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Dmitri Tkachenko

Surprise: Low interest rates seen sticking around - The Globe and Mail - 0 views

www.theglobeandmail.com/...article2032075

Low Interest Rates Bonds Financial Industry Inflation Stock Market

shared by Dmitri Tkachenko on 25 May 11 - No Cached
  • Dmitri Tkachenko on 25 May 11
     
    "Interest rates have recently being going somewhere unexpected: down. With the United States government bumping up against its debt ceiling, inflation ticking upward, and a growing debt crisis in Europe, most expected interest rates to be increasing.If so, it will mean pain for savers, but good news for borrowers .A drop in interest rates is equivalent to a sale on the price of money, and corporations are already rushing to take advantage of the easy lending conditions, even if they're in no immediate need of funds. Mortgage rates have fallen, too - good news for homeowners looking to refinance. But lower rates have not turned out so well for some of the market's savviest players, including Bill Gross, the founder of Pimco, the world's biggest bond fund. Earlier this year, he sold his U.S. Treasuries, because he thought interest rates were poised to rocket higher, which would drive down prices of bonds. Oil has been trading consistently around the $100-a-barrel level, thereby lifting inflation, another bond-market negative. Investors are getting nervous and growing more willing to buy super-safe government bonds."
Heshani Makalande

Banks trim mortgage rates - The Globe and Mail - 0 views

www.theglobeandmail.com/...article2037912

Mortgage rates

shared by Heshani Makalande on 28 May 11 - No Cached
  • Four of Canada’s biggest banks are once again lowering residential mortgage rates at a time when falling government bond yields are cutting funding costs for financial institutions.
  • Royal Bank of Canada, Toronto-Dominion Bank, Bank of Nova Scotia and Bank of Montreal are all trimming their posted rates on popular five-year fixed-rate mortgages by 0.1 percentage point to 5.49 per cent among other reductions.
  • The last time they did so was on May 19 when rates for five-year closed mortgages fell by 0.1 percentage point to 5.59 per cent.
  • ...4 more annotations...
  • RBC, TD, Scotiabank and BMO are also trimming interest rates on Saturday for a number of other residential mortgage products, including various special offers.
  • This latest round of mortgage rate cuts was prompted by falling yields on government bonds across a range of terms, said TD spokeswoman Barbara Timmins in an e-mail.
  • For instance, the yield on the five-year Government of Canada benchmark bond was 2.33 per cent on Thursday, down from 2.58 per cent on May 2 (the first business day of the month), according to data on the Bank of Canada’s website.
  • Banks usually try to match maturities when they use bonds to finance consumer mortgages. As a result, a five-year government bond would be matched up with a five-year consumer mortgage.
    • Heshani Makalande
      Heshani Makalande on 28 May 11
       
      Currently it is easy to get a mortgage because the interest rates are low. This is good news for consumers who will continue to enjoy record low interest rates on mortgages and other borrowing.
alex yesikov

Collapsing Political Support Threatens Euro; Systemic Risk Threatens World Markets - Se... - 0 views

seekingalpha.com/...c-risk-threatens-world-markets

Systemic Risk Greece Euro

shared by alex yesikov on 30 May 11 - No Cached
  • Per a Reuters article Wednesday, EU banks are stuck with over 100 bln euros of Greek government debt they’re unable to sell, hedge or ignore. However the ECB is in the same situation, and holds so much Greek debt that a default would mean the ECB would need a bailout.
  • No one wants to buy the bonds even at record low prices, and insuring the debt is too expensive to be worthwhile.
  • Thus the banks, at least the big ones, can do nothing but hope that when the default comes, be it full or partial, they will be bailout out along with the ECB as an unavoidable step to maintaining economic stability in the EU.
  • ...1 more annotation...
  • That will mean, one way or another: Lots of money printing, a falling EUR and thus likely a rising USD
ngodup yaklha

http://www.theglobeandmail.com/report-on-business/economy/eu-grapples-with-greek-crisis... - 0 views

www.theglobeandmail.com/...article1463543

Deregulation

shared by ngodup yaklha on 05 Jun 11 - No Cached
  • ngodup yaklha on 05 Jun 11
     
    The second was failure to deal with its huge structural costs, the result of excessive government hiring and lack of deregulation. Stefanos Manos, the retired politician who was minister of economy and finance in the early 1990s, launched Greece's deregulation and privatization process. Before he lost his job in 1993, the telecom industry deregulation was well under way and public-private partnerships were put in place. Later, banking was deregulated to some degree. But then the political will to keep going evaporated and the deregulation process pretty much stopped. By last year, Greece's debt as a percentage of GDP was about 112 per cent, more than double that of Spain (another ailing euro zone country) while its budget deficit reached 12.7 per cent of GDP, the EU's highest. The spectre of Greece going bust sent Greek bond yields soaring last week, sending the euro in the opposite direction.
Benjamin Gray

Age of outperformance ends for Canadian banks - The Globe and Mail - 0 views

www.theglobeandmail.com/...article2034967

leverage

shared by Benjamin Gray on 03 Jun 11 - No Cached
  • Between 1990 and 2010, the Canadian prime rate declined by more than 10 percentage points, while inflation fell significantly. The result was a near-perfect environment for financial assets, pushing values for stocks and bonds ever higher.
  • Empowered by the regulator, the Canadian banks have leveraged their massive size and distribution powers to dominate virtually all the financial services sector.
  • The combined outcome was an explosion in trading and market-sensitive revenues, which grew by more than 15 per cent a year for two decades, and today are approximately 20 per cent of gross revenues. Although the process is not quite complete, the banks are also well on their way to dominating the domestic mutual fund business.
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