And the bond market is beginning to smell a rat. If you bought 10-year Treasurys some time ago with at a yield of 1.8%, and inflation is heading to 3% or higher, you’re experiencing the joys of “inflation without compensation” – for years to come. Bond buyers hate that. They become reluctant, even as sellers become more eager.So the 10-year Treasury yield jumped today, settling at 2.54% and then rising further in late trading, to currently 2.58%, up from 1.38% during the heyday in July…..
Never in the history of the Central Intelligence Agency has it and its surrogates so blatantly and boldly interfered in a U.S. election. The U.S. media, in a matter of hours, altered course from concentrating on «fake news» about innocent pizzerias being linked to child sexual exploitation to spotlighting «fake intelligence» about Russia’s alleged cyber-espionage operation designed to elect Donald Trump president. The CIA leaked to The Washington Post, the owner of which has a $600 million contract with the CIA to provide cloud computing, findings of a secret report on Russia’s alleged «fixing» of the 2016 U.S. presidential election to favor Trump over Democrat Hillary Clinton.
Blink, and you missed your chance to refi. And according to nationalized mortgage giant Freddie Mac, it’s about to get worse. As shown last week, as a result of the recent spike in yields, the population of eligible refinance candidates has already plunged by more than half. As Black Knight pointed out, as of the end of November, though there are still 2M borrowers who could save $200+/month by refinancing and a cumulative $1B/month in potential savings, this is less than half of the $2.1B/ month available just four weeks ago.
Today we are seeing the reverse, I believe. The Chinese financial system is showing signs of stress. Corporate bond yields are rising, the Chinese Yuan is weakening, and outflows are continuing. In my view, the Trump election has made a large Chinese devaluation more likely. Mainland Chinese investors are desperately trying to get out of the Yuan, and the People’s Bank of China is trying to defend the value of the Yuan. They are doing this by selling treasuries.”
And there you have it. Via George Soros … the Kochs and Scaife Foundation (and others) are linked to an entirely opposite (seemingly so) series of power centers including Ukraine “think tanks” and NGOs along with the most powerful Democratic groups including the Clintons. (And remember, we probably haven’t reached the top of this sprawling network.)
As late as June 2015, ferbus and all the rest were expecting the federal funds rate to be between 2.4% and 3.8% by the end of 2017. That level of “normalization” no longer exists as a central tendency, however, since the Fed’s models now suggest that full “exit” would be itself a very low probability tail event. Instead, the central tendency for the federal funds rate has been marked down to a range of just 1.1% to 1.6% for next year. There is a vast difference in those two sets of estimates even though they were produced only a year and a half apart.
The inflation figures are out for November and they show core inflation has been at or above The Fed’s 2% target for 13 straight months…..While 2.1% core inflation (and declining) seems impressive, the 3.5% inflation rate for shelter (aka, housing) is not welcome. Particularly when hourly earnings growth for 82% of the population is only 2.36% YoY.
Risk has been banished and lives now in exile somewhere, well out of sight. Uncertainty has become certainty across the board. Given recent positioning extremes, risk may soon send a brief message, just to remind us that it isn’t quite dead yet. We will leave you with this: Donald Trump may well succeed in instituting policies that are positive for the economy – which is the perception the recent moves in risk assets are based on. But he doesn’t have a time machine. He cannot go back and retroactively stop the 135% expansion in the broad true money supply since 2008 (US) and the associated explosion in debt levels. He would not only need a time machine for this, but nigh divine powers of intervention as well.
Soon after announcing his intention to nominate Tom Price, MD as U.S. Secretary of Health & Human Services, Donald Trump announced his intention to nominate Andrew Puzder Secretary of Labor. This is yet another good sign for the repeal of Obamacare. The CEO of CKE Restaurants, which owns the Carl’s Junior and Hardee’s brands, Mr. Puzder warned of the harm to jobs in chain restaurants from Obamacare’s mandate to offer employees overpriced health insurance as far back as July 2013….
Canadian household debt has cracked the two-trillion-dollar ceiling. The appetite for bank borrowing remained unabated in the third quarter, setting fresh records for total credit and mortgage borrowing, Statistics Canada reported Wednesday. The widely-followed ratio of household debt to after-tax income rose to another record high of almost 167 percent