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MOODY'S THREATENS TO CUT USA RATING WITHOUT DEAL TO CUT DEBT/GDP Sam RoSeptember 11, 2012Moody's is warning that it may cut the US government's credit rating from the Aaa to Aa1 if it is unable to negotiate a deal to materially reduce its federal debt to GDP ratio. Here's the annoucnement from Moody's: ------------------- Moody's issues update on the outlook for the US government's debt rating: Budget negotiations key Global Credit Research - 11 Sep 2012 New York, September 11, 2012 -- Budget negotiations during the 2013 Congressional legislative session will likely determine the direction of the US government's Aaa...

On July 18th, 2012, the German government sold US$5.13 billion worth of 2-year bonds at an average yield of -0.06%. Please note the negative symbol in front of that yield number. What this means is that the German government was able to borrow money for less than nothing. When those specific bonds expire in two years’ time, the German government will pay back the original $5.13 billion minus 0.06%. Expressed another way, investors knowingly and willingly bid the German government $5.13 billion in exchange for bonds that will pay no interest and are guaranteed to lose them money on expiration.1...

A decision by Warren Buffett's Berkshire Hathaway Inc. BRKB -0.15% to end a large wager on the municipal-bond market is deepening questions from some investors about the risks of buying debt issued by cities, states and other public entities. The Omaha, Neb., company recently terminated credit-default swaps insuring $8.25 billion of municipal debt. The termination, disclosed in a quarterly filing with regulators this month, ended five years early a bullish bet that Mr. Buffett made before the financial crisis that more than a dozen U.S. states would keep paying their bills on time, according to a person familiar with the...

GARY SHILLING: Bonds Are Great, Stocks Are About To Plunge 40% Henry Blodget Aug. 9, 2012, 12:51 PM |It's hard to find anything in investing that everyone agrees on, but one thing almost everyone agrees on right now is the theory that bonds are terrible investment because interest rates are about to soar. In fact, over the last several years, a parade of respectable economists and strategists have made the seemingly obvious observation that "interest rates have nowhere to go but up," suggesting that anyone who is dumb enough to buy bonds will get killed. And, so far, they've all...

How To Prepare For The U.S. Treasury Bond Market Apocalypse Interest-Rates / US Bonds Aug 05, 2012 - 04:52 AM By: Investment U Alexander Green writes: The Wall Street Journal made an interesting observation recently, “Treasury bonds are priced for the end of the world.” It was a news article, not an opinion piece. But it happens to be the viewpoint of virtually every investor with half a brain – or a modicum of common sense. A few months ago, for instance, the world’s best-known investor, Warren Buffett, wrote in his annual letter to shareholders, “Right now bonds should come...

(CNSNews.com) - Since President Barack Obama was inaugurated in January 2009, the Federal Reserve’s holdings of U.S. government debt have quintupled, according to the Fed’s official monthly balance sheet. On Jan. 28, 2009, a week after Obama’s nomination, the Fed owned $302 billion in U.S. Treasury securities. On April 25, 2012, the latest date reported, the Fed owned five and a half time that much in U.S. Treasury securities--$1.668 trillion. That is an increase from January 2009 of $1.366 trillion—or 452 percent. Under Obama, the Federal Reserve has become the single largest owner of U.S. government debt. When Obama entered...

DYLAN GRICE: The Next Crisis Will Be Born Out Of The US Treasury Market Matthew Boesler Jul. 1, 2012, 6:23 AM SocGen investment strategist Dylan Grice does not think "safe-haven" assets are very safe. In Grice's latest note to clients, he compares the illusion of safety created by faulty regulation before the 2008 financial crisis to the new, impending wave of financial regulation on the table like Dodd-Frank in the U.S. and Basel requirements on a global scale. Grice warns "madness is going on in the government bond markets" today, furnishing this long term chart of US Treasury yields going...

Investors who find Treasury yields too meager can choose from a long menu of meatier government bond yields abroad. But finding the right combination of risk and return is getting trickier. Most investors hold a sizable chunk of government debt in their bond portfolios, for safety more than the income the bonds generate. Not long ago, that slice consisted of one kind of bond: U.S. Treasurys. But the relationship between yields and risk in government bonds has taken an odd turn. As a result, even cautious investors should consider branching out from the U.S. to places like Australia and Mexico....

(CNSNews.com) - Since President Barack Obama was inaugurated in January 2009, the Federal Reserve’s holdings of U.S. government debt have quintupled, according to the Fed’s official monthly balance sheet. On Jan. 28, 2009, a week after Obama’s nomination, the Fed owned $302 billion in U.S. Treasury securities. On April 25, 2012, the latest date reported, the Fed owned five and a half time that much in U.S. Treasury securities--$1.668 trillion. That is an increase from January 2009 of $1.366 trillion—or 452 percent. Under Obama, the Federal Reserve has become the single largest owner of U.S. government debt. When Obama entered...

