The spot metal has posted two straight weekly gains, and at least one technical signal is pointing to further increases. Bullion’s moving average convergence-divergence indicator, a gauge of price momentum, crossed above the so-called signal line last week for the first time since early August in a bullish sign for traders who follow price patterns.
And the juice isn’t going away until after 2023 (according to the Fed Dots plot).
Its a shame for the people of Venezuela that they can’t pump gold instead of oil given that their 9.25% sovereign bond has fallen from over $100 in 2013 to $9.28 today.
One question that is often asked if “Where Will Mortgage Rates Be In Three Years?”
Take a look at Freddie Mac’s 30Y mortgage survey rate (white line) and M2 Money Velocity (green line). And then overlay The Federal Reserve Balance Sheet, pushing down the benchmark 10Y Treasury Note yield. It is clear that mortgage rates aren’t going up anytime soon.
Look at home price growth and The Fed’s balance sheet. As the Fed began shrinking its balance sheet in 2018 and then the Case-Shiller home price index growth rate started falling … then recovered as The Fed threw more gas on the fire.
Gold? There is also a positive relation to The Fed’s balance sheet.
The Fed isn’t going until at least 2023. So, The Fed is here to stay, distorting markets and prices.
The problem is the Treasury Inflation Protected Securities (TIPS) are pricing in little inflation. A negative TIPS yield means your return will be less than the change in consumer prices.
The US Treasury Inflation Indexed curve is negative across the entire curve.
According to The Fed’s minutes posted today, inflation (as measured by Core PCE growth) is not expected to hit 2% until 2023.
Where is the inflation that The Fed is trying to achieve? No where in sight .. until 2023.
After a period of economic weakness in August and September, the pace of recovery in most advanced economies gained traction in the past two weeks, though activity is still far below pre-Covid levels, according to Bloomberg Economics gauges that integrate high-frequency data such as credit-card use, travel and location information. Germany and Japan remain at the forefront of the recovery and activity has also increased in France, Italy, and Spain. After months of stagnation, the U.S. is now seeing its recovery pace accelerate, while Canada and the U.K. are now the worst-performing advanced economies BE is tracking.
The activity indexes are estimated using a dynamic factor model. This methodology extracts an unobservable latent common factor of the underlying high-frequency data in the spirit of Stock and Watson. The model is estimated with daily figures from Jan. 1, 2020 to Oct. 6, 2020.
The high-frequency data we’re using have some obvious advantages — providing a more timely read than traditional data series.
But while the ALT index is showing recovery, also with the Atlanta Fed GDPNow Q3 Forecast of 35.2%, Neel Kashkari argues for MORE stimulus.
(Bloomberg) — Federal Reserve Bank of Minneapolis President Neel Kashkari said more fiscal support was urgently needed to support the U.S. economic recovery, following President Donald Trump’s unilateral decision to halt talks for another round of aid.
“Whatever Congress can do with the executive branch — come together aggressively to put money in the hands of people who have lost their jobs and to support small businesses so that we don’t have this continuing wave of bankruptcies across the economy — it’s just vital that they move quickly, whatever they do,” Kashkari said in an interview Wednesday on CNBC.
Trump’s decision Tuesday to walk away from talks with Democrats amid differences over the size of another fiscal relief package — even though hours later he appeared to reverse course — likely ended the chances of a deal before the Nov. 3 election. The president’s announcement followed a speech by Fed Chair Jerome Powell earlier in the day in which he made one of his strongest appeals to date on the need for lawmakers to do more. (NOT ONLY ABOUT THE SIZE OF THE PACKAGE, BUT THE WAY FUNDS ARE DISTRIBUTED AND NEW VOTING RULES ENCOURAGING MORE EARLY VOTING AND MAIL-IN VOTING). AND BAILOUTS FOR STATE WORKER PENSION FUNDS.
The Dow Jones Industrial Average rose this morning after yesterday’s beating in the afternoon.
The Treasury actives and dollar swaps curves are back to normal.
Apparently Pelosi and Mnuchin met this AM about a stand alone bill.
Just when we thought the US mortgage market had recovered from the financial crisis, then along came Covid and The Federal Reserve helping to push mortgage rates to near all-time lows.
According to Black Knight, the share of borrowers with only one missed payment was already below pre-pandemic levels in July and in August that number fell again. The number of loans in the 30- to 60-days past due bucket dropped by other 9.0 percent. At the same time, serious delinquencies, loans 90 or more days past due, increased by 5 percent and have risen in each of the past five months.
The transition from 30 days delinquent to 60 days late was falling as expected but showed a disturbing uptick in August.
Compared to natural disasters such as hurricanes, this time it is different PRIMARILY BECAUSE OF GOVERNMENT ECONOMIC SHUTDOWNS.
Most mortgages in forbearance remain in active forebearence and had the term extended DUE TO GOVERNMENT LOCKDOWNS OF SEVERAL KEY ECONOMIES.
But with US GDP growth expected to recover at a rate of 34.602%, look for forbearances and 30 day delinquencies to fade.
The German banks Deutshe Bank and Commerzbank along with the Italian bank Banca Monte dei Paschi di Siena crashed after the global financial crisis in 2008 despite an enormous spike in European Central Bank asset purchases.
On the other hand, US banks benefited from The Federal Reserve’s massive balance sheet expansion, at least until Covid hit in 2020.
Deutsche Bank’s 6% CoCo (Contingent Convertible) bond was issued in 2014. Contingent convertibles work in a fashion similar to traditional convertible bonds. They have a specific strike price that once breached, can convert the bond into equity or stock. The primary investors for CoCos are individual investors in Europe and Asia and private banks.
