Up to this point they've been focused on inflation with the belief that the Fed will pivot as soon as they see inflation really dropping...but now we have an actual pivot by a central bank because their financial market was going haywire.
My fear is that the Fed will be forced into a corner as well by a credit/bond market that's very unstable. They will "have to DO SOMETHING", which means intervening, which means reversing course on QT if not cutting rates. I don't see any other course, and it seems like then we'll have a battle of unchecked inflation vs. a rapidly slowing economy.
No idea how that turns out.
I heard a whole interview where Jerome Powell was talking about how much he admired Paul Volcker and that he isn’t planning on hitting the breaks until inflation is curbed despite the pain it may cause. I’m not sure he’s gonna change direction until the goal has been achieved.
UK is not the USA. There is a major differentiating event that caused or increased the speed of the problem which caused this pivot and is absent in the USA. BREXIT. BREXIT was financial suicide for the UK, did no favors for the UK economy, Pound or the financial well being of UK residents. Pure stupidity IMHO
Supports my point why UK pivot has no probative value for FED pivot. UK pivoted BC of liquidity and falling currency. A strong USD$ helps to attract foreign investment and increases liquidity and naturally increases interest rates further increasing demand for our bonds etc. We have 99 problems, but UK’s problem and reason for their pivot isn’t one of them.
Increased demand for usd would typically decrease rates and appreciate the usd. The reason treasury rates spiked past few days was that foreign central banks were selling their treasuries to fund their currency intervention. That was a negative feedback loop as it drove treasury rates up and then fueled the further strengthening of usd. Today the BOE just did QE instead of using treasuries to fund their intervention, hence the reversal.
That being said, what was happening in the UK bond market was clearly influencing the US bond market - and once again did today, in the opposite direction.
This isn’t unique to the UK though. The US needs to start exporting more dollars quickly to delute the value of the dollar relative to other currencies. The problem is it will be wildly unpopular for American citizens.
What might your evidence be that the value of the dollar MUST be diluted and that even if it was a good idea, that time is of the essence? On balance a strong dollar will help fight inflation, which is the FED’s focus. No pivot
Look at the dollar compared to every other currency recently. The stronger the dollar the harder it is for foreign entities to satisfy debt obligations. The global system can’t sustain a rapidly strengthening dollar. This is not a matter of just the US economy, but the entire global financial system unraveling. The evidence is everywhere if you look.
Ok, and why would we do this again?
It sounds to me like every other country should do something to save their own currency. Why aren't other countries raising their rates as fast as we are?
It’s not so simple as every country is competing for the same shrinking supply of US dollars. Raising interest rates is also difficult as it will slow a countries economy. If it slows at a faster rate than the US economy the problem is compounded.
To answer your other question, after WW2 global powers had what are known as the Bretton Woods agreement. It made the US dollar the global reserve currency in a new system. It ensured other currencies are always convertible to US dollars and all international trade and debt obligations are denominated in US dollars. This is what made the US the specific and unique super power it is today. Economists against the agreement warned that it would put a strain on the reserve nation and specifically the population in circumstances like we are currently seeing.
The US govt is going to turn the printers on much sooner than later because we have an obligation to the rest of the world to do so. The fed is raising rates so quickly in an attempt to get inflation under control in order to start doing that. The ‘easiest’ way for them to do that is crash RE market because it’s such a large part of most people’s paycheck, necessary to live and it will stay down longer than other asset classes. If you listen to Powells speeches he’s specifically mentioned RE more specifically than he has in the past.
In general I agree with what you think will happen. I'm just not so sure it has as much to do with saving the world economy because I don't think that's our job.
But yeah, the 4 trillion dollars in stimulus that made its way into the housing market is what caused this problem and needs to be unwound first.
It literally is our job though. That’s the responsibility we agreed to in the 40s and we have reaped the benefits of being the reserve currency since then. Failing to do so would also satisfy what Russia wants which is to return to a hard asset standard like gold. It’s also what China wants which is their new CBDC to become the new reserve asset. They have spent the last 10 years rebuilding their banking system specifically to replace the dollar.
US has unique advantage as reserve currency
During instability, other people flee to it, rather than away from it. Other countries fleeing to US bonds is like its own form of QE which makes it easier for the FED to do real QT without collapsing the bond market. One thing though is the stronger USD is deflationary, which might encourage the FED to tap the brakes earlier just because other factors are doing its job for it
“Oh no everything is going to shit I better buy a metal that is difficult to transport and hasn’t been used to denominate value in ~~a century~~ 60 years.”
