A gauge of U.S. service industries jumped to a four-month high in June and showed the resumption of growth as the economy reopened more broadly from pandemic-induced lockdowns.
The Institute for Supply Management on Monday said its non-manufacturing index soared a record 11.7 points to 57.1 last month, exceeding the 50.2 median forecast in a Bloomberg survey of economists. While the rebound follows a similar jump in the group’s manufacturing gauge and indicates that the economy is recovering from its pandemic-related recession, recent spikes in Covid-19 cases threaten to restrain the pace of improvement in services.
A front-page editorial in China’s Securities Times on Monday said that fostering a “healthy” bull market after the pandemic is now more important to the economy than ever. Chinese social media exploded with searches for the term “open a stock account,” with bullish sentiment also lifting the yuan. The Shanghai Composite Index closed up 5.7%, the biggest advance since 2015.
And a good economic report out of China produced this result for The Dow.
Federal Reserve officials had “many questions” about the benefits of yield-curve control when they discussed its pros and cons during their meeting in early June.
“Many participants remarked that, as long as the committee’s forward guidance remained credible on its own, it was not clear that there would be a need for the committee to reinforce its forward guidance with the adoption of a YCT policy,” minutes published Wednesday of the June 9-10 Federal Open Market Committee meeting showed. YCT refers to yield caps or targets.
Here is today’s Treasury yield curve versus the yield curve on December 1, 2005. Looks more like wholesale panic to me.
“In the field of monetary and credit policy, precautionary action to prevent inflationary excesses is bound to have some onerous effects— if it did not, it would be ineffective and futile. Those who have the task of making such policy don’t expect you to applaud. The Federal Reserve, as one writer put it after the recent increase in the discount rate, is in the position of the chaperone who has ordered the punch bowl removed just when the party was really warming up.”
William McChesney Martin, Speech to Investment Bankers Association of New York, October 1955
As of June 23, As of June 23, 4.68 million homeowners are in forbearance plans, representing 8.8% of all active mortgages, up from 8.7% last week. Together, they represent just over $1 trillion in unpaid principal ($1,025B)., up from 8.7% last week. Together, they represent just over $1 trillion in unpaid principal ($1,025B).
Fannie Mae and Freddie Mac lead in terms of loans in forbearance.
What is forbearance you ask? Forbearance is when your mortgage servicer or lender allows you to temporarily pay your mortgage at a lower payment or pause paying your mortgage. You will have to pay the payment reduction or the paused payments back later.
It has been a wild ride for the US Dollar since the 1980s.
Since 1980, the US Dollar has declined 57% in terms of purchasing power (going from 0.404 in 1980 to 0.130 for today).
The decline in purchasing power of the US Dollar looks like the ski jump at Lillehammer Norway.
There is little doubt that the purchasing power of the US Dollar will continue to deteriorate. But there are alternatives for value preservation. Such as Bitcoin, Gold and Silver.
Note that gold and silver moved together until the Great Bitcoin Bubble of late 2017/early 2018. Since the burst of the Bitcoin bubble, gold has skyrocket and silver has risen a little. Bitcoin also has risen, but nowhere near its bubble highs.
Mortgage lenders should rejoice at the continuing low level of 30-year mortgage rates and the 10-year Treasury yield.
The Covid-crisis can be seen in the following chart, starting in January 2020. It has been all downhill since January 1st in terms of rates and yields. With the exception of the blip in the Freddie Mac US Mortgage Market Survey 30 Year Homeowner Commitment rate around March 19, 30-year mortgage rates are barely above 3%.
The US Ultra Bonds futures price continues to trade at an ultra-premium.
The ultra premiums in ultra bond futures indicates that the Covid shutdowns are likely to return. Or continue to ravage the economy. And endless interference in markets by The Federal Reserve.