Interest rates
derryb
Posts: 36,809 ✭✭✭✭✭
Market interest rates are rising while FED funds rate was just lowered! Dat normally don't happen. A rising 10-year Treasury yield translates into higher mortgage rates. They shouldn't be doing this in a Fed easing cycle. And if they stay up there, expect an epic housing bust in the coming year and mo' helicopter money.
US Bond data on Nov. 2:
One of the reasons to lower interest rates is to put money into the hands of small businesses, the engine of growth in the US economy. That hasn’t happened. Interest rates on small business loans have been rising since 2020, and instead of falling after the Fed’s September cut, they spiked:
Look for gold to continue to shine in the ensuing confusion. Warren Buffet's playbook show he believe a recession is coming.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
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Rates moving higher tonight in response to anticipated higher inflation and massive deficits.
Knowledge is the enemy of fear
Stocks up, rates up, all precious metals down significantly this morning on election results.
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Massive as in 'more massive' than the ones we have had for the last 4 years? The final non-pandemic deficit under 45 was $984 billion. FY24 - with no pandemic - was $1.8 trillion.
Nope, that's to be expected. The market is signalling that the Fed is too loose and that GDP growth and/or inflation are running hot.
If you go back to 1980 there are MANY times when the Fed cut rates and long bond yields (30-year or 10-year) went UP. It depends on WHY the Fed cut the rate (2020 cut is different than a 2024 cut).
Yes. More massive.
Knowledge is the enemy of fear
The deficit curve is continuing to steepen. Crackup boom ahead.
I knew it would happen.
" The market is signalling that the Fed is too loose and that GDP growth and/or inflation are running hot. "
My suspicion is that inflation has NOT been tamed. The numbers have been manipulated by the powers that be, to try to give the impression of low inflation. I still see plenty of rising prices. Can't wait to see what my next car/home insurance rates are...
The market likes the idea of a potentially lower 15% capital gain tax rate which should also help with any PM gains next year. Every indication is the house is red, too.
The Fed is stuck between a rock and a hard place. Need lower rates to avoid massive government debt interest payments, but we need higher rates to prevent inflation caused by the debt.
No win scenario. Where is Capitan Kirk?
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Capital gains tax is already at 15% for married joint filers earning up to almost $600,000. Ain't no relief for the little guy there. PMs would need to be reclassified. Again, that ain't helping the little guy.
Asset inflation will outpace goods and services price inflation. The haves will rejoice, the have nots will cry.
Quite the irony. Lol
Knowledge is the enemy of fear
The IRS views PMs as collectibles. They do not receive preferential tax treatment.
28%
I knew it would happen.
Would be nice to see them classified as assets.
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They just cut it give it a little time. Smaller small business banks have to manage the risk in their portfolio and that premium takes time to ease.
I see gold as an indicator things are stabilizing and it just stabilized. I think the days of +100 a month are in the past. I have to liquidate a large PM holding and turn it into cash and that cash is not going into gold etf's.
Edit: If I had a choice to keep my physical gold I would because to me having it real is the only way if you are going to have it.
There is no manipulation. The entire process is 100% transparent. Folks who invest tens of billions of dollars would NOT trust the money markets if what you say were true.
What you think happens here in fact happened in Argentina and Zimbabwe.
Stuck in the elevator ?
" There is no manipulation. The entire process is 100% transparent. "
I don't agree with that. But as I am fond of saying.... I'm no expert.
I am.
My first job out of college was working on economic statistics as a junior economist. You can debate the COMPOSITION of how the numbers are put together (i.e., hedonics) but you can't say it all isn't 100% out in the open.
Okay.