The Fed was hoping to steepen the yield curve with its 25 basis point (quarter-point) rate cut. Instead, inversions strengthened dramatically.
Inversions Strengthen
What Happened?
- Bond Yields Crash On ISM Report, More China Tariffs
- Global Manufacturing Recession Started, Trump Makes Matters
- Another Undeclared War: Trump Threatens Full Naval Blockade of Venezuela
More Rate Cuts Coming
Trump wants more rate cuts.
He will get them, along with a recession.
Mike “Mish” Shedlock
Isn’t September the end of selling the Fed off assets from the balance sheet? (like they really thought it would work)
It was originally to end in September but Powell announced he was ending it 2 months early. He was draining since February at the rate of $120 billion/mo. The quarter trillion loosening equivalent move was greeted with a collective meh…
On flight home – Regular posting starting this evening
Sorry for off topic, I think this is important enough to drop in with.
This is a message regarding Kashmir. Touted as an anti-terror initiative there is much opinion that in fact it is preparation for war. The twitter account inteldotwav run by a BOS student is aggregating info realtime, he might be frontrunning a little but not by much in my opinion. It would be sensible to read up on the political background, recent legislative moves and so on. I am nothing to do with that account and am not trying to advertise etc., it just happens to be the most reliable source of its kind I have found. Feel free to delete this message if it is too outside rules. Thanks.
Anyone who knows they can win with more debt want rate cuts.
Tomorrow will be Monday, and Mish is going to blame Trump for that too. People will lose respect for Mish, who used to write a blog about macro economics before he lost his mind. What ever happened to that Mish anyway?
How does Mish visit the grand canyon and then return so completely obsessed with Trump? Did Mish not see the grand canyon? What was the point of communing with nature only to return filled with hate and bile?
The Fed doesn’t matter anymore. when Bernanke breached all the Fed’s actual official mandates, the Fed stopped mattering. Baby Bush figured the Fed was there to finance his wars. Obama put an unqualified woman in charge for political correctness reasons, figuring interest rate decisions were a formality and he could buy women’s groups votes — there were and are many qualified women who are smart enough to run the Fed, and they are also smart enough to steer clear of politics. And now Trump rightly looks at the Fed with the same disdain as his predecessors from both parties, the difference this time is Mish’s unbridled hatred for Trump.
We all know the money center banks have no business model, and are dying. They pay and charge interest rates that have absolutely no connection to Fed Funds.
Chase Bank, before the Fed announcement, was offering 0.03% on checking deposits over $500,000. Everyone has a spare half million to subsidize JPM, right? Savings accounts pay 0.05%!! Try not to spend that all in one place. Meanwhile Chase wants 4.125% for a conforming mortgage… Nothing at Chase hinges off the irrelevant Fed.
BankAmerica, Citi and Wells Fargo offer similarly insulting interest rates, which again have no connection to Fed Funds. No connection at all. The money center banks think the Fed is irrelevant, and they act like the Fed is irrelevant too.
CFOs in many corporations are growing restless for the kitchen sink quarter that a recession provides. For them, help is coming.
Many more CFOs are essentially financial caretakers for zombie firms, working business plans that can only survive with free capital. They’re slouching from quarter to quarter, waiting for the chapter 7 bullet in their corporate heads. It’s coming for them, too.
What a mess central banks, and the politicians that manipulate them, have brought to capitalism, which will now be blamed for the coming carnage.
Did Trump “want” any of the eight rate increases from the Fed since he was elected?
Did Trump “want” the Great QE to commence the minute he was elected? To the tune of $700 billion being removed from circulation so far?
Yes these things happened.
Seems like the Fed found its “independence” the minute obama left office.
I am sure it was just a coincidence.
For once I don’t disagree, but it is QT, not QE that you are referring to.
The Fed had little choice, though not reported or probably even accurately measured, inflation on the consumer side is screaming out of control. Sure, commodities are so low they have little room to go lower, but take RBOB for example, a few minutes ago it was trading at $1.74 so why is it still $2.95 at the pump? The normal margin from refinery to pump is about 30 cents for many years till recently, now the markup is about 80%. (gasoline has federal taxes included in the commodity price leaving the refinery, state and local taxes are added at the retail level).
But housing/shelter/rents are extremely distressing, rent has risen here 90% since 2013/14 lease period. At least in theory, in fact there are so few places to rent that it invalidates most comparisons. Vacancy rate here went from 5.6% to well under 1% in that same period. What is available is either substandard and should not be allowed to be inhabited, or the high end luxury units the mass market cannot afford (even with roommates).
Durable household goods like washers/dryers are up about 30% in the last year alone and still rising. Food…. LOL, go look at the price of bread and produce. Many items are up more than 100% even cheap old reliable refried beans are now a buck and a half at Slaveway, other than subsidized milk by the gallon everything in the store is way up. I wanted to buy a bottle of wine last week and was shocked to see that prices for it have nearly doubled from just a year ago. And that took me by surprise since I had heard nothing about the great bean or grape shortage of 2018/19.
The next biggest item on my monthly budget is auto insurance, up about 300-400% since 2013/14. I could go into the reasons for this but that is a dry topic. In fact, we are reaching a point of stagflation. It is starting to feel an awful lot like the mid seventies and that was a horrifying time to reach adulthood. 12-15% inflation, after just a couple years you could easily be on the street or go hungry, I was in the military and servicemen and women with kids were all on food stamps. It was also why Carter lost to Reagan in the biggest electoral loss in US history.