Rising Interest Rates – In a debt burdened economy like that of the United States, interest rates are the lifeblood. In a previous article, I suggested selling call options on TLT (long treasury ETF) under the theory that interest rates probably could not go much lower and it has turned out to be a great trade. Now the 30 year government bond is hitting the 4.6% level, only 20 bps or .2% away from a 2 year high of 4.8% … – Surly Trader
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Chart du Jour: Keep an eye on the yield curve – Posted by Prieur du Plessis – … Put simply, on Tuesday the gap between 10- and 2-year US government bond yields hit its widest spread ever – 286 basis points, beating last week’s 276 basis points and the previous record set in August 2003 of 274 basis points. … – Investment
Postcards from Cape Town
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The Yield Curve Signals Bigger Growth – By Larry Kudlow – What’s a yield curve and why is it so important? … So there could be a mini boom next year, with real GDP growing at 4 to 5 percent, perhaps with a 6 percent quarter in there someplace. And the unemployment rate is likely to come down, perhaps moving into the 8 percent zone from today’s 10 percent. … – Real Clear Markets
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Billionaire Paulson Leads Fund Managers Betting on the Yield Curve – John Paulson and Julian Robertson are among managers looking to capitalize on growing inflation and higher yields. According to a report by the Financial Times, John Paulson is among those looking to gain from the inverse relationship of falling bond prices and rising yields. – Yahoo Finance
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Grants Interest Rate Observer – free Winter Break Issue 33 pages – James Grant is always a good read.
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Morgan Stanley: Interest Rates Set To Soar 40% As Bond Vigilantes Make Geithner And Obama Pay For Their Mess – Get ready for a wild ride on the long end of the curve, as the bondvigilantes go to work making Barack Obama and Tim Geithner pay for the bailout… Bloomberg: Yields on benchmark 10-year notes will climb about 40 percent to 5.5 percent, the biggest annual increase since 1999, according to David Greenlaw, chief fixed-income economist at Morgan Stanley in New York. The surge will push interest rates on 30-year fixed mortgages to 7.5 percent to 8 percent, almost the highest in a decade, Greenlaw said. … – Before It’s News
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Bonds: Strategies for 2010 – By David Bogoslaw – Veteran bond-fund manager Bill Larkin tells Bloomberg BusinessWeek what fixed-income investors can do to boost returns—and protect their portfolios from inflation – BusinessWeek
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30-year fixed mortgage rate rises above 5% – By Martin Zimmerman – LA Times Business –
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A Savvy Bond Man Bets Big on Inflation – Tedford Sees Price Pressures; Time to Buy Timber? – great article – WSJ subscription might be needed – Wall Street Journal