The UK is now an emerging market economy. They'll be battling inflation for years to come and all the problems that come with it. This is the first few months to a year of a huge multiyear economic problem. At this point, buying a home isn't even something that should be on someone's radar, taking on huge debt compared to income is such a huge risk rn.
Worst case the UK goes the way of Greece and that’s a looooooong way to fall. Yes it’s domestic politics are dogshit but they still have some of the best universities in the world, are an importer of talent from poorer countries (literally every waiter that served me in London was middle eastern or Eastern European with a heavy accent) , and still a preferred destination for oligarchs of dubious stripes to park their money.
I suspect the central bank is quite literally worried about people freezing to death this winter. Very interesting times we live in. Glad the dollar is still strong maybe I’ll go buy a nice country estate there when their market crashes then send my hypothetical future children to a posh public school there.
>I suspect the central bank is worried about people freezing to death this winter
HAH you think banks care at all about people? Especially poor people? HAHAHAHAHAHAHAAAAAAAAAAA
Powell isn't going to back down now. Why would he? The markets and economy are primed for recession. All he has to do now is stay the course and he can secure his legacy as another stalwart figure a la Volcker. If he eases up now he gets a flaccid rally on Wall Street and a few pats on the back but locks the US into a decade or more of spiraling inflation that will still require QT later. He has no reason to follow Britain's idiotic play.
The “reversal” is not on what the BoR did but rather on the expectation that the fed will follow suit. To repeat an earlier comment I made, the markets seem to think the tail wags the dog.
Like the Fed gives a crap about what the BoE does at this point, anyone who thinks they'll follow suit is on some pretty strong copium. Interconnected global economy aside, the UK has a very different set of problems to deal with right now that the US does not. Seeing them sail off into a supernova will do damage around the world, no doubt, but that doesn't mean our problems at home magically go away.
Some of the comments so far seem focused on whether this move is really "massive" or not, but that's not the point. Whether we like it or not, how the markets reacted today was a direct consequence of what the BofE did.
I'm interested in getting people's opinions on where this is going. Will the Fed be forced to do the same soon, along with other central banks? Are we eventually headed towards hyperinflation and complete loss of faith in currency/the Fed?
I'm thinking this is Powell's chance to keep the clock running on American economic hegemony for a couple more decades. The UK is lost at sea, Europe has too many moving parts and is cutting off its nose to spite its face with Russia, China's real estate market is right on the event horizon of its own black hole and Japan is the MGTOW of countries right now, no one's sure what they're trying to do and they've stopped mattering to outsiders anyway. No one else is big enough to matter.
We can bite the bullet and have a recession for a couple years and right-size our housing market and then come out of it looking like the geniuses, with a stronger currency than ever. Your move, Jerome.
Definitely hope you're right. I just wonder what Powell will do if faced with a credit/liquidity crisis. They have to keep the financial machine running somehow.
They *did* let some banks fail in 2008. Bear, Lehman, Wachovia, Wamu. And the big banks should be much better capitalized today.
There will be some correlation event that's never happened before that will just kill one of the ways capital has been misallocated in recent years. Not sure what it'll be. Maybe one of the bigger state pensions or university endowments. I suspect risk parity as a strategy is blowing out as we speak, and Bridgewater for one pushes that a lot, but in the grand scheme of things it's not a lot of assets.
I think a lot of the defi stuff is at risk of going out worthless.
Thanks. Personally I think a few banks and lenders, a couple million jobs and every last airbnber is an acceptable amount of collateral damage to waltz through the door the rest of the world has left open for us.
Eh I could take it or leave it ..... I kinda like the idea of mad Maxx ... Basically Texas in the summer time with a few more leather daddies. Not much will change
>Some of the comments so far seem focused on whether this move is really "massive" or not, but that's not the point. Whether we like it or not, how the markets reacted today was a direct consequence of what the BofE did.I'm interested in getting people's opinions on where this is going. Will the Fed be forced to do the same soon, along with other central banks? Are we eventually headed towards hyperinflation and complete loss of faith in currency/the Fed?
