Next FOMC rate hike probabilities:
No hike → 93% 25 bps hike → 7% Source: Game of Trades
Turkey inflation has reaccelerated despite sharply increased key interest rates.
Source: Bloomberg
If the Fed cuts rates next year, is that a good thing?
Source: Jeff Weniger
A BAZOOKA CUT BY THE NATIONAL BANK OF POLAND...
Is it the most dovish central bank around? Despite roughly 10% inflation, The National Bank of Poland cut rates by 75bp to 6%, versus expectations of a 25bp cut. - Poland’s central bank delivered a surprisingly steep interest rate cut in a bid to boost a slowing economy less than six weeks before a tightly-contested election, weakening the zloty and hammering banking stocks. - The decision to lower the benchmark rate by three quarters of a percentage point — the most since the fallout from the great financial crisis in 2009 — to 6% caught economists off guard. Most had predicted a quarter point reduction. - The decision takes on a political dimension coming so close to the Oct. 15 election and has left investors guessing at the next move, with some predicting that the easing cycle has ended as soon as it began. Source: Bloomberg
$862bn in deposits have left the banks since the Fed began to raise interest rates
Source: Apollo, TME
Trafigura says ‘fragile’ oil market may be prone to price spikes as higher interest rates and underinvestment squeeze the market according to a Bloomberg article
- The consensus view is for prices to remain near current levels, but the market is “more fragile than it looks,” Ben Luckock, the co-head of oil trading said in an interview at APPEC in Singapore. Brent crude is nearing $90 a barrel after OPEC+ heavyweights reduced supply — curbs that could continue further. - “One reason is underinvestment in new oil production,” he said on Monday. “Combined with higher interest rates, which make it more expensive to hold oil in storage, it means there isn’t much slack or flex in the system. Put all together, and you have a market that’s susceptible to price spikes.” - Oil options traders are showing confidence in the recent sustained surge in prices, bolstering wagers that crude will rally toward $100, even as questions remain over China’s outlook. However, Luckock and other attendees at the conference said it wasn’t all bad when it came to nation’s economy.
Despite surging mortage rates, US home prices are RISING to ALL-TIME-HIGHS
Higher rates are having an INVERSE effect on price. Rather than prices falling with higher rates, they are actually rising. Why is this happening? As explained by The Kobeissi Letter, as rates rise, existing home sales are falling, now down 16.6% at their lowest since 2010. Borrowers are locked-in to sub-3% mortgages and do not want to sell their homes to get a 2.5x higher rate. We need LOWER rates for LOWER prices... Truly a historic occurrence... Source: FRED, The Kobeissi Letter
Treasury yields extend retreat from year’s highs after GDP data
Short-maturity yields led the move, with two-year yields declining about five basis points to around 4.85%, and most yields reached the lowest levels in more than two weeks. The
benchmark 10-year note’s yield touched 4.085%, the lowest level since Aug. 11.
Following downward revisions to the economy’s Q2 growth rate and related inflation measures, swap contracts tied to Fed meeting dates priced in slightly less than a 50% chance of another rate increase this year. Source: Bloomberg
