Finance, Bill Gross

Inflation and deflation in this levered world coexist nearly side-by-side.

- Bill Gross (1944- )

Bond bubble may be closer to popping

With the stock market heating up, there is growing concern that the long-lasting bond bubble might finally be ready to pop. As major stock indexes like the Dow and S&P 500 soar to record highs, investors are confidently leaving the safety of bonds to chase higher returns in equities. Consequently, the yield on the 10-year U.S. Treasury note has climbed past 2 percent, hitting an 11-month high. As the economy slowly recovers, this shift toward riskier assets is likely to continue.

Adding to the shift, the Federal Reserve is expected to halt further stimulus measures, paving the way for long-term interest rates to climb naturally. Market strategists predict a steady rise in yields, potentially reaching 3.2 percent by 2015. This upward trend in rates could spell trouble for the housing market, as higher mortgage rates would likely slow down home buying and refinancing, ultimately squeezing the banks.

Other global factors are also pushing rates higher. Aggressive money-printing in Japan and Europe is strengthening the U.S. dollar, while ongoing political battles in Washington over the debt ceiling raise the threat of another credit downgrade. The transition might not be a sudden crash like previous financial crises, but it certainly signals a bumpy road ahead for bond investors.

Based on the article: Paul R. La Monica, "Bond bubble may be closer to popping" (CNNMoney) • Read the original post

최근 주식 시장이 뜨겁게 달아오르면서, 오랜 기간 이어져 온 채권 시장의 거품이 꺼질 수 있다는 우려가 커지고 있습니다. 다우와 S&P 500 지수가 연일 최고치를 기록하면서 투자자들은 안전한 채권보다는 수익성이 높은 주식으로 눈을 돌리고 있습니다. 그 결과, 미국 10년물 국채 금리는 최근 11개월 만에 가장 높은 수준인 2퍼센트 위로 올라섰습니다. 경제가 천천히 회복됨에 따라 투자자들의 이러한 위험 선호 현상은 당분간 계속될 것으로 보입니다.

여기에 미국 연방준비제도가 시장에 돈을 더 푸는 부양책을 멈출 것으로 예상되면서 금리 상승세는 더욱 뚜렷해질 전망입니다. 전문가들은 10년물 국채 금리가 꾸준히 올라 2015년에는 3.2퍼센트까지 도달할 수 있다고 분석합니다. 이렇게 금리가 오르면 주택 담보 대출 금리도 함께 뛰어올라 부동산 시장의 활기를 떨어뜨리고 은행들에게도 큰 부담이 될 수 있습니다.

뿐만 아니라, 일본과 유럽의 돈 풀기 정책으로 인한 달러 가치 상승, 그리고 미국의 국가 부채를 둘러싼 정치권의 갈등도 금리를 끌어올리는 불안 요소로 꼽힙니다. 과거 금융 위기처럼 한순간에 시장이 무너지는 충격은 아닐지라도, 안전하다고 믿었던 채권 시장에 곧 찬바람이 불어올 수 있습니다.

참고자료: Paul R. La Monica, "Bond bubble may be closer to popping" (CNNMoney) • 기사 원문 읽기

Housing and Core Inflation – It’s Complicated

Housing and Core Inflation – It’s Complicated

Laura Rosner - Market Economics
US Daily Spotlight | 22 Feb 2013 03:15 |

Markets were risk-off on Thursday, as equity markets sold off by more than 0.6% for the second day in a row, while the 10yr Treasury closed the day at 1.98%. Data for the day were unimpressive with jobless claims for the week suggesting only modest improvement in February payroll employment, existing home sales edging marginally higher and the February Philly Fed manufacturing index falling sharply (details of the report were less negative than the headline index implied). Meanwhile, core inflation was slightly stronger than expected in the January CPI report, mainly reflecting a rebound in core goods prices, but also modestly firmer increases in housing costs.

Global inflation outlook 2013

Global inflation outlook 2013

Azusa Kato,David Tinsley,Dominique Barbet,Gizem Kara,Jacqueline Rong,Jeremy Lawson,Marcelo Carvalho,Ryutaro Kono,Xingdong Chen - Market Economics
Economic Desknote Global | 14 Dec 2012 12:52 |

Summary

Global Outlook

We expect global inflation in 2013 to remain broadly unchanged from 2012, at around 3½%. Inflation rates will vary between regions and countries, though. Although inflation should remain stable around 2% in the higher-income economies, emerging and developing economies are likely to see inflation edge up slightly, to 5.4% from 5.2% in 2012. Among the advanced economies, US inflation is likely to remain broadly stable at around 2% in 2013, while in the eurozone, we expect inflation to slow to 1.6% in 2013 from 2.5% in 2012. Among the major emerging economies, Asia ex-Japan and Latin America should see inflation inch up next year. Most notably, our forecast for Brazil suggests that inflation is likely to be much more of a headache than people think.