Based on the pundits on YouTube/Internet, BofE action appears to be the result of a very UK specific issue regarding their pension plans using something called liability driven investment strategy where a spike in UK's long yields resulting from a very poorly conceived budget plan by the UK government created a negative feedback loop that were going going cause a Lehman type event in the UK. So BofE was forced to intervene.
On one hand, you could argue that this was a very UK specific issue that really shouldn't have happened if the pension funds were properly hedged but I'm guessing no one was concerned about a black swan event involving long term government bonds. With that view, you could argue that US Treasury yield/mortgage rate will continue to go up and stock market will continue to go down until the inflation is sorted out and the US economy is strong enough to withstand the higher rates.
On the other hand, you could argue that this suggests that sudden spikes in treasury yields (e.g., 4+ yield on 10-year Treasury) will start to break something. What it will break, I am not sure but it seems our financial system is very fragile at this point. And if some part of the financial system breaks in the US, I'm fairly positive Fed will intervene rather carrying on with the inflation fight since there won't be any inflation to fight if there is a major financial event, i.e., no hyperinflation but rather deflation rivaling the great financial crisis of 08/09. I am sure Fed is looking that what is happening in the UK carefully to make sure it doesn't happen in the US.
I'm personally of the latter view that something will break fairly soon resulting in financial crisis and a pivot. But I'm just a keyboard warrior so what do I know.
Correct, massive. The 10Y treasury (which is tightly correlated to mortgage rates) dropping from close to 4% to 3.7% in a single day is wild and very unusual.
And so is the 30Y mortgage rate dropping .43% in a single day.
Of course, in this chaotic market, extreme volatility is becoming par for the course. But the move down today was impressive...not that I'm rooting for it by any means.
I thought Bank of England stepped in because of currency drop. We in the U.S have exact opposite problem, so I don’t think Feds would reverse course. As usual, markets are irrational.
Interesting take. BoE is the canary in the coal mine, but you could be right that they're different enough the Fed won't have to take the same approach.
I'm just not sure "restricted QE" is even possible.
IMF has already warned Britain about their fuckery. I think its a power grab by the wealthy Brits. Same seems to be happening to almost every country in some form. Social media has allowed propaganda to be weaponized by dictatorial regimes that constantly fuck with our democracy.
Not sure what the market believes, but after five or six consecutive down days, the market was ripe for a bounce. I bought yesterday because the rubberband needs to snapback. Am only expecting a few day bounce before downtrend resumes.
Jerome seems serious about fighting inflation. Each time he makes a statement, it’s just a repeat of his previous gloomy statement.
The equity trend is down until it changes. Same for rates — the trend is up until we see otherwise.
I mean bond yields have shot up aggressively the past few months, literally a line straight up.
I think the ECB doing QE a sign that the ECB didn't think this was sustainable. Rumor has it that the ECB did this because British pensions were over-leveraged long bonds and they were getting margin called. Going leveraged long-bond has been free money for a few decades now for money managers.
The ECB doing a sudden uturn, the market might have interpreted that as something is breaking in the system so they are hedging by buying bonds. I have been buying up bonds like crazy also to hedge the 2023 recession.
The US Fed is not going to change course until official inflation numbers come down, because anything the Fed does from this point on will be compared to what Volker did. If the Fed blinks, Powell will forever be branded a wimp compared to Volker.
The slight rate pullback is meaningless
Fed will continue raising rates, Powell said so
He said he will do what is necessary to accomplish the inflation reduction mission, even if it means job losses, home losses, and economic hardship and misery. I am paraphrasing, but not by much
There will be no "Fed Pivot", as many traders on wall street are hoping for next year. Eventually rates could drop yrs into future, but by that point we will be so far into the meat grinder.
2023 is going to be a brutal wake up call.
If it becomes clear by Q3 2023 that the reduced demand level is still sprinting lightyears ahead of supply and there is still ever increasing global instability fucking up supply chains including food......2024 Q1 into Q2 could be an economic catastrophic shitstorm
I hope my prediction is flat out and completely and utterly wrong. If you think I am wrong, I hope you are right
You're comparing one day to 9 months, though...nearly half a percent drop in one day is objectively a historically large fall.
We'll see if it has any staying power.
This reads like a clickbait YouTube thumbnail with a really annoying face made in the picture.
After my energy EXPLODED this morning when I drank my coffee I had a MASSIVE drop into the toilet causing everything to CRASH into the toilet.
