A look at outstanding amounts of Treasuries, corporates, agencies, munis and open market paper... Read More
The amount of outstanding private credit in the U.S. experienced a brief decline during the financial crisis, but government debt grew throughout the entire period. Both are now at new highs.... Read More
Private pension funds have much smaller funding gaps than their government counterparts.... Read More
Defined benefit plans continue to be replaced by IRAs and defined contribution plans.... Read More
Over the past couple quarters, households' real estate equity actually surpassed stock ownership.... Read More
Roughly 45% of FDIC deposits in the U.S. are uninsured.... Read More
First Republic is looking into a potential sale. This brings into question whether other regional banks are still at risk of losing deposits. These banks are critical sources of lending in the U.S., so any sustained loss of deposits would have a material effect on the economy. A hike in deposit rates and further FDIC assurances could help stem the outflows.... Read More
First see the charts below. This wild gyrating of the probabilities this close to a meeting is without precedent. NO ONE has a road map for this, including the Fed. So, what do they do next week? Let me offer... Read More
The 2-year is down 44 bps over the last two days (since Wednesday’s close). Only five other days in the last 40 years have seen a larger two-day moves. Oct 20, 1987 = the day after the largest stock market crash... Read More
Bank deposit rates have been too low relative to other higher-yielding options. That was not a problem until depositors began to move money out of the banking system for these higher-yielding instruments. The fix - raising deposit rates - would hinder profitability.... Read More
Homebuyers enjoyed a relatively affordable market in the decade following the housing crash. The recent rise in prices and mortgage rates put homeownership out of reach for many prospective first-time buyers.... Read More
There has been a notable shift in attitudes toward cash as rates continue higher and traditional investments such as equities and bonds have underperformed.... Read More
Risk can not be destroyed, only transformed. Understanding the mechanics of 0DTE on an intraday basis can give insight into understanding risk in a new market envoirnment. ... Read More
0DTE options have become a focus for market participants trying to understand where risk lies. Looking at the derivatives market and how these options are traded is a crucial first step. ... Read More
Powell just finished, and here is the updated probability that the Fed will hike 50 next week. Go with the market probabilities, and you’ll be mistaken for Nostradamus. So much for the idea that nothing happens at these testimonies! The... Read More
Redfin's alternative measures of the housing market continue to show a slowdown in the crazy conditions of the last year.... Read More
10-year Japanese government bond yields are pushing against their 0.50% yield curve control ceiling again. Despite a 30-year high in inflation and rising wages, the Bank of Japan remains in a decades-long fight against deflation. Something has to give, the inflation data or yield curve control.... Read More
Australia ended its yield curve control in 2021. The unwind serves as a warning for Japan and anyone else that wants to consider fighting economic or market forces.... Read More
Between the strong payroll report on February 2, the higher-than-expected inflation report on February 14, and the recent rise in used car prices, markets have repriced their expectations for Fed hikes significantly over the last two weeks. They now expected the Fed to hike above 5.25%, maybe as high as 6% by fall.... Read More
So, the inflation rate gets to the high 2% or low 3% range by the release of the June report in July, then the base effect turns positive and inflation drifts up the rest of the year. To repeat, Powell could not be more clear, he is not raising the target rate above 2%. So the Fed keeps hiking beyond 5.25% to get to "sufficiently restrictive."... Read More