Bond Market Today: Fed raised rates & bonds Rallied As Predicted

Bond Market Today

This is an update on an article we wrote back in November, titled oops we did it again; the Fed is setting up the masses for another stimulus program. Well, the Fed raised rates and it was a non-event as we predicted. Fast forward and the markets are tanking not because of higher rates but because well would you believe it ” oil prices are too low”. Before the nonsense was that oil and energy prices were too high, now the problem is that they are too low. What will they come up with next?

So the Feds raised rates but bonds are rallying strongly and almost at their old highs; one would think that the Fed actually lowered rates. All that fuss over a pathetic 0.25% rate hike and now we find that bonds are rallying anyway.

“The Federal Reserve seems to have lost a little bit of that control they’ve had over the last seven years during their zero interest rate monetary policy,” said Todd Colvin, senior vice president at Ambrosino Brothers. Mr Colvin goes on to make the following statements

“There’s a place to be right now and that’s in riskless assets,” he said. “And the favorite riskless asset on the globe is the U.S. Treasury.”

“I think that 10-year yields could easily get to 1.5%,” he said, “not only because of weakness in the economy and low inflation but you have that pesky U.S. election coming up. And that could hinder the Fed’s ability to really manipulate monetary policy at a time when, really, you want things to be apolitical as we walk into an election.”

“Right now, 1.5% targets, but I certainly wouldn’t make that the floor,” – he said.

Bond Market Today: What are The Futures Markets saying

Futures on the fed funds indicate the market is not pricing a rate hike this year and appears to be discounting one even in 2017. History indicates that the markets tend to trend higher for up to two years after the first rate hike. Thus based on this data, a rate hike should be viewed as a positive event as it would indicate all was well. But perhaps all is not well, and that is why the crowd is panicking at the mere thought of hike.

We, however, believe that this boring Fed might raise rates story is a non-event and have said so many times in the past.

The Fed is hesitating so much in raising rates because they know that the economy is not really strong. However, what is more, important is they are trying to gauge if the public is buying the nonsense that the outlook is improving via all the manipulated data that is being put out? If they sense that the public is buying this nonsense, then they will initiate a tiny rate hike. To some degree, it appears that the public is buying this nonsense. Whatever move the Fed makes; their ultimate aim is to find a way to embark on another wave of QE. Look at the World’s markets; while the US markets look okay, the emerging markets are taking a beating and its just a matter of time before the contagion spreads to the U.S. The only way to prevent this is to flood the markets with hot money. Market Update Oct 2^nd, 2015.

The Fed is still trying to gauge if the crowd has bought into their drug-induced theme, which states that all work and no play makes Jack a smart chap. We used to use the word sadly but is that really the appropriate word to use; if the crowd does the same thing over and over again. Perhaps instead of saying sadly, we should instead begin the sentence with; insanely the crowd appears to be buying into this theme. Is the economy really improving? If it is, the real unemployment numbers should be very low. Instead, it appears that 40% of Americans might not be working, if the story below is to be believed. Market Update Oct 17, 2015

The most recent jobs numbers masked a dark story. Unemployment held steady at 5.1%, but only 59.2% of Americans have a job. The difference is the unemployment rate only counts people who don’t have a job and are actively looking for one. The labour force participation rate is perhaps a more accurate gauge of the economy. It includes people who’ve given up, don’t want to, or can’t work, and it fell to 62.4% last quarter Full story

Based on the numbers above, the economy should be in tatters and people should be rioting. Instead, all appears calm, the masses suffer silently and lay the blame on forces they claim to have no power over. As long as they take this approach, that is exactly how things will play out. It is, for this reason, the Fed decided to raise rates by a paltry 0.25% and took forever to do so. Now they are going to backtrack on their commitment to raise rates as the economy is in trouble.

Well, it was always in trouble but now the masses might see through the smokescreen they have created. While many call the Fed stupid and short-sighted; the truth is that at every twist and turn of the road, they have walked away unscathed. While the gold bugs wait for their day in glory (many have already passed away waiting for that day to materialize), they do not understand that even if Gold moves to 10,000 which it will not, the Fed has, is and will still win the game. What does it matter if Gold moves to $100K; if you control the printing press, you just push the pedal to the metal and print a lot more and problem solved. [/color-box]

Never get caught up in any battle, for a battle is one of many in a war. The idea should be to win the war and not the battle. You look around, and you gauge the situation and then you plan a course of action. The masses are frozen, they bitch and moan about how bad things are, but when push comes to shove, they allow themselves to be pushed. In the end, their only role as history clearly indicates is that of cannon fodder. Do not feel sorry for the masses and do not attempt to educate them.

For your reward will be an immense amount of pain. The masses are notorious for punishing the wrong person for the wrong crime. There is no such thing as a good Samaritan in the land of investing. A good Samaritan is usually a dead Samaritan and heroes usually have very short life spans. Pay attention to history, you will never see the masters of deceptions or the shadowy elite players move out of the shadows and try to play the role of a hero or a good Samaritan. These roles are created for the masses, and they are sold a bag of lies and they gladly buy into this mumbo jumbo.

No matter what the nuts out there state; the Fed is not backed into a corner nor are they scared or nervous about anything. They have backed everyone else into a corner, and the ones that are scared are the ones makes these idiotic proclamations. The whole purpose of this experiment is to find out just how far the masses can be pushed with the proper brainwashing. Right now they are taking notes so that the central bankers of the future can build on these lessons and push the envelope even further. The reason there is no repeat of 1929 is that they took notes and learned from their mistakes. These guys are nefarious geniuses. They claim to be impotent, but they are omnipotent. So how do you win? The answer is simple. Throw your silly emotions and bias out of the window and ride on their coattails. End of story.

Bond Market Today

Bond Market Today: What are The Futures Markets saying

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