Go to the Amazon.com link below for TIMING THE MARKET by Deborah Weir (Wiley, 2005).
Email: DebWeir@WealthStrategies.bz
Take her class at the NY Institute of Finance: nyif.com/courses/fimk_1014.html.
Thursday, December 15, 2005
Moderate inflation numbers and out-sized profits in gold are eroding the price of that metal. Gold reached $530 an ounce Dec. 12, the highest since January 1981. It is trading around $500 as traders lock in some profits for year-end reports.
2 comments:
Anonymous
said...
Talk today (12/27 Reuters) of the 10-year and 2-year yield curve inversion.
It was said: "Federal Reserve officials are unlikely to see the inversion as a harbinger of economic slowdown. They have said globalization has kept yields unusually low and thus altered the significance of a yield curve inversion."
I would like to hear some expert comments about the information contained in the following article:
Brief Inversion Raises Anxiety
By Katie Benner Staff Reporter 12/27/2005 4:33 PM EST
Updated from 11:34 a.m. EST Get Jim Cramer's picks for 2006. The yield on the benchmark 10-year note briefly dipped below that of the two-year note at the start and end of trading Tuesday, signaling the first inversion of this part of the yield curve since 2000. There is debate among traders and analysts over whether a recession will follow the inversion, as was the case the last two times the curve inverted; meanwhile, some economists worry that the falling 10-year yield could ramp up housing market speculation. At 6:23 a.m. EST, the 10-year note yielded 4.393% while the two-year note yielded 4.396%, Reuters reported. The curve then briefly inverted by similarly slim margins a few times in the afternoon. Yields on shorter-maturity debt are usually lower to reflect the fact that investors tend to demand higher yields on longer-dated bonds to compensate for additional inflation risk. By late afternoon, the curve was flat, with the benchmark 10-year up 8/32 to yield 4.34%. The two-year note was up fractionally to also yield 4.34%. The 30-year bond ended the session up 23/32 to yield 4.5%, while the five-year note added 3/32 to yield 4.29%. When the yield curve inverted in 2000, two-year yields exceeded 10-year yields by a little more than 50 basis points, according to Cantor Fitzgerald. Tuesday's short-lived inversion was by a wafer-thin three-thousandths of a point, so it did little more than raise anxiety. Inversion happened in the shorter end of the yield curve last week, with two-year notes yielding about 4 basis points more than five-year notes. "We're in the camp that we don't think it will portend a recession," said Michelle Girard, senior Economist at RBS Greenwich Capital. "Normally the curve inverts when Fed policy is extremely restrictive, but this time it's due more to the fact that long-term rates are unusually low." Federal Reserve bankers, including Alan Greenspan, have suggested several reasons why the shape of the curve is less predictive, including the fact that inflation has remained remarkably quiet, even with strong economic growth and high energy prices. "For investors, the more the Fed raises rates, the lower we'll see the yield on the long end go," said John Derrick, director of research at U.S. Global Investors. "That's because the market sees the hikes as tough on inflation, and it gets comfortable with the inflation picture," so investors are willing to accept lower yields on long-dated Treasuries. And the march of globalization has eroded the Fed's influence over long-term rates, because slow growth in Europe and Asia has made Treasuries unusually attractive for overseas investors who recycle the dollars we spend on their cheaper goods back into the U.S. economy. Underscoring this point: Foreign banks now own far more Treasury securities than the Fed, at about $1.1 trillion vs. $738 billion for the central bank, according to Grant's Interest Rate Observer. In addition to debate over a possible slowdown, there are worries that abnormally low yields on the long end of the curve, which are used to set mortgage rates, could fuel housing market speculation. "It's an old story that low long-term rates have kept the housing sector very well supported, much longer into an economic expansion than has typically been the case" said Girard. Even though the Fed has pushed the fed funds rate up to 4.25% since June 2004, the yield on the benchmark 10-year Treasury has fallen in that time from 4.61% to its current level near 4.50%. But Girard does not believe that the U.S. is in the midst of a housing bubble. Derrick added that it is unlikely that continued low rates will pull new players into real estate. "Anyone who wanted to refinance has refinanced, and this long stretch of low mortgage rates has probably pulled in anyone who was going to get into the housing market," he said
2 comments:
Talk today (12/27 Reuters) of the 10-year and 2-year yield curve inversion.
