In the US, interest rates on household items are skyrocketing
In just 1 year, the average interest rate on credit card debt has gone from 14% to 21%+. New car loan rates went from 4% to 8% while used car loan rates are at 12%+. Mortgage rates are at a fresh high of 7.2%, up from 2.7% in 2021. Will the US consumer be able to absorb all these debt servicing costs? Source: The Kobeissi Letter, Macrobond, IN
The US Corporate Debt Maturity Wall
$230bn ($525bn Annualized) of Corporate Debt Matures in the Remainder of 2023 $790bn matures in 2024 $1,070bn matures in 2025 Source: Ayesha Tariq, Goldman Sachs
This could be a problem for sugar prices which already hit 12-year highs back in May
Source: Barchart
Market-implied inflation expectations over the next 5-10 years have risen to the highest levels in more than a year
Traders are starting to game out a future with sustainably higher inflation and higher long-term bond yields. Source: Bloomberg, Lisa Abramowiz
The lagging effects of higher interest rates ?
Yellow Corp. filed for bankruptcy and will remain shuttered after the trucking firm’s long-running financial woes (rising bond & loan payments) were compounded by a dispute with its labor force (wage inflation). The firm closes after nearly 100 years and leaves 30k employees jobless (this will likely be reflected in a lower payroll print for August). Source: Bloomberg
German exports to Kyrgyzstan are up 2000% in the past 3 years
Value of these exports is small, but this is just one of many examples showing how hard it is to police export controls on western goods to Russia. Source: Robin Brooks
Interest payments on US government debt are soaring
source: Markets & Mayhem
Shorting US 10y bonds seems to be one of the most crowded trades at the moment
Among the shorts, Billionaire investor Bill Ackman. To his opinion, if long-term inflation is 3% not 2%, the 30y Treasury yield could rise to 5.5%. In contrast, Warren Buffett has announced buying positions in 10y US Treasuries. Source: Bloomberg, HolgerZ