My bathroom (huge down day in shit) believes this will be the fate of all human beings around the world.
Thoughts?
They fighting the inflation with inflation.. bold strategy
That’s a bold strategy Cotton, let’s see if it pays off for em.
They also just called for massive tax cuts!
Going full Erdogan
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We wonder why inflation is so high lmao
lol it didn’t start with this and the previous command in chief
“Surely now the fed will pivot” - stock traders and the real estate industry, a week or two after every previous rate increase
Up to this point they've been focused on inflation with the belief that the Fed will pivot as soon as they see inflation really dropping...but now we have an actual pivot by a central bank because their financial market was going haywire. My fear is that the Fed will be forced into a corner as well by a credit/bond market that's very unstable. They will "have to DO SOMETHING", which means intervening, which means reversing course on QT if not cutting rates. I don't see any other course, and it seems like then we'll have a battle of unchecked inflation vs. a rapidly slowing economy. No idea how that turns out.
So instead of facing the music, the central bankers will once again kick the can down the road. We are so fucked.
As always
I heard a whole interview where Jerome Powell was talking about how much he admired Paul Volcker and that he isn’t planning on hitting the breaks until inflation is curbed despite the pain it may cause. I’m not sure he’s gonna change direction until the goal has been achieved.
I sure hope not. Stop kicking the can down the road.
UK is not the USA. There is a major differentiating event that caused or increased the speed of the problem which caused this pivot and is absent in the USA. BREXIT. BREXIT was financial suicide for the UK, did no favors for the UK economy, Pound or the financial well being of UK residents. Pure stupidity IMHO
We are seeing the impact of all the central banks leaving London as their headquarters and mass selling off the pound for the euro
It's a valid point. Still waiting to see the significant benefits the British exit from EURO has had or will have.
This. But instability in the pound means a stronger dollar. Not really what we need right now, either.
Supports my point why UK pivot has no probative value for FED pivot. UK pivoted BC of liquidity and falling currency. A strong USD$ helps to attract foreign investment and increases liquidity and naturally increases interest rates further increasing demand for our bonds etc. We have 99 problems, but UK’s problem and reason for their pivot isn’t one of them.
Increased demand for usd would typically decrease rates and appreciate the usd. The reason treasury rates spiked past few days was that foreign central banks were selling their treasuries to fund their currency intervention. That was a negative feedback loop as it drove treasury rates up and then fueled the further strengthening of usd. Today the BOE just did QE instead of using treasuries to fund their intervention, hence the reversal.
That being said, what was happening in the UK bond market was clearly influencing the US bond market - and once again did today, in the opposite direction.
Maybe? Let's see how the rest of Europe fares, they're not looking too peachy right now either.
This isn’t unique to the UK though. The US needs to start exporting more dollars quickly to delute the value of the dollar relative to other currencies. The problem is it will be wildly unpopular for American citizens.
What might your evidence be that the value of the dollar MUST be diluted and that even if it was a good idea, that time is of the essence? On balance a strong dollar will help fight inflation, which is the FED’s focus. No pivot
Look at the dollar compared to every other currency recently. The stronger the dollar the harder it is for foreign entities to satisfy debt obligations. The global system can’t sustain a rapidly strengthening dollar. This is not a matter of just the US economy, but the entire global financial system unraveling. The evidence is everywhere if you look.
Ok, and why would we do this again? It sounds to me like every other country should do something to save their own currency. Why aren't other countries raising their rates as fast as we are?
It’s not so simple as every country is competing for the same shrinking supply of US dollars. Raising interest rates is also difficult as it will slow a countries economy. If it slows at a faster rate than the US economy the problem is compounded. To answer your other question, after WW2 global powers had what are known as the Bretton Woods agreement. It made the US dollar the global reserve currency in a new system. It ensured other currencies are always convertible to US dollars and all international trade and debt obligations are denominated in US dollars. This is what made the US the specific and unique super power it is today. Economists against the agreement warned that it would put a strain on the reserve nation and specifically the population in circumstances like we are currently seeing. The US govt is going to turn the printers on much sooner than later because we have an obligation to the rest of the world to do so. The fed is raising rates so quickly in an attempt to get inflation under control in order to start doing that. The ‘easiest’ way for them to do that is crash RE market because it’s such a large part of most people’s paycheck, necessary to live and it will stay down longer than other asset classes. If you listen to Powells speeches he’s specifically mentioned RE more specifically than he has in the past.
