Interest rates are low until they’re not…
Old Wall Street Proverb
The bond market vigilantes are back…and that is a very good thing!
The Biden administration (included in that illegitimate regime is Federal Reserve Chairman Jerome Powell) is destroying U.S. fiscal health. They are spending trillions and printing money to pay for these trillions that we don’t have.
There will be consequences, as we have written about extensively here on these pages.
Yesterday Powell assured financial markets the Fed will keep rates basically at zero until the 2022 election (no politics in this policy). This is of course to allow #ObamaKamala to add as much debt as possible to the books, while avoiding having to even pay interest on what we owe.
This morning, the bond market rebelled, sending long-term interest rates higher. The U.S. ten year bond hit 1.75%. The historical average is approximately 5%.
The United States cannot afford even ‘average’ interest rates, as just the service on our debt will eat up the annual Federal budget.
The bond market may continue to take interest rates away from the Federal Reserve, which is supposed to only set short-term rates. However, through asset purchases, or quantitative easing (in banana republics they call it printing money), the Fed has attempted to control long-term rates as well.
We will see if they are successful, or if the market tells the Fed, we don’t believe America has the will, nor the ability, to pay back the debt, and sends long-term rates much higher, which is of course the goal of the Chicoms, as this will devastate the U.S. economy.
All of this comes while economic data from February looks to be collapsing. Yesterday it was housing data, today jobless claims were worse than expected. Financial markets sold off.
Continuing Jobless Claims (Mar 5) printed at 4.124M vs 4.07M consensus estimate.
Philadelphia Fed Manufacturing Survey (Mar) printed at 51.8 vs 23.1 estimate.
Zero Hedge reported, But, the surge is driven by a massive spike in the prices-paid index (which rose to 75.9 vs 54.4). Read…inflation.
Initial Jobless Claims (Mar 12) printed at 770k vs 700k estimate.
Initial Jobless Claims 4-week average (Mar 12) printed at 746.25k.
EIA Natural Gas Storage Change (Mar 12) printed at -11B vs -17B estimate.