Who Will Buy the Bonds?

Mar 9, 2011 | Bonds, Market Commentary, Monetary Theory

Yo u’ll see me in the coming months talk about the bond markets, particularly as the Quantitative Easing (QE2) comes to a close this summer.

We have a huge federal deficit. We need people to buy Federal bonds to lend money to the government.

With the huge influx of money from the Fed in the past few months, foreign investors were squeezed out. Will they come back? The answer is not as simple as you’d think.

I’ll be writing more and more about this as the year goes by, particularly it’s impact on you.

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S&P Downgrades Japan from AA to AA-

Feb 9, 2011 | Asia, Bonds, Market Commentary

J apan has been in a continued recession for the past 20 years.

The deficit levels of the Japan government are among the highest of the developed countries, and expected to increase in the coming years.

This is not good news for Japan. As the rating decreases, the extra premium paid to borrow money goes up. So, a 3% cost of borrow might increase to 4%.

Anyway, this is something to watch as the United States deficit to GDP is increasing rapidly.

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Just When You Thought the Euro Was Out

Feb 9, 2011 | Bonds, Europe, Market Commentary

Yo u’ve been reading my newsletters and saying “boy, that Mike Brady knows everything”. That may be true, but it’s good to remember the markets have a mind of their own.

The Euro has rallied against other currencies recently.

Do I think this is a short term rally? Yes. Do I think the Euro and Europe in general still have long term problems? Yes.

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Muni Fund Outflows

Feb 2, 2011 | Bonds, Market Commentary

I f you’ve been listening to my videos and reading my newsletter, you are minimally affected by the Municipal Bond declines over the past 2 months.

Yeah!

Outflows are huge right now and I anticipate they will continue while states determine how to balance their budgets.

To do: Continue to avoid Municipal Bonds unless you’ve really done your homework

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