The financial system is flashing warning signs

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The International Monetary Fund (IMF) issues a warning, with Managing Director Kristalina Georgieva urging the world to prepare for higher interest rates due to persistent high inflation.

The current scenario of surging U.S. bond yields, mirroring periods from the early 1980s that coincided with two recessions


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IMF Warns World Must ‘Buckle Up’ for Higher Interest Rates

“We live in a shock-prone world, and adaptation is crucial,” Kristalina Georgieva stated at the Future Investment Initiative. Inflation remains troublingly high, indicating persistent interest rates that will stifle growth for years. She urged for unity, cautioning against economic fragmentation. Side Note: Currency printing by global central banks is rarely discussed as the real issue.

Are We Close to the First Major Central Bank Failure in Decades?

Japan’s bond market is destabilizing despite aggressive interventions by the Bank of Japan (BoJ). The BoJ’s unprecedented Quantitative Easing (QE) program, aiming to maintain the 10-Year Japanese Government Bond yield below 1%, is struggling. In the last month alone, the BoJ had to step in six times due to rising yields. As the Yen weakens, concerns grow over an imminent debt crisis, reminiscent of past financial bubbles.

2023 is the Worst Year for Housing Market in Decades

The housing market in 2023 is heading towards its darkest period since the 2008 economic downturn. Current projections from Redfin estimate that only 4.1 million homes will be sold this year. Should this number decline below 4 million, it would represent the most dismal performance for the housing sector in nearly three decades, since 1995.

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The Economy Crashed Twice The Last Time U.S. Yields Rose So Much

US bond yields are surging at a pace not seen since the early 1980s, a period that led to two recessions. The 10-year Treasury yield recently exceeded 5% for the first time since 2007. Despite the aggressive interest-rate hikes under Fed Chair Jerome Powell, the economy hasn’t tanked, but the bond market is taking a hit. With increasing federal deficits and major central banks reducing bond purchases, there’s growing uncertainty.

Interest Rates Continue to Climb – Adjustable-Rate Mortgage Demand Hits Highest Level in a Year

Mortgage demand is at its slowest since 1995 due to rising interest rates. Application volume fell 1% last week, with the interest rate for 30-year fixed-rate mortgages reaching 7.90%. Refinance applications have also dropped, now constituting less than a third of total mortgage activity. The market for existing homes is nearly stagnant, exacerbated by limited supply and higher mortgage rates.