Yes, there are many central banks around the globe. But the US Federal Reserve is leading the way with a staggering 24.9% YoY growth in M2 Money Stock. M2 growth barely exceeded 10% during the US financial crisis and Great Recession.
In terms of Treasury holdings, the Fed is beating all other major central banks.
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.
The result? US Treasuries yields are falling like a rock. US Treasury 10Y yields are down around 20 basis points this morning.
And unless lenders lower their 30-year mortgage rates, the spread between Bankrate’s 30 year average mortgage rate and the 10 year Treasury yield is at its highest level since Q4 2008, the epicenter of the financial crisis.
This morning before the US equities markets open, Europe is already down around 7% – 8%.
Here is Fed Chair Jerome Powell wishing us all the best!
I want to thank Rick Sharga for remembering that I was one of the few that predicted what is happening today with interest and mortgage rates while most others predicted mortgage rates would rise above 8%.