Markets are indicating a prolonged period of higher interest rates. Economist El-Erian warns Treasury bonds are losing their safe-haven status. Despite escalating tensions and a surge in bond issuance, yields are rising, and investors are turning to volatile assets, signaling a major downturn for the bond market.
Rats are starting to jump ship.
The foundation of the financial system is shaking.
The chapters are still being written.
— Gold Telegraph ⚡ (@GoldTelegraph_) October 27, 2023
It probably does not help having a Treasury Secretary that appears overtly delusional about the effects of debt issuance on supply and demand.
Or, of course, she knows better but chooses to engage in political posturing. https://t.co/vL8L75LKJI— Sven Henrich (@NorthmanTrader) October 27, 2023
Small Cap Stocks fall to their lowest prices since November 2020 👀 pic.twitter.com/SyTB7hDFOq
— Barchart (@Barchart) October 27, 2023
Mortgage rates in the US rose for the seventh week in a row, per Fannie Mae.
— unusual_whales (@unusual_whales) October 27, 2023
Proxy Fed funds rate now over 7%, signaling prolonged high-interest rates and ongoing inflation concerns.
According to the Fed itself, the current proxy Fed funds rate is ~7%.
In other words, it would take 3 more 50 basis points rate hikes to hit this proxy rate.
What is the proxy Fed funds rate?
It's the Fed funds rate that would typically be associated with current market… pic.twitter.com/g4dd0FrrSM
— The Kobeissi Letter (@KobeissiLetter) October 26, 2023
I keep hearing how "rare" home price collapses are?
Really? Show me all the times where housing DID NOT collapse when:
1. Debt service was this high
2. Working age trajectory was collapsing from a 1950-2008 level
3. Buying vs renting disparity was this large
4. Prices to… pic.twitter.com/FAr0UpMi0n— Darth Powell 🦈🇺🇲🇺🇦🇵🇱🇫🇮 (@GRomePow) October 27, 2023
JPMorgan’s CEO plans to sell 1 million shares of the 8.6 million shares his family own
This is the longest bear market for banks since 2008: pic.twitter.com/KdGHikASJu
— Mac10 (@SuburbanDrone) October 27, 2023
The average U.S. stock is approaching the lows of last October and back into bear market.
This is the chart of the week: pic.twitter.com/lPGCFTzbuD
— Mac10 (@SuburbanDrone) October 27, 2023
Economist El-Erian Says Treasury Bonds Are Losing Their Status as Safe-Haven Assets
The Treasury market, once the bedrock of safe-haven investments, is now in alarming decline, as emphasized by Mohamed El-Erian on CNBC. Even with Middle East tensions escalating, the expected rush to U.S. government debt is nowhere in sight. Instead, yields are skyrocketing as traders increasingly dump bonds with seemingly little faith left. The turn towards traditionally volatile assets like equities is a glaring red flag. Given the current trajectory, combined with the Federal Reserve’s maneuvers and the looming surge of bond issues, the bond market stands on the precipice of a major downturn.