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May 2012
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Archive for the Interest Rates Category

Yield Falls On Ten Year TIPS -

The yield on 10 year Treasury Inflation Protected Securities (TIPS) fell into negative territory for only the third time in history. A recent U.S. government sale of $13 billion in 10 year TIPS sold at a negative yield of 0.391%. The safety of US Treasuries and the possibility of another round of quantitative easing drew investors. Yields rose for ten year bonds from Spain and Italy. Ten year yields for Spain touched 6.288% in trading and Italian yields rose to slightly over 5.8%.

To read a related Wall Street Journal, please click here:

http://online.wsj.com/article/BT-CO-20120517-711941.html

James Sutliff

Elections May Rattle Currency Markets -

Elections in France and Greece may impact the Euro in the near term.  France elected Francois Hollande of the Socialist party by a slim margin over President Nicholas Sarkozy.  Hollande is not expected to support austerity measures.  Hollande is the first Socialist President elected in France in 17 years.  Francois Mitterand was the last Socialist President and he served from 1981-1995.

To read a related Wall Street Journal article, please click here:

http://online.wsj.com/article/BT-CO-20120507-705469.html

Jim Sutliff

Treasury Prices Fall -

Federal Open Market Committee minutes indicated that a third round of quantitative easing may not happen in the near term.  The Fed minutes sent Treasury prices lower and yields higher.  Yields on the 10 year Treasury went to 2.28%.

To read a related Wall Street Journal article, please click here:

http://online.wsj.com/article/SB10001424052702303816504577321452332344214.html?mod=WSJ_markets_liveupdate

Jim Sutliff

Gold Continues Decline -

Gold continued to slide and fell to the lowest level since January 25th.  Traders weighed Federal Reserve statements on the economy and gold fell almost 2 percent.  Gold traded near $1,670 an ounce and continued to decline in electronic trading.

To read a related Bloomberg article, please click here:

http://www.bloomberg.com/news/2012-03-13/gold-advances-with-equities-before-federal-reserve-meeting-greek-bailout.html

James Sutliff

Negative Yield Treasury Auctions -

The U.S. Treasury may start to offer negative yield auctions.  The safety and security of U.S. Treasuries have already led to them being traded at negative yields on secondary markets.  According to Reuters, the one month Treasury bill traded on a secondary market at a negative yield in December.  The Treasury Departments systems would have to be modified to handle the trading of Treasuries at a premium.

To read a related Fox Business article, please click here:

http://www.foxbusiness.com/investing/2012/02/01/treasury-may-let-investors-pay-to-hold-us-debt/

Jim Sutliff

Germany Votes For Greek Bailout -

Germany voted to support a second Greek bailout of approximately $174 billion.  The Finland parliament is expected to vote on the Greek bailout this week.  Also, European leaders will discuss the Euro zone bailout fund at their next meeting in Brussels on March 1st and 2nd.

To read a related Bloomberg article, please click here:

http://www.bloomberg.com/news/2012-02-27/merkel-rebuffs-bigger-euro-firewall-as-she-backs-financial-aid-for-greece.html

Jim Sutliff

Federal Reserve To Release Forecasts -

The Federal Reserve has announced that they will release their forecasts for the Federal funds rate.  The move will increase transparency at the Federal Reserve at may help with financial planning for businesses and investors.  Monetary policy expectations should be released at the next meeting on January 24th and 25th.  The Fed funds rate is expected to remain low for the remainder of 2012.

To read a related Bloomberg article, please click here:

http://www.bloomberg.com/news/2012-01-03/fed-officials-will-make-public-own-forecasts-for-key-rate-at-next-meeting.html

James Sutliff

Economic Data Drives Oil Higher -

Economic data sent oil prices higher in trading on Tuesday.  Housing starts and building permits rose and data from Europe looked strong.  Also, supplies of crude oil fell 4.6 million barrels last week which was higher than analyst expectations.

To read a related Reuters article, please click here:

http://www.reuters.com/article/2011/12/20/us-markets-oil-idUSTRE7AD06820111220

Jim Sutliff

Fitch May Downgrade France -

Fitch Ratings indicated that they may downgrade the sovereign debt of seven European nations.  France is one of the European nations facing a downgrade from Fitch.  The six other nations are Belgium, Cyprus, Ireland, Italy, Slovenia, and Spain.

To read a related Bloomberg article, please click here:

http://www.bloomberg.com/news/2011-12-16/euro-advances-as-juncker-signals-eu-to-meet-imf-loan-deadline-yen-falls.html

James Sutliff

Bernanke Meets With Republican Senators -

On Wednesday, Federal Reserve Chairman Ben Bernanke met with Republican Senators to discuss the European Union sovereign debt crisis.  According to GOP Senators, Bernanke indicated that the European debt crisis could significantly impact the American economy.  The Euro fell below $1.30 in afternoon trading.

To read a related CNN Money article, please click here:

http://money.cnn.com/2011/12/14/news/economy/bernanke_europe_senate_gop/index.htm

Jim Sutliff

Euro Trades Lower -

 The Euro fell on news that Moody’s is considering a downgrade of European Union sovereign debt.  The inability to end the debt crisis is one factor in the Moody’s decision.  In currency trading, the Euro fell to $1.3184 which is the lowest mark since October 4th.  Also, Italian bonds declined in trading.

To read a related Bloomberg article, please click here:

http://www.bloomberg.com/news/2011-12-11/euro-weakens-before-german-investor-confidence-data-italy-s-bill-auction.html

James Sutliff

Asia Markets Fall; Gold Rises -

Stock markets across Asia fell with Japan’s Nikkei dropping 1.6% and Korea’s Kospi Composite falling 1.9%.  New Zealand and Australian markets were also lower in trading.  European debt crisis concerns were the driving force in the markets.  The Euro fell to $1.3345 against the Dollar and gold rose $7.40 to $1,713.20 an ounce.

To read a related Wall Street Journal article, please click here:

http://online.wsj.com/article/SB10001424052970203413304577087082679599936.html?mod=WSJ_hp_LEFTWhatsNewsCollection

James Sutliff

Federal Reserve QE3 -

The Federal Reserve may provide another round of quantitative easing.  The breakdown of the budget negotiations between Republicans and Democrats are one factor that could lead to QE3.  Quantitative easing may lower long term interest rates and help with the recovery of the housing market.

To read a related Fox Business article, please click here:

http://www.foxbusiness.com/politics/2011/11/23/washington-gridlock-could-push-fed-to-act-on-economy-with-qe3/

James Sutliff

Euro Falls On Debt Yields -

Yields for European sovereign debt continue to drive the Euro lower in trading.  The Euro fell against most major currencies and settled at $1.3525.  In trading against the Yen, the Euro fell to 104 Yen and had the biggest weekly drop since late September.  Cross currency rates improved slightly for the Euro against the New Zealand Kiwi and the South African Rand.

To read a related Bloomberg article, please click here:

http://www.bloomberg.com/news/2011-11-19/euro-loses-most-against-yen-since-september-as-debt-yields-surge-in-crisis.html#

Jim Sutliff

Smaller Euro Zone -

The Euro zone debt crisis continues to spread and yields on Italian debt broke the 7% mark today.  As a result, the Dow Jones Industrial Average fell almost 400 points in trading on Wednesday.  Speculation of a smaller Euro zone with deeper integration has increased over the last week.  In a recent speech, French President Nicholas Sarkozy mentioned a two-speed Euro zone which would be smaller than the current European Union.

To read a related Reuters article, please click here:

http://www.reuters.com/article/2011/11/09/us-eurozone-future-sarkozy-idUSTRE7A85VV20111109

James Sutliff