Market pricing for another 50 bps rate cut at the Fed's next meeting two days after the election is now up to 60%.
@CMEGroup
US CREDIT CARD INTEREST RATES ARE AT ALL-TIME HIGHS
US credit card rates remain at record highs of ~22%. US credit card debt is now ~$1.14 trillion, also at an all-time high. This means Americans pay ~$250 billion in average interest payments on credit cards a year. Source: Global Markets Investor
😱 The "shocking chart" of the day !!! 😱 US CPI index since the 1970's vs its trend line.
In order to 'average' out the recent period of high inflation at 2%, the fed would have to tolerate a period of time of deflation. But can they really afford deflation with $33T of debt and persistently high budget deficit? As mentioned by Peter Boockvar on X, once purchasing power is lost, it is lost forever because central bankers won't let you get it back... Last week, Federal Reserve Governor Chris Waller inadvertently made that perfectly clear when he spoke on Friday. He told CNBC in an interview that "What's got me a little more concerned is inflation is running softer than I thought."... Bottom-line: It is very unlikely that inflation will come back to trend line in the foreseeable future. Perhaps the jumbo rate cut was also about making sure that the US economy doesn't fall into a deflationary trap... Welcome to the era of fiscal dominance Source chart: Bloomberg
US yieldcurve keeps steepening...
Source: Bloomberg, HolgerZ
🚨WHAT? US stocks fell after a 0.50% rate cut?🚨
Markets were very mixed after the Fed 'Jumbo' reduction. Big cuts are not usually a good sign BUT... Day 1 is usually not the REAL reaction. We need to wait 2 more trading sessions to see what's really going on. Market performance today: S&P 500 -0.3% Nasdaq -0.3% Russell 2000 +0.0% Dow Jones -0.3% Bitcoin +0.1% Bank Index +0.4% VIX +4%, front month futures VIX -1% Gold -0.6% WTI Crude Oil -1.3% Source. Global Markets Investor
Live look at JP Morgan after being the only ones who correctly predicted a 50bps cut:
Source: Trend Spider
Amazing to see the effect of 818K downward jobs revision on the fed dots...
Source: www.zerohedge.com
Among the reasons why the Fed cut 50bps this week:
1) Inflation risk is LOWER than Employment and Consumer risk 2) The sticky component of inflation is shelter. For shelter inflation to go down we need to see more housing supply and for this we need to get lower mortgage rates = jumbo rate cut does help 3) They MUST get front-end rates lower as this colossal wall of debt matures (source: Lawrence McDonald, Bloomberg)