CNBC: China Economic 'Facade' Starts to Show Cracks: Chanos

China Economic 'Facade' Starts to Show Cracks: Chanos
Published: Wednesday, 18 May 2011 | 8:16 AM ET
By: Jeff Cox

China's economy is showing real signs of weakening, particularly in real estate, and even could tip into a recession, hedge fund manager Jim Chanos told CNBC.

WSJ: RBI's Gokarn: High Inflation Can't Be New Normal

ECONOMY|APRIL 5, 2011, 5:12 A.M. ET
RBI's Gokarn: High Inflation Can't Be New Normal

By SOURAV MISHRA, BIJOU GEORGE and SUBHADIP SIRCAR

MUMBAI—India cannot risk accepting high inflation as the "new normal," nor can the central bank be a bystander, a deputy governor of the Reserve Bank of India said Tuesday.

WSJ: OECD Frets Over Inflation

EUROPE NEWS|APRIL 5, 2011, 5:21 A.M. ET
OECD Frets Over Inflation

By GABRIELE PARUSSINI

PARIS—Economic growth in the world's richest countries outside disaster-stricken Japan is gaining strength, the Organization for Economic Cooperation and Development said Tuesday in an upbeat interim assessment, but warned that a rise in commodity prices may push up inflation expectations.

Bloomberg: Bernanke Says Fed Must Monitor Inflation ‘Extremely Closely’

Related News: Economy · U.S. · Currencies · Germany
Bernanke Says Fed Must Monitor Inflation ‘Extremely Closely’
By Scott Lanman and Steve Matthews - Apr 5, 2011 1:00 PM GMT+0900

Federal Reserve Chairman Ben S. Bernanke said policy makers must watch inflation “extremely closely” for evidence that rising commodity costs are having more than a temporary impact on consumer prices.

Inflation risk can hurt portfolio that plays it too safe

Inflation risk can hurt portfolio that plays it too safe
By Matt Krantz, USA TODAY

Q: Can being too safe with your investments, by putting a large chunk in savings, be in fact risky if there’s inflation?

A: Being too safe can be a sure way to lose money.

WJS: Bernanke: Fed Ready to Tackle Inflation if Necessary

MONEY|MARCH 1, 2011, 3:37 P.M. ET
Bernanke: Fed Ready to Tackle Inflation if Necessary

Federal Reserve Chairman Ben Bernanke said Tuesday the U.S. central bank is ready to respond as necessary to a surge in global commodity prices caused in part by unrest in the Middle East, though he said inflation expectations remain low.

Brazil talks tough on inflation, urges gov't to help (Reuters)

Brazil talks tough on inflation, urges gov't to help

Thu Jan 27, 2011 4:47pm EST

Brazil's budget deficit, including debt repayments, stood at 14.4 billion reais ($8.6 billion) in November, nearly five times larger than a year earlier.

JOBS, INFLATION SURGING

Neil Shearing, senior emerging markets economist at Capital Economics Ltd in London, said the central bank's minutes "are unequivocally hawkish."

"If there were any lingering doubts as to whether or not (the central bank) would shift priorities under the new governor, Alexandre Tombini, I think they've been well and truly banished now," Shearing said.

(more)

Global Price Fears Mount (WSJ)

EUROPE NEWS | JANUARY 23, 2011, 7:37 P.M. ET

Global Price Fears Mount
As Food, Raw Materials Soar, Europe's Central Bank Head Warns on Inflation

By BRIAN BLACKSTONE And MARCUS WALKER

Inflation fears—fueled by spiraling food, oil and raw material prices—are mounting around the globe, prompting the head of the European Central Bank to signal that it could raise interest rates in the future even though some countries have been weakened by the Continent's debt crisis.

Bacon prices sizzle. Consumers feel the heat.

Bacon prices sizzle. Consumers feel the heat.

NEW YORK (CNNMoney.com) -- Bringing home the bacon is getting more expensive.

Whether it's a bacon cheeseburger from a local diner or packs of bacon on grocery store shelves, you can expect to pay a higher price for your favorite cured meat until demand simmers down or more hogs are bred. ...