Bonds and Stocks

November in Figures

November 30, 2011

November had uncanny parallels to October.  Most of October had seen a rise in risk appetite and associated weakness in the dollar and strength in equities, and in most of November just the opposite had occurred.  Former Greek Prime Minister Papandreou’s proposal to submit the October 26 EU rescue package to a referendum caused that […] More

An Historic Closing for the Dow

January 5, 2011

Today’s 11,723 closing level in the Dow Jones Industrial Average matches the closing level on January 14, 2000.  The index went downhill after that date, the culmination of a nearly 17-1/2 year bull run during which the DJIA soared 16.9% per annum on average from 777 at the close on August 12, 1982.  In hindsight […] More

Footprint of Deflation in Major Advanced Economies

July 27, 2010

The fear of future inflation has ushered in an age of austerity even as prospects for sustained economic recovery among major advanced nations face substantial and unusual uncertainty.  It is feared that government deficits, which ballooned in response to a drop in tax revenues caused by the deep recession, will be monetized away by central […] More

Fear of Financial Contagion

May 4, 2010

The world recession of 2008-9 demonstrated the interconnectedness of global financial markets and how quickly a localized malfunction can destabilize other seemingly insulated and unrelated areas.  Excessive sovereign deficit-spending and debt are not unique to Europe or the euro area.  Public finances were thrown out of whack in numerous countries by the policy response to […] More

Market Contagion

February 9, 2010

Although Greece constitutes just 2.65% of the euro area economy, it is understandable why the Greek debt crisis rattled the region’s other markets.  One element of Greece’s problems, the unreliability of reported data and past gimmicks used by Greek authorities to meet standards for joining the European Monetary Union, naturally raise suspicions about other members […] More

January in Figures

January 29, 2010

Risk aversion staged a comeback at the start of 2010 and was manifested in a stronger yen and dollar, lower bond yields, weaker equity markets, and softer commodity prices. 10-Yr Yield 12/31/09 01/29/10 Chg vs End-Nov U.S. 3.83% 3.58% -25 Basis Points Germany 3.39% 3.20% -19 Japan 1.30% 1.32% +2 U.K. 4.02% 3.91% -11 Canada […] More

December in Figures

January 4, 2010

In the final month of 2009, the dollar and equities advanced.  Traditional hard currencies, that is the yen, euro and Swiss franc, suffered the most pronounced losses against the greenback, and the Canadian and Zealand dollars outpaced their U.S. counterpart.  The Dow Jones Industrial Averaged lagged behind the rise of other U.S. stock indices and […] More

November in Figures

November 30, 2009

November was a spectacular month for gold prices and saw North American and Japanese stocks follow incredibly divergent paths.  Short-term interest rates remained anchored at very low interest rates, and bond yields, which had risen in October, relinquished all those increases and more.  The dollar, pound and kiwi traded significantly lower against the euro, Swissy, […] More

September in Figures

September 30, 2009

During the past month, interest rates fell modestly for the most part, sterling and the dollar weakened, equities strengthened except in Japan, and gold advanced.  Barriers of JPY/USD 90, GBP/USD 1.60, and $1000 on gold were broken.  Oil closed not far from its end-August level, and use of the dollar to fund carry trades become […] More

Does The Japanese Government Bond Market Face Armageddon? Probably Not.

September 8, 2009

A provocative headline on today’s wire services reports High Frequency Economics founder and chief economist Dr Carl Weinberg predicting a “catastrophic” debacle in Japanese public finances under the incoming Democratic Party government, resulting in a near-vertical yield curve.  Insofar as Japan has the second largest economy in the world, Weinberg reportedly further projects that this […] More