Bond yields going up again could interest rates go higher then 4.5% in UK?

[coypondboy]

Interesting article showing bond yields rising again after recent falls how high could they go?

https://notayesmanseconomics.wordpress.com/

[TerryBoi]

Here we go again.

Put on your seat belts.

Few are gonna walk away from this crash intact.

[TheCountOfNowhere]

26 minutes ago, coypondboy said:

Interesting article showing bond yields rising again after recent falls how high could they go?

https://notayesmanseconomics.wordpress.com/

Inflation is 13%

 

IRs can go to 20%

[voy-por]

What are you hearing on the inside @TerryBoi? As far as I can tell, markets are *finally* coming round, kicking and screaming, to sticky inflation and higher for longer interest rates. 

[fellow]

It looks like mortgage rates won't be falling for much longer.

The bulls will then lose their only argument and we can finally move past the delusion phase.

[TerryBoi]

7 minutes ago, voy-por said:

What are you hearing on the inside @TerryBoi? As far as I can tell, markets are *finally* coming round, kicking and screaming, to sticky inflation and higher for longer interest rates. 

Fed futures market telling us Nov 2023 @ 5.25%.

This just developed over the last few couple of days.

Its a huge move. Generally does not move this fast unless people are starting to get nervous.

Large parts of the US economy are built on TINA (their is no alternative to stocks).

5.25% means there is a very good alternative now to stocks; just stick it in T-Bills and sleep at nite.

The only drawback to this?

US insolvency.

[TerryBoi]

5 minutes ago, fellow said:

It looks like mortgage rates won't be falling for much longer.

The bulls will then lose their only argument and we can finally move past the delusion phase.

Yes, same in US. 

Dec/Jan there was this slight lull in mortgage rates too and people thought we're back in business.

It vanished as quickly as it came though.

[Nomadd]

15 minutes ago, voy-por said:

What are you hearing on the inside @TerryBoi? As far as I can tell, markets are *finally* coming round, kicking and screaming, to sticky inflation and higher for longer interest rates. 

https://www.reuters.com/markets/global-markets-no-landing-pix-2023-02-22/

[Maghull Mike]

https://www.zerohedge.com/markets/neocons-know-monetary-system-collapsing-martin-armstrong-warns-war-checks-all-boxes

[fellow]

It looks like New Zealand have gotten the message already:

New Zealand hikes rates to over 14-year highs, flags more to come; kiwi rallies

https://www.reuters.com/markets/nz-central-bank-hikes-rates-by-50bps-expected-flags-more-come-2023-02-22/

"WELLINGTON, Feb 22 (Reuters) - New Zealand's central bank raised interest rates by 50 basis points to a more than 14-year high of 4.75% on Wednesday, and said it expects to keep tightening further as inflation remains too high, a hawkish signal that sent the local dollar surging".

[voy-por]

48 minutes ago, TerryBoi said:

Fed futures market telling us Nov 2023 @ 5.25%.

This just developed over the last few couple of days.

Its a huge move. Generally does not move this fast unless people are starting to get nervous.

Large parts of the US economy are built on TINA (their is no alternative to stocks).

5.25% means there is a very good alternative now to stocks; just stick it in T-Bills and sleep at nite.

The only drawback to this?

US insolvency.

As I thought. Zero interest rate environment created all sorts of perverse incentives and systemic fragilities. Only question is whether they do a kill shot straight to the head or let the patient bleed out. 

[spyguy]

Ft article-

Majority of Federal Reserve officials backed quarter-point rate rise in February

Account of most recent meeting shows ‘almost all’ policymakers supported slower pace of tightening

 

https://www.ft.com/content/b6ef76c6-b738-4006-8bcf-b2ff794d26d6

Comment, which isnt me -

The Fed will need to raise benchmark policy rate to 6% to bring inflation to the 2% target level.

Wage pressure after four decades of wage repression is a new reality today. Decoupling, onshoring, reshoring and friendshoring are all inflationary. Cheap Asian manufacturing products is no longer possible as a deflationary force.

After several rounds of massive fiscal and monetary stimulus the inflationary effects will be more lasting than previously thought. Inflation today is much more sticky.

Navigating between reining in inflation and a soft landing is indeed a daunting task for Fed.

All this coupled with the need to do what’s necessary before 2024 presidential campaign goes on full swing.

 

[spyguy]

59 minutes ago, TerryBoi said:

Fed futures market telling us Nov 2023 @ 5.25%.

This just developed over the last few couple of days.

Its a huge move. Generally does not move this fast unless people are starting to get nervous.

Large parts of the US economy are built on TINA (their is no alternative to stocks).

5.25% means there is a very good alternative now to stocks; just stick it in T-Bills and sleep at nite.

The only drawback to this?

US insolvency.

I'd not say US insolvency - US prints it's own currency.

If $ is no longer used as trading n reserve currency, then Yep.

No sign at all of this happening.

 

[Square Mile]

1 hour ago, TerryBoi said:

Fed futures market telling us Nov 2023 @ 5.25%.

This just developed over the last few couple of days.

Its a huge move. Generally does not move this fast unless people are starting to get nervous.

Large parts of the US economy are built on TINA (their is no alternative to stocks).

5.25% means there is a very good alternative now to stocks; just stick it in T-Bills and sleep at nite.

The only drawback to this?

US insolvency.

