Long Bond Shouldn’t

Sunrise Market Commentary - Fixed Income: Global core bonds take a breather - Investors remained mostly sidelined in an uneventful session on Friday. The G-8 meeting stressed the need for growth, besides fiscal consolidation and sees Greece staying inside EMU. This shouldn’t surprise markets today. With a razor thin calendar, trading might start the week in a lackluster mode. - Currencies: Euro succeeds short squeeze - On Friday, the decline of the euro halted and EUR/USD succeeded a cautious rebound, even as uncertainty on the EMU debt crisis persisted. Technical considerations will also dominate trading today as the G8 meeting provided no high profile measures to address the debt crisis. The Sunrise Headlines - US Equities rose for a second consecutive session on ...

Fundamental News Today's highlight; - Interest Rate Decision. (AUD, 5:30, GMT) - RBA Rate Statement. (AUD, 5:30, GMT) - ISM Manufacturing Index. (USD, 15:00, GMT) - Unemployment Rate. (NZD, 23:45, GMT) The EUR/USD is trading at 1.3233 having retraced Friday’s gains, at the close of the European session down 0.2%, but still trading above 1.32. European bond yields are generally stable and EUR volatility is trading near its lows at 8.4. News flow has generally been negative, with Spain entering a recession (GDP came in at ‐0.3% in Q1), S&P downgrading 11 banks and the March central bank data revealing a lack of foreign demand for Spanish debt. As expected, S&P has downgraded 11 Spanish banks and put a further 6 on watch; while taking the opposite tact, Moody’s has announced that ...

2012 is proving to be the ‘Year of the Central Bank’. It is an exciting celebration of all the wonderful maneuvers central banks can employ to keep the system from falling apart. Western central banks have gone into complete overdrive since last November, convening, colluding and printing their way out of the mess that is the Eurozone. The scale and frequency of their maneuvering seems to increase with every passing week, and speaks to the desperate fragility that continues to define much of the financial system today. The first major maneuver took place on November 30, 2011, when the world’s G6 central banks (the Federal Reserve, the Bank of England, the Bank of Japan, the European Central Bank , the Swiss National Bank, and the Bank of Canada) announced “coordinated actions to enhance ...

In today’s Daily Reckoning, we’ll do something we can barely stand to do: we’re going to write one more time about Greece. If you can stand to read it, you may come to the same conclusion we reached. That conclusion is simple: what’s going on Europe has nothing to do with solving a debt crisis and everything to do with preserving a corrupt system based on limitless debt and growing government power. The sooner you understand that fact, the sooner you’ll be able to prepare for what happens next. There are two options for what happens next, and we’ll get to those shortly. First, though, doesn’t it strike you as strange that all of Europe can be brought to its knees by tiny little Greece? Greek GDP is just 2.4% of Europe’s GDP. In economic terms, Greece doesn’t matter. Its lack of growth or ...

US-Iranian saber-rattling or impending shoot-out? In his usual, candid manner, contrarian investor Doug Casey talks about why he believes it’s serious this time… why the US is the greatest threat to peace today… why Iran might move towards a gold standard… and what smart investors should do. Louis James: Doug, I’ve heard you say you think the US is setting Iran up to be the next fall guy in the wag-the-dog show — do you think it could really come to open warfare? Doug Casey: Yes, I do. It could just be saber rattling during an election year, but Western powers have been provoking Iran for years now — two decades, really. I just saw another report proclaiming that Iran is likely to attack the US, which is about as absurd as the allegations Bush made about Iraq bombing the US, when he ...

As Chuck wrote yesterday, the markets were feeling confident that an agreement on a second financing accord for Greece was going to be finalized yesterday. The euro (EUR) continued to rally on the news through most of the day, but the talks stumbled over the issue of pension cuts, and EU/IMF officials had to give Greece 15 more days to come up with additional cuts. The delay in an agreement caused the euro to retreat from the two-month highs against the dollar, moving back into the $1.32 handle after trading as high as $1.3313. But there is still confidence an agreement will be met, as the parties have agreed on all the issues except a 300 million euro reduction in pension benefits. The ECB meets today to set monetary policy, and ECB President Mario Draghi will hold a press conference ...

Dow down slightly yesterday. Oil falling further below $100. And gold still going up. What is most interesting is the movement in the price of gold. It seems to be heading up again — almost no matter what else is happening. So, let’s look at what might be going on… If investors sensed a recovery…they would expect banks to lend more freely…people to shop more freely…and prices to rise. This would raise consumer prices; the price of gold should go up. But if the market sees growth and inflation ahead, why is oil slipping? And why is the Baltic Dry Index — which measures shipping prices — at a 25-year low? And how come last month’s employment figures were disappointing? And why aren’t stock market prices going up? Most important, if the economy is really recovering, why is the 10-year ...

After all, in spite of some short-term fixes, there remains no real resolution to the sovereign debt issues in many European countries. We’re certainly not spending less money in the US, and now we’re bailing out Europe via currency swaps with the European Central Bank. Shouldn’t gold be rising? Yes, but nothing happens in a vacuum. There are some simple explanations as to why gold remains in a funk. 1. The MF Global bankruptcy, the seventh-largest in US history, forced a high degree of liquidation of commodities futures contracts, including gold. Many institutional investors had to sell whether they wanted to or not. This is similar to why big declines in the stock market can force funds and other large investors to sell some gold to raise cash for margin calls or meet redemption ...

Japanese yen is rising today as Q3 GDP results indicate that Japan is recovering from the March 2011 earthquake and tsunami. Also boosting the yen today is safe haven demand as, once again, European stability is called into question. Japanese economic growth showed annualized growth of 6% in Q3 of 2011, providing evidence that recovery is well underway from the earthquake and tsunami in March. Indeed, even though Japan’s economic growth is not expected to keep that pace, it shouldn’t be hindered too much, since reconstruction efforts should provide some support to the economy. Also helping the Japanese yen today in Forex trading is the fact that the eurozone, once again, appears to be on the brink of disaster. Italian bond yields and Spanish bond yields are on the rise. The eurozone ...