The banks are front running the Fed again. Since Trump won, interest rates have gone up about a half of a point. I know the banks are capitol starved, but I'm not sure the people who run banks understand how to run banks. I always think - they must know where the pain point is. But obviously they don't. At 4% the market is nearly dead. Refi's most assuredly are completely dead.
Every single time the banks do this - rates collapse. And if the Fed raises in Dec (and I think they will) it will only cave rates more. The market just isn't quite ready for it yet. The way the banks do this is the craziest thing I've ever seen. It's like a kid who hasn't ever had chocolate, then find a tub of chocolate and then proceeds to eat the whole thing.
I'm not sure the banks can control this one. The move has been astonishingly quick for the bond market. If treasuries spike it won't be easy to pay for trumps tax cut, wall and infrastructure promises. It's almost as if foreign governments are conducting economic sabotage . . . DF
ReplyDeleteThat's a really interesting comment. I'm going to have to mull it around in my head for a little while. With the dollar being so strong right now, I think those guys are jumping the gun. It's almost an exact repeat of January.
ReplyDeleteI'm not sure anyone REALLY really cares about how this is paid for. If we are doing real talk. Nobody cared how we were going to pay for all that money printing. And that brings in zero revenue!
All I know is - forget the housing shortage. We have a freeway shortage. People are going to lose their minds if we don't get some more freeways in here. People are routinely sitting in two hour traffic in the Bay Area as I'm sure you know. Even on the weekends. There is a ton of productivity lost.