Posts filed under “Fixed Income/Interest Rates”

Historical Global Yields & Defaults, 1800 – Present

Yields and default
Click to enlarge



Now that we managed to avoid default, let’s look at some historical examples of Sovereign default.

1. United States 2013
2. Germany 1938,1948
3. Japan 1942, 1946-1952
4. France 8 times between 1558-1788. Last one in 1812
5. Italy 1940. Almost daily speculation of another default since 2008
6. Spain 1809, 1820, 1931, 1834, 1851, 1867, 1872, 1882 and 1936-1939. Since 2008, Spanish yields spiked considerably and have been volatile on the back of another default
7. Austria 1938, 1940, 1945
8. United Kingdom 1822, 1834, 1888, 1932

While default is nothing new for many countries, this would have been for the United States.

Many economists have said that a US default would have catastrophic consequences for the global community. Borrowing costs would essentially sky rocket, global equity prices would be leveled, dollars status as a benchmark questioned and most importantly, a reversal into another deeper and darker world recession.

Glad we avoided that mess.



Ralph Dillon
Global Financial Data

Category: Credit, Fixed Income/Interest Rates, Really, really bad calls

Puerto Rico

Puerto Rico David R. Kotok, Cumberland Advisors, October 16, 2013     Puerto Rico is not the federal government. It is an important debt problem. Some readers saw the Barron’s front-page article on Puerto Rico and its financial problems. The details of the debt burdens of Puerto Rico make for an ugly picture. Puerto Rico…Read More

Category: Credit, Fixed Income/Interest Rates, Think Tank

Global Systemic Risk

click for ginormous graphic Source: NYU VLAB   I mentioned NYU’s VLAB earlier, but one more trick I wanted to share: You can drill down by region or even country to see how much risk is in the system. Note that this is a function of both size and riskiness, i.e., a very small reckless…Read More

Category: Credit, Fixed Income/Interest Rates, Regulation

Category: Fixed Income/Interest Rates, Think Tank

If Houses Traded Like Bonds

As the 10-year Treasury yield approaches 3 percent let’s take a look at the recent spike in mortgage rates and its micro impact on the housing market and average home buyer. The chart below shows 30-year fixed mortgage rates have increased 122 basis points since early May.  This translates into a 17 percent increase in…Read More

Category: Fixed Income/Interest Rates, Real Estate

Assert a Principle? Measure Market Risk?

Assert a Principle? Measure Market Risk? David R. Kotok Cumberland Advisors September 5, 2013     “Assert a principle,” says our Secretary of State, John Kerry. So now we find ourselves in the throes of an unresolved national debate over whether the US should launch cruise missiles at unknown targets in Syria in order to…Read More

Category: Fixed Income/Interest Rates, Think Tank, War/Defense

US 10 Year, CPI, and Annual % Change, 1791-Present

Here is a historical look at the US 10 Yr and CPI with Annual Percentage Change: Click to enlarge ~~~ ~~~ Under normal circumstances, interest rates will rise along with inflation. They more or less move in lock step. But ZIRP and QE means that these are not normal times. Thus, the FED’s intervention means…Read More

Category: Federal Reserve, Fixed Income/Interest Rates

Proof the Bond Bull is Over: PIMCO Selling Hedge Funds

If you have been seeking unequivocal proof that the 30 year bull market for bonds is over, look no further than this WSJ headline: Bond-King Pimco Plans to Push ‘Alternative Funds’. Think about what this means: From 1980 to 2013, PIMCO enjoyed three decades of rising bond prices — read falling interest rates — and…Read More

Category: Fixed Income/Interest Rates, Hedge Funds, Investing

What Do Outsized Bond Yield % Increases Mean?

Click to enlarge Source:: Société Générale   Nice chart from Andrew Lapthorne of Société Générale describing the spike over the past few months in bond yields. Lapthorne adds: “Not that this seems to be worrying investors too much: equity markets have proven reasonably robust in the face of such rising yields and equity volatility continues…Read More

Category: Fixed Income/Interest Rates

Broken Relationship: SPX Yield vs 10 Year

Low bond yields have in the past been bad, not good, for equity returns

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Category: Dividends, Fixed Income/Interest Rates, Video