Global currencies vs. the dollar last 10-years % change
Source: Charlie Bilello
A lot of US banks deposits are going into money market funds which saw a $6.3 billion inflow last week, up to $5.64 trillion
Money market funds paying 5%+ interest rates have become the new safety trade. Source: www.zerohedge.com, Bloomberg, The Kobeissi Letter Activate to view larger image,
US Housing | The National Association of Realtors’ index of contract signings tumbled 7.1% to 71.8 from July, the group reported Thursday
The decline was larger than all estimates in a Bloomberg survey of economists. *US AUG. PENDING HOME SALES FALL 7.1% M/M; EST. DOWN 1% *US AUG. PENDING HOME SALES FALL 18.8% FROM PREVIOUS YEAR Source: Bloomberg
Italy's 10y risk spread over Germany rose >2OObps, for the 1st time since March w/Italy 10y yield on course to 5%
Source: HolgerZ, Bloomberg
Very strange to see the US spending like we are in a recession while calling for a "soft landing."
As highlighted by The Kobeissi Letter, the US is now spending 44% of GDP per year, the same levels as World War 2. Deficit spending alone is a massive 6% of GDP per year. Since the debt ceiling crisis, the US has been borrowing ~$14 billion PER DAY to cover deficit spending. By 2033, Bloomberg projects deficit spending will be ~7% of GDP... Source: CBO, The Kobeissi Letter
US 10 year yields keep rising in tandem with oil
WTI oil now trades at $93.5/bbl. So is oil & inflation fears the only reason for bond yields to move upward? Probably not. The fact that real yields are also on the rise shows that inflation is not the only culprit. Investors are adjusting to the reality of rates staying high for longer than expected. They are also requesting positive real yield to get compensated for being invested in US treasuries at the time the US Treasury is issuing massive amount of debt while the FED keeps shrinking its balance sheet through QT. Source chart: Bloomberg
The Total US Bond Market ETF now has a negative return over the last 7 years. $BND
Source: Charlie Bilello
As highlighted in a tweet by HolgerZ, the S&P 500 is running in tandem with the Fed net liquidity
So it's not so much the peak or pause in rate hikes that matters, but rather what happens to the Fed balance sheet & reverse repo operations. Source: HolgerZ, Bloomberg
