⚠️Bank of Japan is getting closer to deliver another rate hike:
Inflation has picked up while wages have jumped to the highest level in at least 3 DECADES. The market is pricing in about a 60% probability of a hike next week, and an 82% chance by March. Remember when in August 2024 the market flash crashed by suddenly waking up to BOJ's rate hikes? This is key to watch. Source: The Kobeissi Letter, The Daily Shot
French OAT 10-year just hit 3,40% while OAT-Bund spread is now at 86bps…
What is the pain threshold for ecb to step in?
🚨 "Klarnageddon": Consumer credit card debt just plunged the most since covid; these prints are usually negative just ahead or inside of deep recessions.
🔈 According to the Fed's latest consumer credit data, in November consumer credit across US households tumbled by $7.5 billion to $5.102 trillion, a 1.8% annual rate of contraction and usually something one only sees in the middle of recessions (or worse). ❗ While non-revolving debt (i.e. student and auto loans) rose modestly, it was revolving, or credit card debt, that cratered by a whopping $13.8 billion the biggest drop since the covid crash shut down the economy and the prospect of future income for millions of Americans (hence the collapse in spending). ⚠️ It is not clear what sparked this sudden reversal in the favorite American pastime - i.e., to buy stuff one can't afford and hope to pay it back some time in the future for a modest 29.95% APR - but we know what didn't: falling rates... because they didn't. ❗ Three months after the Fed cut rates, taking them 100 bps below where they were in September, the average interest on credit card accounts across the US banking system as tracked by the Fed is at 22.8%, the second highest reading on record and a drop of 57bps from the highest rating on record taken in Q3 2024... Source: Bloomberg, www.zerohedge.com
FOMC Minutes Show 'Almost All' Fed Members See Higher Inflation Risks, Cite Trump Policies
👉 RATE POLICY: — A 25bps rate cut was broadly supported, with the majority favoring a cautious approach to further easing. — Many participants suggested that a variety of factors underlined the need for a careful approach to monetary policy decisions over coming quarters — Some participants noted it might be prudent to pause rate cuts if inflation readings remain above target or economic momentum persists. — A few officials highlighted potential scenarios to accelerate cuts if inflation trends lower or labor market softens more than expected. — Many emphasized the importance of carefully assessing the neutral rate and moving gradually to avoid policy missteps. 👉RISK OUTLOOK: — Inflation risks remain balanced, though higher-than-expected recent readings warrant close monitoring. — Labor market risks were deemed manageable, with no rapid deterioration expected. 👉ECONOMIC CONTEXT: — Inflation progress has slowed but remains on a downward path; core PCE inflation was noted at 2.8% in October. — Labor market conditions have eased slightly, but unemployment remains low at 4.2%. — Participants expect solid GDP growth to continue, though some noted financial strains for lower-income households. 👉BALANCE SHEET AND TECHNICAL ADJUSTMENTS: — Continued reduction in Treasury and mortgage-backed securities reaffirmed, with caps set at $25B and $35B per month, respectively. — Discussed adjusting the overnight reverse repo (ON RRP) rate to align with the bottom of the federal funds rate range. 👉 ADDITIONAL NOTES: — Fed emphasizes data-dependent decision-making, balancing risks to inflation and employment. — Gradual easing remains the likely path, with flexibility to adapt if economic or inflation conditions shift. - source: Wall St Engine @wallstengine
YELLEN: "FISCAL POLICY NEEDS TO BE PUT ON A SUSTAINABLE COURSE"
As a reminder, Mrs Yellen was Fed vice chair and chair from 2010 to 2018 and has been treasury secretary since 2021. On an aggregate basis, she has been directly overseeing and presiding over a $15 TRILLION increase in US debt... Source: www.zerohedge.com
Swiss central bank faces call to hold bitcoin in reserves
Swiss citizens are advancing a new initiative to integrate Bitcoin into the financial reserves of the Swiss National Bank (SNB). This proposal has entered the official signature collection phase, aiming to secure 100,000 signatures within 18 months. If successful, the initiative will proceed to a national referendum to amend the Swiss federal constitution. The Swiss citizens initiative is an attempt to include Bitcoin in Article 99 (Clause 3) of the Swiss constitution which presently requires some amount of the country to be stored in gold. Bitcoin enthusiasts have suggested that Bitcoin should be considered as an instrument similar to gold. However, the initiative encounters numerous challenges even though the interest has been escalating. Switzerland being a neutral country does not often make changes to its constitution and the process is quite long and complicated. The proposal has to be supported and getting 100,000 verified signatures within the time limit is rather a challenging feat. source : coingape
The Federal Reserve has reduced the size of its balance sheet by 10.7% this year, the largest percentage decline of any year on record.
Source: Charlie Bilello
Most of the world's central banks are easing.
(see NDR analysis below)
