Its Saturday and I’m dreading markets opening on Monday. However right here is the place we sit in the present day.
The 30-year mortgage fee has soared to five.29%, the very best degree since 2009 at the start of Obama’s Presidency. Since 2009, we’ve got seen the buying energy of the US Greenback decline additional (orange line) whereas inflation (blue line) has soared. M1 (yellow) and M2 (inexperienced) has been rising for the reason that monetary disaster, however actually took-off with the Covid outbreak in 2020 and The Fed’s huge overreaction coupled with Federal authorities stimulus.
Because the creation of The Federal Reserve System below President Woodrow Wilson, the buying energy of the US Greenback has collapsed a lot that $10 in 1913 in price 34.8 cents in the present day. However discover that since 1949, the CPI YoY has not often been destructive which means that costs are just about solely going up.
As a substitute of April showers deliver Could flowers, it’s April anticipated Fed fee hikes (now 10.408 fee hikes by February 2023) bringing declining belongings costs. In April up to now, the S&P 500 index is DOWN 7%, the 10-year Treasury Notice value is DOWN 5%, Bitcoin is DOWN 11%, the three.5 coupon company MBS value is down 3.2%.
We’re seeing elevated volatility in each the fairness and bond markets.
Effectively, Powell and The Fed are hurling fireballs at mortgage charges and asset costs in April.
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