*click on all charts to enlarge (then when see + click again to see large version)FED to rescue? How's housing market doing? How's employment? Wages? Bank bonuses?
at 0% effective FED rates.......with economy not responding as the experts predicted and MSM keeps saying it is.......too few arrows left in the quiver to deal with another crisis.
How so with need to borrow at greatest in decades we see a 10 yr below 3%?
I hope you continue to find my analysis and blog helpful.
D
2 comments:
You are highlighting all the important points. Markets however can be irrarational for some time. Fundamentals will always win out in the end. Fed rates are near 0? They dont have a choice. Fed rates are approx same as 90 day tbill rates.
Rates go up when borrowers are willing to pay more interest in the hope they can sell assets for profit. For example when you have a housing bubble speculators are willing to borrow at higher and higher rates. The Fed follows by setting rates higher.
Why are bond rates low? Because we are done with peak credit in the US. As we deleverage and hit deflation for the next two decades which will survive? Stocks? Municipal bonds? US govt backed bonds?
Arguably we are worse off than Japan post 1989 because our govt debt is higher and we are consumers rather than net producers. Keep up the good work.
Seen the Baltic dry index lately?!
>Rates go up when borrowers are willing to pay more interest in the hope they can sell assets for profit.<<
That's not what happened this time.
ANyone with FACE got loan...greed took over....rates did not rise, rates stayed low allowing anyone to borrow and make payments...they paid no attention to price, but what they could pay...and of course no documentation.....interest only loans...during this speculative bubble rates SHOULD have gone sky high....now we have new gov agency to protect us...banks have racheted up requirements...yes I see deflation....yes I do
THEY always have choice. Yes understand bonds low as safe haven....might surprise to see how LOW rates can go...at some point that party will end badly.
TOO much like Japan.....almost all jobs now SERVICE JOBS....people living ogg not making mortgage payments and credit cards....another trap being set.
ONE DAY...BULL will be reset...many say NOW....cant buy that argument....thanks for comments
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