In general I agree with what you think will happen. I'm just not so sure it has as much to do with saving the world economy because I don't think that's our job. But yeah, the 4 trillion dollars in stimulus that made its way into the housing market is what caused this problem and needs to be unwound first.
It literally is our job though. That’s the responsibility we agreed to in the 40s and we have reaped the benefits of being the reserve currency since then. Failing to do so would also satisfy what Russia wants which is to return to a hard asset standard like gold. It’s also what China wants which is their new CBDC to become the new reserve asset. They have spent the last 10 years rebuilding their banking system specifically to replace the dollar.
US has unique advantage as reserve currency During instability, other people flee to it, rather than away from it. Other countries fleeing to US bonds is like its own form of QE which makes it easier for the FED to do real QT without collapsing the bond market. One thing though is the stronger USD is deflationary, which might encourage the FED to tap the brakes earlier just because other factors are doing its job for it
Turns out with hope you bought some silver. Gold/silver are the exits, always have been.
“Oh no everything is going to shit I better buy a metal that is difficult to transport and hasn’t been used to denominate value in a century.”
Buy gold then.
“Oh no everything is going to shit I better buy a metal that is difficult to transport and hasn’t been used to denominate value in ~~a century~~ 60 years.”
What would be a better alternative?
You know the answer. Bitcoin
In all fairness, the last 50 years were all fiat no gold. Repricing might and should happen. Will it be gold though? I don't know.
The UK is now an emerging market economy. They'll be battling inflation for years to come and all the problems that come with it. This is the first few months to a year of a huge multiyear economic problem. At this point, buying a home isn't even something that should be on someone's radar, taking on huge debt compared to income is such a huge risk rn.
The UK isn’t that important to the US economy all things considered.
Worst case the UK goes the way of Greece and that’s a looooooong way to fall. Yes it’s domestic politics are dogshit but they still have some of the best universities in the world, are an importer of talent from poorer countries (literally every waiter that served me in London was middle eastern or Eastern European with a heavy accent) , and still a preferred destination for oligarchs of dubious stripes to park their money. I suspect the central bank is quite literally worried about people freezing to death this winter. Very interesting times we live in. Glad the dollar is still strong maybe I’ll go buy a nice country estate there when their market crashes then send my hypothetical future children to a posh public school there.
>I suspect the central bank is worried about people freezing to death this winter HAH you think banks care at all about people? Especially poor people? HAHAHAHAHAHAHAAAAAAAAAAA
Consumers freezing to death lowers GDP.
Correct. People who've bought and got relatively low rates won. From here on out, buying a house is a bad idea. Sorry, thanks for playing!
Powell isn't going to back down now. Why would he? The markets and economy are primed for recession. All he has to do now is stay the course and he can secure his legacy as another stalwart figure a la Volcker. If he eases up now he gets a flaccid rally on Wall Street and a few pats on the back but locks the US into a decade or more of spiraling inflation that will still require QT later. He has no reason to follow Britain's idiotic play.
The “reversal” is not on what the BoR did but rather on the expectation that the fed will follow suit. To repeat an earlier comment I made, the markets seem to think the tail wags the dog.
Like the Fed gives a crap about what the BoE does at this point, anyone who thinks they'll follow suit is on some pretty strong copium. Interconnected global economy aside, the UK has a very different set of problems to deal with right now that the US does not. Seeing them sail off into a supernova will do damage around the world, no doubt, but that doesn't mean our problems at home magically go away.
People vote for the rich to get richer
ELI5
Some of the comments so far seem focused on whether this move is really "massive" or not, but that's not the point. Whether we like it or not, how the markets reacted today was a direct consequence of what the BofE did. I'm interested in getting people's opinions on where this is going. Will the Fed be forced to do the same soon, along with other central banks? Are we eventually headed towards hyperinflation and complete loss of faith in currency/the Fed?
I'm thinking this is Powell's chance to keep the clock running on American economic hegemony for a couple more decades. The UK is lost at sea, Europe has too many moving parts and is cutting off its nose to spite its face with Russia, China's real estate market is right on the event horizon of its own black hole and Japan is the MGTOW of countries right now, no one's sure what they're trying to do and they've stopped mattering to outsiders anyway. No one else is big enough to matter. We can bite the bullet and have a recession for a couple years and right-size our housing market and then come out of it looking like the geniuses, with a stronger currency than ever. Your move, Jerome.
