Interest Rates 02 (Nov 14 - Dec 25)

[winston]

The Fed is testing how banks would handle negative rates

Switzerland, Sweden and Denmark have nudged some official lending rates negative without such repercussions

Source: Bloomberg

http://thecrux.com/the-fed-wants-to-tes ... ive-rates/

[winston]

This is why ultra-low and negative interest rates don’t work…

Denmark, Sweden and Switzerland all have negative interest rates, but consumer spending isn’t going up there.

In fact, savings rates have been going up in lockstep with the decrease in interest rates, exactly the opposite of what the geniuses at the various central banks expected.

It isn’t in an individual’s self-interest to go out and spend their money on more “stuff” in order to spur economic growth.

Source: ValueWalk

http://thecrux.com/this-is-why-ultra-lo ... dont-work/

[winston]

Wall Street banks: The probability of negative U.S. rates is on the rise…

Source: Bloomberg

http://thecrux.com/13-change-of-negativ ... -the-year/

[winston]

Wall Street banks: The probability of negative U.S. rates is on the rise…

Source: Bloomberg

http://thecrux.com/13-change-of-negativ ... -the-year/

[winston]

The best way to take advantage of negative interest rates

by Steve Sjuggerud

When you think about it, the immediate results of negative interest rates are pretty obvious…

1. “Savers” get clobbered. Retirees lose money on their savings. It’s terrible.
2. People borrow money. Hey, it’s “free.” Why not get some?
3. Asset prices go up. What do people do with the free money? They buy stuff.

Source: True Wealth

http://thecrux.com/sjuggerud-the-best-w ... est-rates/

[winston]

Why NIRP (Negative Interest Rates) Will Fail Miserably

By Tyler Durden

Source: Zero Hedge

http://www.thetradingreport.com/2016/02 ... miserably/

[winston]

Bond God: The Fed's Actions Are 'Unthinkable'

By Dr. Steve Sjuggerud

"What's scaring people is the 12 rate hikes in three years in the dots," DoubleLine Capital founder Jeffrey Gundlach told Reuters in a phone interview last week. And he's right...

The "dots" that Gundlach is talking about are the Federal Reserve's projections of interest rates over the next three years – which are published in a "dot-plot" format.

The Fed's dot plot shows short-term interest rates rising from next to nothing today to more than 2% by the end of next year... and more than 3% by the end of 2018.

Gundlach called the Fed raising rates in today's environment "unthinkable."

"The market is going to humiliate the Fed," he said. "It's bizarro to have rate-hike projections while at the same time, [Federal Reserve Chair Janet] Yellen is talking about negative rates. What a mess."

If you know anything about Gundlach, he's worth listening to...

Gundlach has earned the nickname of the "Bond God" for his correct calls in the markets...

Last year, he correctly predicted that oil prices and junk bonds would fall... and that China's slowing economy would hurt emerging markets and commodities. He also correctly predicted that interest rates on Treasury bonds would go down – which was a prediction against most of the crowd.

Investors have realized Gundlach is the best... He's currently managing $85 billion, mostly in bonds.

So... who would you rather pay attention to when it comes to interest rates? Gundlach, the best guy on the planet at making money from interest rates? Or a group of government employees? It's your call...

Right now, Yellen and her staff are predicting the Fed will raise interest rates 12 times through 2018.

Meanwhile, the REAL money – real-money bets in the futures markets – says the Federal Reserve won't raise interest rates at all until 2017.

The difference between the "real-money experts" and the "government employees" today is massive.

Who are you going to believe? My money is on the experts... My money is on guys like Gundlach.

Gundlach is exactly right. The Fed raising interest rates in this environment is unthinkable. So when is the Fed going to change the dots?

The Fed is predicting higher interest rates each year for the next three years. But don't believe it. The real money says interest rates won't be raised until 2017 – at the earliest.

Source: Daily Wealth

[winston]

Negative rate not having intended effect

Source: Nikkei Asian Review

http://asia.nikkei.com/Markets/Tokyo-Ma ... ded-effect

[winston]

If Zero Interest Rates Fixed What’s Broken, We’d Be In Paradise

By Tyler Durden

Source: Zero Hedge

http://www.thetradingreport.com/2016/02 ... -paradise/

[winston]

This is what the economic 'prophet of doom' is saying now...

by Kim Iskyan

When the yield curve “inverts,” it means that the yield on long-term bonds is less than the yield for short-term bonds. In other words, investors see more risk in short-term bonds than in long-term bonds. This might not sound logical.

But there’s a good reason for this. If investors are worried the economy is headed for a recession, they will look for ways to keep their money safe. If they think stock prices will fall, and that interest rates will fall, they will put their money in long-term government bonds to ride out the storm.

So, with questions about the global economy on everybody’s mind, keep an eye on the U.S. yield curve. If it continues to narrow, or somehow inverts, and it lives up to its reputation as the best predictor of tough economic times, a recession could follow. That would be bad for economies – and markets – throughout the world.

Source: True Wealth Asia

http://thecrux.com/this-is-what-the-eco ... aying-now/