Yup - to get back to the root of it all, watch published inflation numbers going fwd (split food against energy CPI/RPI wrt to UK) and US 10yr Treasury. From a UK perspective 2yr, 5yr, 10yr Gilts and Sonia swap rates.

Its a huge punt but imho UK inflation will stick and we could see 4.75-5% Boe by autumn 2023. Trackers or Variable mortgages will be hurting. Anything above 5% will be utter carnage on mortgages so I dont think BOE will rise IR regardless if they should or not - as it will enter the political realm upon which the voting base they rely on (middle and upper earning class) will revolt. Exciting times!

[Tapori]

5 hours ago, TerryBoi said:

Here we go again.

Put on your seat belts.

Few are gonna walk away from this crash intact.

Are you still on course for your apocalyptic prediction?

What's the range of views in your circles?

[Tapori]

5 hours ago, TerryBoi said:

Fed futures market telling us Nov 2023 @ 5.25%.

This just developed over the last few couple of days.

Its a huge move. Generally does not move this fast unless people are starting to get nervous.

Large parts of the US economy are built on TINA (their is no alternative to stocks).

5.25% means there is a very good alternative now to stocks; just stick it in T-Bills and sleep at nite.

The only drawback to this?

US insolvency.

Could anyone explain for a layman why exactly and the strategy behind FED raising rates so much? To boost their currency?

[voy-por]

18 minutes ago, Tapori said:

Could anyone explain for a layman why exactly and the strategy behind FED raising rates so much? To boost their currency?

They have to take the demand out of the economy, which is running way too hot. Rates are the only tool available to them.

[A.steve]

22 minutes ago, Tapori said:

Could anyone explain for a layman why exactly and the strategy behind FED raising rates so much? To boost their currency?

Central banks are subject to control by influential elites.  Their agendas use longer timescales than subordinate plebeians.  Steady monetary policy does not advantage the wealthiest relative to plebs... because it facilitates the poorer to make systemically good life decisions with confidence.  An extremely volatile policy promotes caution - and that's not easy to exploit.  On the other hand... a prolonged period of apparently stable super-easy credit will promote indebtedness... and this is maximally lucrative for creditors if followed by a prolonged period when it is expensive to be indebted.

 

[Timm]

1 hour ago, Tapori said:

Could anyone explain for a layman why exactly and the strategy behind FED raising rates so much? To boost their currency?

It's not about boosting the currency, but more about protecting it. USD (still) is the world medium of exchange. If it loses a lot of value in a short space of time, it would also lose the confidence of those who use it.

If USD loses confidence in its value, it may lose its status as the global medium of exchange. 

If that happens, then imports would leap in price when priced in USD.

[zugzwang]

5 hours ago, Tapori said:

Could anyone explain for a layman why exactly and the strategy behind FED raising rates so much? To boost their currency?

To drive the economy into recession, force down wages and force up profits. All the better to compete with China.

[zugzwang]

4 hours ago, Timm said:

It's not about boosting the currency, but more about protecting it. USD (still) is the world medium of exchange. If it loses a lot of value in a short space of time, it would also lose the confidence of those who use it.

If USD loses confidence in its value, it may lose its status as the global medium of exchange. 

If that happens, then imports would leap in price when priced in USD.

It's got nothing to do with dollar confidence. The business of maintaining exchange rates is the responsibility of America's financial colonies overseas. If they don't want their goods to be priced out of international markets (most of which, by threat or sanction, are denominated in USD) they have to keep buying US Treasuries, essentially financing the US govt's $2 trillion annual deficit.

[spyguy]

5 hours ago, Timm said:

It's not about boosting the currency, but more about protecting it. USD (still) is the world medium of exchange. If it loses a lot of value in a short space of time, it would also lose the confidence of those who use it.

If USD loses confidence in its value, it may lose its status as the global medium of exchange. 

If that happens, then imports would leap in price when priced in USD.

Pick a non $ currency. Any will do.

Look at the exchange rate for the last ~30y.

Does that look like a country defending the strength of its currency a la Swissy?

 

[Timm]

17 minutes ago, spyguy said:

Pick a non $ currency. Any will do.

Look at the exchange rate for the last ~30y.

Does that look like a country defending the strength of its currency a la Swissy?

Why on earth would I pick a non $ currency when the question I replied to was (my bold):

6 hours ago, Tapori said:

Could anyone explain for a layman why exactly and the strategy behind FED raising rates so much? To boost their currency?

 

[Timm]

55 minutes ago, zugzwang said:

It's got nothing to do with dollar confidence. The business of maintaining exchange rates is the responsibility of America's financial colonies overseas. If they don't want their goods to be priced out of international markets (most of which, by threat or sanction, are denominated in USD) they have to keep buying US Treasuries, essentially financing the US govt's $2 trillion annual deficit.

At the risk of taking you seriously, what do you mean by "America's financial colonies overseas"?

 

[henry the king]

12 hours ago, fellow said:

It looks like mortgage rates won't be falling for much longer.

The bulls will then lose their only argument and we can finally move past the delusion phase.

It is all they have, and it is based on pure speculation rather than facts.

Like "if this happens then this happens then this happens then prices go up!"

Whereas for us, prices are already going down. So we are being proved right by the data right now. Not speculation or guess work or projecting (which is hard in the housing market). Just cold hard numbers showing a crash currently taking place at the same pace as 2008 right now.

That might change, but that is hard to predict. Nobody knows the impact of HTB being removed for example, should see that in the data in a few months!