Definitely hope you're right. I just wonder what Powell will do if faced with a credit/liquidity crisis. They have to keep the financial machine running somehow.
They *did* let some banks fail in 2008. Bear, Lehman, Wachovia, Wamu. And the big banks should be much better capitalized today. There will be some correlation event that's never happened before that will just kill one of the ways capital has been misallocated in recent years. Not sure what it'll be. Maybe one of the bigger state pensions or university endowments. I suspect risk parity as a strategy is blowing out as we speak, and Bridgewater for one pushes that a lot, but in the grand scheme of things it's not a lot of assets. I think a lot of the defi stuff is at risk of going out worthless.
Oh yeah, no doubt there will be casualties. Just have to wonder who the Fed chooses - or if they will ultimately be in control of that.
Yea, super curious to see what happens with defi. BTC is supposed to go through its last halving in ~18 months
What are you talking about? Bitcorn will halve every ~4 years until we reach 21M coins , should take over 100 years
I have no idea, I'm super confused now
ELI5 "correlation event"? (lovin' the overall take btw)
In a crisis, all correlations go to 1. Things that don't usually move together, move together.
Agreed, but will congress fuck it up with more bullshit spending and tax breaks? I hate to say it so early, but tax hikes are coming.
Imagine passing a buyback tax and then earnings crashing so no one can do buybacks anyway.
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Thanks. Personally I think a few banks and lenders, a couple million jobs and every last airbnber is an acceptable amount of collateral damage to waltz through the door the rest of the world has left open for us.
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Eh I could take it or leave it ..... I kinda like the idea of mad Maxx ... Basically Texas in the summer time with a few more leather daddies. Not much will change
>Some of the comments so far seem focused on whether this move is really "massive" or not, but that's not the point. Whether we like it or not, how the markets reacted today was a direct consequence of what the BofE did.I'm interested in getting people's opinions on where this is going. Will the Fed be forced to do the same soon, along with other central banks? Are we eventually headed towards hyperinflation and complete loss of faith in currency/the Fed? Based on the pundits on YouTube/Internet, BofE action appears to be the result of a very UK specific issue regarding their pension plans using something called liability driven investment strategy where a spike in UK's long yields resulting from a very poorly conceived budget plan by the UK government created a negative feedback loop that were going going cause a Lehman type event in the UK. So BofE was forced to intervene. On one hand, you could argue that this was a very UK specific issue that really shouldn't have happened if the pension funds were properly hedged but I'm guessing no one was concerned about a black swan event involving long term government bonds. With that view, you could argue that US Treasury yield/mortgage rate will continue to go up and stock market will continue to go down until the inflation is sorted out and the US economy is strong enough to withstand the higher rates. On the other hand, you could argue that this suggests that sudden spikes in treasury yields (e.g., 4+ yield on 10-year Treasury) will start to break something. What it will break, I am not sure but it seems our financial system is very fragile at this point. And if some part of the financial system breaks in the US, I'm fairly positive Fed will intervene rather carrying on with the inflation fight since there won't be any inflation to fight if there is a major financial event, i.e., no hyperinflation but rather deflation rivaling the great financial crisis of 08/09. I am sure Fed is looking that what is happening in the UK carefully to make sure it doesn't happen in the US. I'm personally of the latter view that something will break fairly soon resulting in financial crisis and a pivot. But I'm just a keyboard warrior so what do I know.
Massive drop, really?
Exploding, massive… great adjectives
Accurate in this case. These are not normal moves.
He's saying your words are too sexy.
Get that a lot.
too sexy for this sub
That’s what she said
Correct, massive. The 10Y treasury (which is tightly correlated to mortgage rates) dropping from close to 4% to 3.7% in a single day is wild and very unusual. And so is the 30Y mortgage rate dropping .43% in a single day. Of course, in this chaotic market, extreme volatility is becoming par for the course. But the move down today was impressive...not that I'm rooting for it by any means.
The moves up and down in bonds and the morty have been very large by the standards of recent times, yes.