It was said: "Federal Reserve officials are unlikely to see the inversion as a harbinger of economic slowdown. They have said globalization has kept yields unusually low and thus altered the significance of a yield curve inversion."
I would like to hear some expert comments about the information contained in the following article:
Brief Inversion Raises Anxiety
By Katie Benner
Staff Reporter
12/27/2005 4:33 PM EST
Updated from 11:34 a.m. EST
Get Jim Cramer's picks for 2006.
The yield on the benchmark 10-year note briefly dipped below that of the two-year note at the start and end of trading Tuesday, signaling the first inversion of this part of the yield curve since 2000.
There is debate among traders and analysts over whether a recession will follow the inversion, as was the case the last two times the curve inverted; meanwhile, some economists worry that the falling 10-year yield could ramp up housing market speculation.
At 6:23 a.m. EST, the 10-year note yielded 4.393% while the two-year note yielded 4.396%, Reuters reported. The curve then briefly inverted by similarly slim margins a few times in the afternoon.
Yields on shorter-maturity debt are usually lower to reflect the fact that investors tend to demand higher yields on longer-dated bonds to compensate for additional inflation risk.
By late afternoon, the curve was flat, with the benchmark 10-year up 8/32 to yield 4.34%. The two-year note was up fractionally to also yield 4.34%.
The 30-year bond ended the session up 23/32 to yield 4.5%, while the five-year note added 3/32 to yield 4.29%.
When the yield curve inverted in 2000, two-year yields exceeded 10-year yields by a little more than 50 basis points, according to Cantor Fitzgerald. Tuesday's short-lived inversion was by a wafer-thin three-thousandths of a point, so it did little more than raise anxiety. Inversion happened in the shorter end of the yield curve last week, with two-year notes yielding about 4 basis points more than five-year notes.
"We're in the camp that we don't think it will portend a recession," said Michelle Girard, senior Economist at RBS Greenwich Capital. "Normally the curve inverts when Fed policy is extremely restrictive, but this time it's due more to the fact that long-term rates are unusually low."
Federal Reserve bankers, including Alan Greenspan, have suggested several reasons why the shape of the curve is less predictive, including the fact that inflation has remained remarkably quiet, even with strong economic growth and high energy prices.
"For investors, the more the Fed raises rates, the lower we'll see the yield on the long end go," said John Derrick, director of research at U.S. Global Investors. "That's because the market sees the hikes as tough on inflation, and it gets comfortable with the inflation picture," so investors are willing to accept lower yields on long-dated Treasuries.
And the march of globalization has eroded the Fed's influence over long-term rates, because slow growth in Europe and Asia has made Treasuries unusually attractive for overseas investors who recycle the dollars we spend on their cheaper goods back into the U.S. economy.
Underscoring this point: Foreign banks now own far more Treasury securities than the Fed, at about $1.1 trillion vs. $738 billion for the central bank, according to Grant's Interest Rate Observer.
In addition to debate over a possible slowdown, there are worries that abnormally low yields on the long end of the curve, which are used to set mortgage rates, could fuel housing market speculation.
"It's an old story that low long-term rates have kept the housing sector very well supported, much longer into an economic expansion than has typically been the case" said Girard.
Even though the Fed has pushed the fed funds rate up to 4.25% since June 2004, the yield on the benchmark 10-year Treasury has fallen in that time from 4.61% to its current level near 4.50%.
But Girard does not believe that the U.S. is in the midst of a housing bubble. Derrick added that it is unlikely that continued low rates will pull new players into real estate.
"Anyone who wanted to refinance has refinanced, and this long stretch of low mortgage rates has probably pulled in anyone who was going to get into the housing market," he said
Post a Comment