Affects Higher Education." That premise is rubbish. Most news stories say little or nothing about the real cause of the problem. Many lenders did go too far and did create a credit crunch, most conspicuously in the housing market. But that is not what happened in the market for student loans....