Interest rates going higher, page-20

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Bunn-Wackett

22,375 Posts.

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07/01/23

10:48

Post #: 65575107
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Originally posted by xjospi: ↑

Thank u for the genuinely informative posts. I can see u stayed up for the release of the numbers. Shows your commitment to the game. I was fast asleep.

A few things: SP500 took the numbers as GOOD news on inflation- UP 2.28%. So there's the thing about markets being efficient (not that i believe it).

Non manufacturing PMI showed a CONTRACTION for Dec. Indicating JJ's belated hikes are working to slow the economy.

The post about the terminal rate at 5.4% is, give or take, within 10 basis points, in line with previous expectations.

The ENTIRE yield curve is down on the report (except the very short end- 1 month and 3 months when I last checked) indicating the bond market/investors (as well as stonks investors) also see this report as positive in terms of future hikes, ie that we are within 100 or so basis points of terminal.

I am in FULL SUPPORT of monetary policy going back to normal ASAP. It should never have got to this dumb dumb situation to begin with, JJ shoulda been hiking back in 2018, when he proclaimed rate hikes and QT were on 'auto pilot', before his wall st rat masters sent him a XMAS gift of a message, namely negative 20% on the SP500. Which of course made him about turn and cave into their extortion. Sending the SP back into a frenzy of a V shaped recovery! DUMB! Just let it settle where it MUST with NORMAL MONETARY POLICY SETTINGS.

But I don't think this report indicates anything we didn't already know, ie jj's belated hikes are SLOWLY working. The terminal on current data looks to be circa 5.4%.

I am looking forward to being a bond investor via some ETFs for the first time, so I look forward to some 'yields to maturity' starting with a 5, whereas they only start with a 4 at the moment.

Let's assume this translates roughly into 6 or 7% on mortgage rates. I still don't see how that is the catalyst for a 50% wipeout of Oz housing, which by the way would be utterly catastrophic for ALL of us. Over 20% of the XJO is the 4 major banks alone. You can imagine what a 50% wipeout would do to their loan books and therefore their profits and share prices. They would most likely need to be nationalised. Now add on the entire domino effect of such a catastrophe and what you're basically saying is unless u work for the ***ment, you could be in real trouble.

It really is a terrible outcome, one that NO Aussie should be longing for.

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I’ll throw a few CPI inputs that are likely to hang around for a while ... maybe just a couple every now and then so you can have a think

1) this generation’s insatiable appetite to spend like there’s no tomorrow
2) greening of the planet is very, very costly
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