U.

S Economy & T-
Bond
U.S Economy Present,
Past, Future
Presented by
 Muniba Shoaib
 U . S Economy Present ,
Past , Future
• America's economy grew by 3.7 percent in the third quarter of 2007,
faster than most other developed economies around the globe and
faster than the historical U.S. growth rate, since 1970, of 3.2
percent
• The American economy has grown much faster in recent years than
many economists thought possible, especially in the wake of the
terror attacks of 9/11
• Since 1970, GDP growth has averaged 3.16 percent per year,
• This rapid expansion has been concentrated in the five quarters
following the 2003 Bush tax cuts
 U . S Economy Present ,
Past , Future
• Smart tax policy is a key ingredient of economic
growth
• Tax cuts created strong incentives for investment,
Investment is one of main components of GDP,
and also one of most variable
• The average rate of investment growth after the
2003 tax cut has been 14.6 percent
• The economy was last in recession in 2001 after
that there have been ups and downs, mostly
crisis like recovery would be slow and that
unemployment was likely to remain high for
another year.
•
 Future
• A 50% probability that this is a U shaped recession
• A 30% probability this is a W shaped recession
• The third scenario (saving the worst for the last) is an
L shaped recession.
 Future Hypothesis
based on
• Oil prices: US economy needs oil prices in the range of
60-70 dollars for the economy to recover
• What happens to excess money flow: A big reason why
the economy has not gone further down in last 3
months is the massive interference by the
governments of all countries.
• Innovation: In the end every economy has grown due
to some innovation or other There are several
industries which have the capability of growth
biotechnology, smart phones, alternative energy, and
green jobs. It would be seen which among these is
able to drive the next era of growth.
•
Inflation
Presented by


 Shumail Arzu
 Inflation
• Price inflation
• The inflation rate
• Deflation
• The present fiscal year of 2009 US has been
experiencing overall deflation in the price of its
commodities due to the recent recession
• The stock market crash

•
 Inflation
• Deflation can also be brought about by direct
contractions in spending, either in the form
of a reduction in government spending,
personal spending or investment spending
• People were defaulting.
• In October 2009 the rate of deflation is
-0.18%.
•
Central Banks Expected
Monetary Policy For
Pakistan
 Presented by
 Anam Iftikhar

 Central Banks Expected
Monetary Policy For
Pakistan
• The inflation has fallen to 8.9 percent in October 2009
• External current account has improved considerably
• With government borrowings from the SBP remaining within the
quarterly limits, the broad money (M2) has also remained along
the projected path
• The real sector is also showing signs of improvement as the large
scale manufacturing (LSM)
• . A higher than projected fiscal deficit for FY09 has also changed
some underlying assumptions for inflation outlook in FY10
 Central Banks Expected
Monetary Policy For
Pakistan
• The strength and sustainability of its overall balance of payments crucially
depends on continuation of foreign financial flows.
• In conclusion, the overall level of risk and uncertainty in the economy has
increased considerably given the present law and order situation.
• As a consequence, the pressure on the fiscal position, especially from the
financing side, has escalated and growth in the real economy is limited.
• Striking a balance between monetary and financial stability and real
economic activity has become increasingly difficult.
• In this perspective, SBP has decided to support the reproduction.
•
 Centrals Bank Expected
Monetary Policy For United
States
• Mortgage crisis
• US government has also reduced the interest rates substantially
which are currently at 2.5 pc to increase the money supply and
increase liquidity which in turn will boost the demand
• The trade deficit in the U.S. Widened in October as the growing
economy resulted in imports to rise faster than the exports.
• Us a highly indebted country
 Centrals Bank Expected
Monetary Policy For United
States
• International currencies resulting in a growing
concern amongst the leading countries to
consider an alternate currency as a reserve
currency
• The unemployment is rising
• US will have to maintain interest rate below 1
pc to ensure liquidity and maintain the
purchasing power of the public until the
recession ends and the economy takes a u-
turn towards
•
Oil Prices
& Gold
Outlook

 Presented by
 Natasha Farooq
 Oil And Its Future
Impact
• As oil prices rise, costs go up for transportation companies such as airlines
and freight delivery companies, squeezing their profit margins.

