Posted on 10/20/2023 5:44:33 AM PDT by Red Badger
Consumers are about to feel the impact of soaring bond yields, Blackstone president Johnathan Gray told the FT.
The yield on the 10-year US Treasury continued to rise on Thursday, edging closer to 5%.
Higher bond yields are raising borrowing costs all over the economy, from mortgages to personal loans.
American consumers are about to feel the sting of soaring bond yields, Blackstone president Johnathan Gray said.
Bond yields, which impact borrowing costs for all kinds of loan products, moved higher this week as investors fretted over higher-for-longer interest rates. After notching a 16-year-record earlier this month, the yield on the 10-year Treasury bond continued to surge on Thursday, rising to 4.958%.
"When 30-year mortgages and car loans cost you 8 percent it will impact consumer behavior," Gray said in an interview with Financial Times on Thursday. "Growth has been remarkably resilient, but if you keep policy this tight, this long, invariably you will cause the economy to slow down."
In some corners of the economy, rising yields and higher borrowing costs have already been acutely felt. Rates on the 30-year fixed mortgage just notched 8% this week for the first time since 2000, with the steady rise to that level in the past year putting the US housing market in a state of paralysis and bringing transaction volume to a 13-year low.
(Excerpt) Read more at finance.yahoo.com ...
Rates are just now getting back to the long term averages.
Too many got too used to the cheap money of the last 15 years.
Real interest rates determined by the market are typically 2% above inflation. With the Federal Reserve “buying” treasuries via “quantitative easing” Treasury rates are too far below what they should be earning.
“Quantative easing” is a euphemism for “just printing money”.
Not only the millennials ... we are retired and the first mate has been hinting that she may need a newer ride. I told her that ship has sailed - she should have asked 18 months ago when one could get a new car loan for 2.75% or so. Between interest rates doubling and car prices going nutz, it will be a while before anything new graces our driveway - and it won’t be an EV.
Anything that helps stop people from buying cars using big loans is good, since most people don’t understand what a bad idea that is.
My personal Bond Fund of 3 and 6 month T-Bills has done great for over a year and is still going strong. Plus, no state taxes to pay.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.