Borrowing Costs

"Now The Pain Begins": S&P, Moodys Cut Illinois To Near Junk, Lowest Ever Rating For A U.S. State

“We’re going to start to see some real pain now,” Senate President John Cullerton told reporters in Springfield on Wednesday after both S&P and Moody's downgraded Illinois to just above junk, the lowest ever rating for a US state. “We’re going to start to see downgrades. We don’t have any funding for schools. We don’t have any funding for higher end and a bunch of social programs.”

In Watershed Event, Europe Unveils Plan To Securitize Sovereign Debt

In a watershed event for the European - and global - bond markets, Brussels is pressing for sovereign debt from across the eurozone to be "bundled into a new financial instrument and sold to investors as part of a proposal to strengthen the single currency area."  Call it securitized sovereign debt.

The Fed Is About To Hike: Why That Is Bullish For Bonds

Contrary to conventional wisdom, Treasuries have rallied following the last three rate increases. Instead of sending yields higher, the hikes are driving speculation that rising short-term borrowing costs will curb the economic expansion and make it tougher for the Fed to sustain its 2% inflation target.

Mortgage Rates Tumble To 6-Month Lows

After a week of dismal housing data, a silver lining perhaps. The spike in U.S. mortgage rates since the November presidential election has been cut in half.

ECB Warns Of "Excessive Exuberance" In House Prices; Sees Financial Instability Due To Higher Yields

In an unexpected two-part warning from the ECB, the European Central Bank warned of “excessive exuberance” in some European housing markets, driven by offshore buyers, that could spread to other areas in a “ripple effect.” Separately, the ECB also said "debt-sustainability concerns" have risen in the past six months amid a potential increase in yields and political uncertainty in some countries.

Asia Jumps, Europe Stutters As Political Rumblings Return; Oil Nears $51

Global stocks were mixed to start the week, with Asian stocks higher, European stocks initially advancing then fading gains, while S&P futures are little changed after the biggest weekly drop since April (which for those keeping record was -0.4%). European shares, the euro and the pound all stumbled on Monday as rumblings in Spain, Britain and Brussels reminded investors that the region still has plenty of political uncertainty left in the tank.

What's The Worst That Could Happen?

The last time the stock/bond ratio was this elevated, it didn’t work out well for investors as volatility spiked, equity prices plunged and the “sprint for safety” send bond prices surging.