• The crude oil storage industry, larger investments are expected to come
from national oil companies during 2008-15

• The global crude oil industry has been hit by the global economic
slowdown. The slowing demand, low crude oil prices and tight credit
market have posed serious challenges to the industry

• Approximately 69 major E&P projects were delayed, suspended or

cancelled altogether of which 23 projects were Canadian oil sands
projects. However with the crude oil prices reviving the situation is
expected to ease.
• Canadian Natural Resources has reduced its Capex from
$6.4 billion in 2008 to $2.7 billion in 2009, reduced by
approximately 57.8%. BP reduced its Capex from $22
billion in 2008 to $19 billion in 2009, a reduction of
13.6% 

•
 Gold And Its Future
Impact
• When gold will hit peak demand and gold price
rise to unseen levels. Then the oil price will
influence the gold price as a joint measure of
the state of the global monetary scene.
• Americans have maintained their life style by
borrowing. As the American consumer is about
to find out, the bill for that life style is coming
due
• Stagflation
• Traditionally gold has been a safety net against
inflation. Inflation is good for gold
 Forward View On Stocks
And Bonds
• The U.S. Economy in 2009 will be worse than ever. All the surprises are going to
be on the downside. They believe that the current recession that is currently
being experienced by the country is not going to just blow over.

• And the reason for it to get worst is that the interest rates are now at all-time lows,
and the bond market is much, much bigger than the stock market.

• What’s inevitable is much higher interest rates. And when they go up, it will mark
the end of already ailing stock and real estate’s market and it will wipe out a
huge amount of capital in the bond market as well.

• Furthermore, the higher interest rates will bring on even more bankruptcies.

• Although, some consider these bankruptcies to be benefit in disguise for they

believe that these higher interest rate would encourage people to save.

•
 T-Bonds
 Presented By
 Ameer Taimur Ali
 Treasury Bonds 
• Treasury bonds (T-Bonds, or the long bond) have
the longest maturity, from twenty years to thirty
years
• . The secondary market is highly liquid, so the
yield on the most recent T-Bond offering was
commonly used as a proxy for long-term
interest rates in general
• Treasury Inflation-Protected Securities (or TIPS)
• The U.S. Treasury replaced the 20-year maturity
with the new 30-year maturity in February
2010.
•
 Types Of T - Bond
• EE Bond
– Series EE bonds are issued at 50% of their face value and
reach final maturity 30 years from issuance.
– Designed to reach face value in approximately 17 years,
although an investor can hold them for up to 30 years and
continue to accrue interest
– Series EE bonds are designed for individual investors, sold
at a discount, and redeemed at an amount that includes the
interest income
• Series HH
– Series HH bonds are sold at a discount and mature at face
value. Series HH bonds are nonmarketable
• Series I
– Series I bonds are issued at face value and have a variable
yield based on inflation
 How U . S Treasury Bonds
Work
• The U.S. Government has never defaulted on a
loan, and it would take a mighty big catastrophe
before the U.S. Treasury could collapse.
• You can't predict what price you'll be able to get
for your bonds if you need to sell at some point
before maturity.
• Advantage of treasuries is that interest payments
are exempt from local and state taxes however,
not from federal income taxes.
• Treasury securities cannot be redeemed before
maturity and do not have call provisions.
•
 Treasury Bonds , Bills
and Notes
• Treasury Bills have maturities of one year or less.
• Treasury Notes have maturities of two to ten years.
• Treasury Bonds have maturities greater than ten years.
• Treasury Bonds, Bills, and Notes are all issued in face
values of $1,000, though there are different purchase
minimums for each type of security.
• Treasury Bonds are usually issued in thirty-year maturities,
and pay interest twice a year.
• No matter what you're buying, you can often get a better
deal when you buy direct. And the U.S. Treasury has a
special program for individual investors to help cut out
the middleman (in this case, your broker) and help you to
purchase T-Bonds
•
 T - Bond Present
• Highs in late 2008 as investors flocked due to global credit
crisis, bringing the yield on the 30-yr treasury bond to as
low as 3%
• The injection of money by the federal reserve board into the
may bring economic growth but investors are wondering
that inflation may soon become a problem.
•
 Future Of T - Bond
• Treasury bonds futures offer substantial
protection from unexpected changes in
corporate bond prices
• Treasury bonds futures are more effective in
fabricate high-quality corporate debt
• China's holdings of US Treasury bonds
tumbled in December, allowing Japan to
take over as the top holder of American
government debt,
 Future Of T - Bond
• The huge budget deficit will inevitably result in
issuance of additional money and the
depreciation of the U.S. Dollar, which will
cause a sharp shrink in the value of the U.S.
Dollar assets held by creditor countries
• Bonds control the amount of money in an
economy. If china sells US treasury bonds, it
basically gets money in exchange for the bond,
that would mean more money is out of the
control of the U.S, and inflation will result
 Recommendations
• Lock in a Purchase Price
• Preserve Investment Value
• Trade Changes in the Yield Curve
• Cross-Hedge
• Efficiency
• Market Integrity
• Pricing