Category Archives: bonds and loans

The Downside of Falling Mortgage Rates

I’m scared by the latest uptick in mortgage financing. Mortgage rates fell sharply yesterday, which is good news for people with good credit. But it might also be good news for people with bad credit — and very bad news … Continue reading

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The Broken Treasury Market

If you want to worry about naked shorting, don’t worry about the stock market, where it’s vanishingly rare. Worry instead about the Treasury market, where it’s a major problem. Helen Avery has a huge and important story up about failures-to-deliver … Continue reading

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Citi’s Credit Barely Tighter

While most people are looking at the share price, Alea has the Citi CDS datapoint: 19bp tighter, at 482bp. That seems disappointing: what kind of a rescue is this, if Citi is still trading at levels more normally associated with … Continue reading

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TIPS Strips, Redux

It took a bit of hunting, but I finally found someone who knows all there is to know about TIPS strips. Mike Pond is an Inflation-Linked Strategist at Barclays Capital (yes, that’s really a job, and yes, it still exists) … Continue reading

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The Deteriorating Bond Market

Accrued Interest has a great blog entry today on the implications of the big secular shift in the bond market, away from hedge-fund-driven leveraged relative-value plays and towards long-term real-money investing. No longer is it likely that arbitrages even of … Continue reading

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Ecuador Approches Default

Here we go again. A brief history: as soon as he was elected, back in 2006, Ecuadorean president Rafael Correa started making entirely-predictable noises about defaulting on his country’s bonds. (He’d said he’d do just that throughout his presidential campaign.) … Continue reading

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Where are the TIPS Strips?

Let’s say you’re a risk-averse investor with a nest egg you want to save for retirement. You’re not greedy; you’d rather take absolute safety over an extra point or two in annual returns. You could just keep your money in … Continue reading

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When Wall Street Takes Advantage of the Public Sector

Andrew Clavell called it, back in February: Let’s assume you work at a Pennsylvania school board… The more complex the structured product, the more opportunity for agents to extract fees at your expense… If you claim you do know where … Continue reading

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Liaquat Ahamed’s Lehman Question

Add economic historian Liaquat Ahamed to the ranks of those, like Paul Krugman, who think that monetary policy has at this point done all that it can do, and that the next important step will have to be fiscal. I … Continue reading

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Chart of the Day: The Russia-Brazil Spread

After writing about my BRIC decoupling thesis, I asked the friendly chaps at Markit if they could share with me the 5-year CDS spreads for the four countries in question. It turns out that India isn’t really much of a … Continue reading

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When Banks Stop Underwriting

Citigroup and Credit Suisse are so damaged by the financial crisis, it seems, that they’ve given up underwriting loans to their biggest and most valuable corporate clients, including Nestle and Nokia. Instead, they’re linking those loans to the companies’ CDS … Continue reading

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Economic and Financial Bad News

If you’re one of those people who needs a negative GDP number to convince yourself that we’re in a recession, here you go. But the headline -0.3% figure isn’t the worst bit: that would be the 8.7% fall in disposable … Continue reading

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The TED Debate

Alex Tabarrok puts up a chart of the TED spread over the past 40 years or so, with the clear implication that it’s not at unprecedented levels right now. Alea responds with a chart of something he calls the "TED … Continue reading

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Credit Market Datapoint of the Day, AIG Edition

What was that about the credit markets improving? Not so fast: American International Group Inc. has used $90.3 billion of a U.S. government credit line since it was bailed out last month… AIG’s latest balance was revealed yesterday by the … Continue reading

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The Credit Crunch Isn’t a Myth

Joe Wiesenthal points to a new paper from the Minneapolis Fed which seems to show that bank lending’s quite healthy. A lot of bank lending is going up, say the authors, and therefore the banking system can’t be in as … Continue reading

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How Originate-to-Distribute Brought Down Wachovia

Zubin reckons there’s reason to believe the originate-to-distribute business model wasn’t responsible for the subprime mortgage crisis. He might be right. But I’m not at all convinced by some of his arguments. Consider this one: If you believe that incentives … Continue reading

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The Return of Lending: Still Distant

Andrew Ross Sorkin gets an astonishing, if anonymous, quote this morning: “It doesn’t matter how much Hank Paulson gives us,” said an influential senior official at a big bank that received money from the government, “no one is going to … Continue reading

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Melting

Your daily TED update: 320bp, and falling. I love Sam’s metaphor: not frozen so much as melting. Credit markets, like water, freeze quickly and melt slowly. But if things continue to improve at this clip, Bill Gross’s prediction of Libor … Continue reading

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The Coming Consumer Credit Crunch

I was going to respond to Virginia Postrel’s silly article claiming that current levels of consumer debt are nothing to worry about. But I don’t need to, because Henry Blodget, without mentioning Postrel directly, has done it for me. All … Continue reading

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Credit: No Easy Answers

Robert Aliber has a peculiar op-ed in the FT, presenting a TARP plan "that should revive the market in mortgage-related securities, greatly enhance bank capital and earn several tens of billions of dollars for the US Treasury". It’s peculiar because … Continue reading

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A Dark Morning

A hardy perennial in sci-fi movies is the scene where people start firing ever-larger weapons at some alien object, only to see it wobble a little instead of getting obliterated as expected. I’m beginning to see the TED spread (432bp … Continue reading

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Investor Notes: BRICs and Credit Default Swaps

A couple of notes from the lunch I went to this afternoon put on by Natixis Asset Management: •Ron Holt of Hansberger Global Investors passed along a provocative datapoint: that the total market capitalization of all Russia’s oil companies is … Continue reading

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The Very Slow Thaw

The speed and size of yesterday’s stock-market rally — which is being continued today — should absolutely not be taken as any indication that the credit crunch is over. It represents hope that the crunch will be over — and … Continue reading

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Credit Crunch Picture of the Day

I’m a fan of Jim Surowiecki’s financial column in the New Yorker, but this week the real kudos goes to his regular illustrator, Christoph Niemann. In a classic case of a picture telling a thousand words, Niemann nails the credit … Continue reading

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Looking for Credit Data Online

If the TED spread is not the best indicator to look at to judge the health of the credit markets, what should we be looking at? Nick asked me this morning about S&P’s newly-launched Commercial Paper index, which might be … Continue reading

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