(Reuters) - Municipal bond prices fell and yields rose on Wednesday, squeezed by a retreat in the Treasury debt market, though yields remained near historic lows. The municipal bond market usually surges in June and July, when bondholders often reinvest billions of dollars of coupon payments and redemptions. But that scenario might be dampened as a result of the current low interest rates, said Edward Reinoso, chief executive officer of New York-based Castleton Partners. "The penalty for staying in cash is so minimal that it may be the better option instead," he said. In the secondary market, the 10-year yield...

The debt crisis and central bank policy responses have degraded the quality and value of debt markets and signal a "potential breaking point" in the global economy, PIMCO's Bill Gross, manager of the world's largest bond fund, said in his monthly letter to investors. In his June outlook entitled "Wall Street Food Chain," Gross said stimulus policies by the Federal Reserve and the European Central Bank have led to riskier government bonds with lower value and paved the way for higher inflation.

Steady declines in smoking, a big win for public health, are creating problems for municipal bond investors. A handful of bonds backed by yearly payments from tobacco companies under a landmark settlement with 46 states are in the earliest stages of default, and more distress is expected. Dozens of states, counties and cities issued the bonds to receive billions of dollars upfront from the 1998 settlement. But now they are seeing smaller payments than expected from the companies as tobacco sales decline in America. There is also a renewed legal battle between the states and the tobacco companies, with the...

NEW YORK (AP) -- Stock futures tumbled Wednesday after economic policymakers signaled that they may be less willing to fund more economic growth through bond purchases. The Dow Jones industrial average futures fell 112 points to 13,020. The Standard & Poor's 500 index futures fell 12.1 points to 1,396.7. The Nasdaq composite futures slipped 21.25 points to 2,757.75. The Institute for Supply Management will release its services index at 10 a.m. Eastern time and economists expect it to show that growth has cooled compared to February, which came in at the highest growth in a year. But it was the...

Bank of Greece complicit in broadscale embezzlement revealed by respectable Greek health site... The illegally denied default of Greece entered a dramatic new phase this afternoon with the revelation by mainstream Greek public health website Health News that, shortly before midnight on March 8th – the eve of Greece's psi completion on Friday March 9th – on average 70% of public utility funds in varous large, interest-bearing accounts at the Bank of Greece were raided. These included most of the state's regional hospital budgets, various universities, and (it is alleged) at least one utility company. The shortfalls came to light...

U.S. Treasury Bond 10-Year Yield Is Heading Up Above 6% Interest-Rates / US Bonds Mar 25, 2012 - 06:18 AM By: Andrew Butter The last time the yield on the 10-Year US Treasury dipped below 2% was in 1941; just before (not just after), the Japanese attack on Pearl Harbor. Perhaps then the recent 1.8% low was not just because of Euro-refugees, perhaps we are on the cusp of another Black Swan tail-risk potentially as devastating as World War II? Or perhaps there is another explanation? This article is a continuation of a series started two years ago which correctly...

Much to the chagrin of the Federal Reserve, bond traders are taking that FOMC statement from yesterday and taking no prisoners as they literally hammer the long bond into submission. I find it a bit ironic (to be honest I am gleeful about it) that the Fed, which continues its attempts to manipulate hedge fund behavior by herding them into the equity markets, has opened an enormous can of worms and awakened the heretofore comatose bond vigilantes as an undesirable chain reaction to their "peachy" statement about the state of the US economy. Bond traders are already moving the Fed...

Yes, I know Athens is burning as some of the more violent demonstrators threw some Molotov cocktails and the media was given some photo ops so the situation can be understood by those too involved with life’s challenges to read. If that sounds acerbic it is because I have been writing about the Greek debt crisis since December of 2009 when the Chinese investment funds reneged on a promise to purchase $25 Billion of Greek bonds and the debt crisis was in full swing. Again, Athens may be the present battleground but the political and financial games are being played...

Sound bites from the left. Sound bites to the right; here I am, stuck in the middle with you (STEALERS WHEEL). The House Budget Committee was in full political regalia as posturing for the home folks and November’s election was in full force. Most of the questions are redundant or ridiculous and in some cases, both. An exception was Committee Chairman Paul Ryan, who asked Mr.Bernanke if the FED‘s policies had corrupted the BOND markets that they stopped sending a credible signal. It has been a consistent theme of NOTES that the BOND market is broken as an indicator of...

[T]he real question that we face for all the markets is WHEN will the Sovereign Debt Crisis go into meltdown? We are in the 13th year from the Major Directional Change of 1999 that marked the birth of the Euro, low in gold and crude oil, and the bubble in shares that peaked in many countries in 2000. Just as the United States has been obsessed with the Great Depression as government always is ready to stimulate and many see this as pending hyperinflation with the end of the world, Germany suffers from the opposite delusion. There, the fear is...

S&P Sounds Alarm On US, G20 Downgrades Antonia van de Velde, CNBC January 31, 2012 Concerns over the size of United States debt reared their head once again as ratings agency Standard & Poor’s warned that health care costs for a number of highly-rated Group of 20 countries, including the U.S., could hurt growth prospects and harm their sovereign creditworthiness from the middle of this decade. S&P downgraded the United States credit rating for the first time ever in August of last year. "Governments' fiscal burdens will increase significantly over the coming decade, with the highest deterioration in public finances...