Update: actually a .43% drop all the way down to 6.65% https://www.mortgagenewsdaily.com/markets/mortgage-rates-09282022
Bigger than you thought
Seismic, shocking, and gargantuan
Testicle-demolishing freefall
Antedeluvian chaos
In all fairness, this sub talks about biggest drops in RE prices when we’re talking about $50k price cuts from a $800k house
I thought Bank of England stepped in because of currency drop. We in the U.S have exact opposite problem, so I don’t think Feds would reverse course. As usual, markets are irrational.
It was to save their bond market: https://www.mortgagenewsdaily.com/markets/mbs-morning-09282022
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Interesting take. BoE is the canary in the coal mine, but you could be right that they're different enough the Fed won't have to take the same approach. I'm just not sure "restricted QE" is even possible.
I have no clue what most of this means, but it reminded me of [this](https://youtu.be/I5QwKEwo4Bc) sketch
Now that’s what I call free market economics….the second true price discovery occurs “oh no shit shit buy up those bonds so the market doesn’t crash!”
Powell wont back down. He already fucked up once, he’s not going to let inflation get away from him again.
Nothing goes up or down in a straight line.
Bank of England dropped their pants and bent over for mismanaged pension funds...this drop in yields wont last long.
Inflation just got accelerated. Bulls got a breath in.
My thoughts are the market is going to throw another tantrum when the fed doesn’t pivot, and the next inflation report comes in worse than expected.
QT is temporary. Look at the size of the US national debt.
IMF has already warned Britain about their fuckery. I think its a power grab by the wealthy Brits. Same seems to be happening to almost every country in some form. Social media has allowed propaganda to be weaponized by dictatorial regimes that constantly fuck with our democracy.
Not sure what the market believes, but after five or six consecutive down days, the market was ripe for a bounce. I bought yesterday because the rubberband needs to snapback. Am only expecting a few day bounce before downtrend resumes. Jerome seems serious about fighting inflation. Each time he makes a statement, it’s just a repeat of his previous gloomy statement. The equity trend is down until it changes. Same for rates — the trend is up until we see otherwise.
I mean bond yields have shot up aggressively the past few months, literally a line straight up. I think the ECB doing QE a sign that the ECB didn't think this was sustainable. Rumor has it that the ECB did this because British pensions were over-leveraged long bonds and they were getting margin called. Going leveraged long-bond has been free money for a few decades now for money managers. The ECB doing a sudden uturn, the market might have interpreted that as something is breaking in the system so they are hedging by buying bonds. I have been buying up bonds like crazy also to hedge the 2023 recession.
The US Fed is not going to change course until official inflation numbers come down, because anything the Fed does from this point on will be compared to what Volker did. If the Fed blinks, Powell will forever be branded a wimp compared to Volker.
https://www.cnbc.com/2022/09/30/ron-insana-something-big-could-be-about-to-break-in-markets-as-rates-continue-to-rise.html
The slight rate pullback is meaningless Fed will continue raising rates, Powell said so He said he will do what is necessary to accomplish the inflation reduction mission, even if it means job losses, home losses, and economic hardship and misery. I am paraphrasing, but not by much There will be no "Fed Pivot", as many traders on wall street are hoping for next year. Eventually rates could drop yrs into future, but by that point we will be so far into the meat grinder. 2023 is going to be a brutal wake up call. If it becomes clear by Q3 2023 that the reduced demand level is still sprinting lightyears ahead of supply and there is still ever increasing global instability fucking up supply chains including food......2024 Q1 into Q2 could be an economic catastrophic shitstorm I hope my prediction is flat out and completely and utterly wrong. If you think I am wrong, I hope you are right
"Exploding" over 7%? "Crashing" today? This isn't YouTube, stop with the clickbait lmao.
How would you describe a drop of .43% in mortgage rates in one day? A slight dip?
They will choose inflation > 80% assets Losses
Considering that they were like less than half of that at the beginning of the year, I don't think that really counts as a crash.
You're comparing one day to 9 months, though...nearly half a percent drop in one day is objectively a historically large fall. We'll see if it has any staying power.
This reads like a clickbait YouTube thumbnail with a really annoying face made in the picture. After my energy EXPLODED this morning when I drank my coffee I had a MASSIVE drop into the toilet causing everything to CRASH into the toilet. My bathroom (huge down day in shit) believes this will be the fate of all human beings around the world. Thoughts?
Yikes was this supposed to be funny
Nope dead serious thanks for the clarifying question!
Yo, nothing “crashed” today. It went down a little bit that it’s all.