BREAKING: A HAWKISH PAUSE BY THE FED
FOMC KEEPS RATES UNCHANGED AS EXPECTED BUT MAKES CLEAR THAT HIGHER RATES ARE THE NEW NORMAL...US 2y yields hit highest since 2006 after somewhat hawkish Fed. Bottom-line: #Fed futures now no longer show rate CUTS beginning until September 2024. To put this in perspective, three months ago futures were expecting 4 rate CUTS in 2023. Now, interest rates are expected to PAUSE for at least 1 year... One remark: Fed estimates that r* (the real short-term interest rate expected to prevail when an economy is at full strength and inflation is stable) remains at 0.5%, and yet rates in 2026, when US debt may hit $50 trillion will be 3%. This means that blended interest on US debt will be ~$2 trillion, double where it is now. Source: Bloomberg, The Kobeissi Letter, HolgerZ, www.zerohedge.com
Humility
Source: Strati Georgopoulos
The best performing segment of the bond market this year? Leveraged Loans, up close to 10%. $BKLN
Source: Charlie Bilello
With the rise of oil prices, there is currently a revival of the "commodities super-cycle thesis"...
Source: J-C Parets
German banks are NOT passing on the increased interest rates to their customers
Commerzbank, Germany's 2n-largest retail bank, has announced it will increase net interest income to €8bn. Commerzbank has increased its deposit beta - a measure of how much of a rate increase it passes along to savers - slower than initially expected. The bank will end this year with something around a deposit beta of avg 40%. Source: HolgerZ, Bloomberg
Over the last 15 years, the US National Debt has increased at a rate of 8.5% per year versus an increase in economic growth (nominal GDP) of 4.0% per year
Source: Charlie Bilello
United Auto Workers (UAW) threaten to expand strike, according to WSJ
4 days after workers at Ford, Stellantis, and GM went on strike, strikers are threatening to expand. Currently, 13,000 out of 144,000 UAW workers are on strike. A strike by the entire UAW would cost US automakers nearly $600 million PER DAY. This is the first time in history that all 3 US automakers are on strike. Source: The Kobeissi Letter
Since the June bottom, crude oil, uranium, sugar and orange juice are up 20-30%. Is the risk of a second wave increasing?
Source: The Macro Guy
