1 Year Bills -- 1.5-2.0%
2 year note -- 2.5-3.0%
5 year note -- 3.5-4.0%%
10 year note --4.0-4.5%
20 year bond -- 4.5-5.0%
30 year bond --5.0-5.5%
ZIRP, zero int. rate policy; NIRP, negative int. rate policy.
1. Less interest income to savers = less spending by savers
2. Puts banks & insurance companies at risk, since they don't earn enough on the rate spread to continue lending & policy activities.
3. Savers & banks & insurance companies are forced to invest in riskier assets, that may plunge. Creates bubbles.
Why not just hoard the cash at home in a safe place? Hide it in a fire proof box where no burgler could find it. Anyone accepting negative rates is an idiot. Boycott the bill auctions. I would boycott the note and bond auctions as well--the rates are just an insult.
Supplies are that tight.
CNBC said that the prospects of a deal are poor. Lew said the money will run out in early Nov., not the short term extension in early Dec. that Boehner worked ot. CNBC said the impasse over planned parenthood funding will be taken up again soon, but by then the debt limit will have been reached. The new probable hardline speaker, McCarthy, oppses funding for PP. So if they try to attach this to the budget limit hike, the Pres, will almost certainly veto it & we have a shutdown, and (hopefully not) a default.
Physical, especially coins, is almost out of stock. Need to pay a big premium over spot to buy. Yet here we have paper SLV & paper futures languishing. I SMELL A RAT!
If TWTR rises to $40, each of them would be worth $500; $45--$1000 each---someone bout them for $15 today.
This could accelerate the selling of USTs coming out of China, Japan, Europe etc.
Get out of treasuries. No deal on planned parententhood, etc. Could be a bond crash.
Real estate & the economy are now in serious retrenchment in most places. Not good for large appliance sales. 30% correction seems entirely possible. Even retest of $100? This stock has gone up almost 10 fold in the last six years (below $25 at one point) as real estate recovered, so a test of $100 is entirely possible imho.
Bullard said a "normalized level" of rates, given the 5.1% unemployment rate, would be in the 3% area for short term rates (Fed funds, 16 week TBill, discount rate etc.) which presumably would also mean considerably higher longer rates (5%?) with a positively sloped yield curve.
Cramer responded to Bullard by saying he hasn't been cheerleading stocks recently; in fact, he has been somewhat cautious.