Bad Sign! What Interest Rates Are Telling Us (US 10Y-2Y Curve Inverts To -80 Basis Points, Euro 10Y Yields Falling, Fed Funds Rate Priced At 2.301% By January 2024)

Confounded Interest ^ | 11/24/2022 | Anthony B. Sanders

[Kaiser8408a]

What interest rates are telling us is a bad sign.

With an impending railroad strike that can torpedo the US economy (but if that is possible, why is the Biden Clan vacationing in Nantucket for Thanksgiving weekend when Joe should be talking with railroads and the unions to not let this happen?), let’s see what interest rates are telling us.

First, the US Treasury 10Y-2Y yield curve continues to descrend into the abyss (now at -80 basis points).

Second, the latest Fed Dot Plot (from September, new one will be issued during December) show that The Fed thinks that their target rate, while rising in 2023, will likely start falling again in 2024.

Third, since it is Thanksgiving Day, US bond markets are closed. But in Europe, the 10-year sovereign yields are falling, a sign that the ECB is reversing course by increasing monetary stimulus and/or a European are slow down.

Fourth, US mortgage rates have cooled since peaking (locally) at 7.35% on November 3, 2022 and now sit at 6.81%, a decline of 54 basis points. A clear sign of cooling.

Fifth, how about Fed Funds Futures data? It is pointing to a peak Fed Funds Target rate of 4.593% at the June FOMC meeting. Then a decline in rates to 2.301% by January 2024.

Now, go and enjoy your Thanksgiving dinner with friends and family (up 20% since last year), courtesy of Jerome Powell, Joe Biden, Nancy Pelosi and Chuck Schumer.

[Leaning Right]

Thanks for the post. I will look into preferred stocks later this week.
I bought some I-bonds soon after Biden got elected. For some reason I just didn’t trust the guy! Preferred stock might be a good addition to those.

Regards,
LR

[Aeneas2112]

They aren’t idiots by any stretch. Some of the biggest brains with the best information on the planet.

They are doing *precisely* what the WEF and Uniparty want them to do.

[cgbg]

My view is that the risk/reward ratio is bad on everything.

If you believe that and you are older (like I am) then your sole goal is to preserve capital as best you can.

That means paying all debt down to zero.

Once that is done then make sure you are well stocked in physical durable stuff that you use—don’t want to get caught in any type of shortages and of course that is a hedge against future inflation.

When you die you want your heirs to start laughing at what a “hoarder” you were—that means you were doing it correctly!

After that is done then T bills, high interest savings accounts etc. are your “cash”—80% of your holdings.

If you want to play with the remaining 20% or so do whatever you want....just make sure you can afford to lose it.

[Justa]

"I don’t want a ‘Christian Nation’ because I don’t want an ‘Islamic’ Nation or a ‘Satanic Nation"

Best keep it safe then

[Bonemaker]

I have another word I’d liked to have used!

[buckalfa]

"There’s no free lunch once inflation gets embedded in the economy. Things are going a bit better than I expected. We’ll work through this."

The potential for economic harm is great. Storm clouds are gathering on the horizon. Yet the economy is humming right along in terms of unemployment and Team Biden still has unspent billions(trillions?)to continue to juice the economy. Perhaps part of the midterm failure was the GOP selling economic doom and gloom which does not yet exist in terms of actual recession.

[oldasrocks]

Recession will start after January so the dems can blame GOP for it.