Bank of Japan Stops QE, Reserve Bank of Australia Starts Tapering, Bank of Canada & Bank of England Already Tapering, Amid Shock-and-Awe Rate Hikes in Emerging Markets

Business

WOLF STREET 06 July, 2021 - 03:37pm 14 views

The Fed is a laggard, not the leader, in ending the ridiculously easy money policies. At the ECB, internal resistance is building against its asset purchases but for now is getting squashed, leaving the ECB even further behind than the Fed.

The Swiss National Bank continues full tilt, but it doesn’t buy Swiss assets; it prints francs and dumps those printed francs for assets denominated in euros, dollars, and other currencies, including US stocks, which is a different ball game and works as long as enough foreign investors are silly enough to buy these Swiss francs.

But other central banks have already started the process of tapering asset purchases or hiking rates. The Bank of Japan, which started tapering months ago, has now completed its tapering and its total assets actually fell. And some central banks have announced rate hikes, and others have already imposed hiked rates, including shock-and-awe rate hikes in Brazil, Russia, and Turkey to tamp down on raging inflation.

So these are the major central banks that are ever so gingerly stepping away from the ridiculous easy money policies.

The Reserve Bank of Australia announced today that it would taper its QE, by reducing weekly purchases of government bonds by A$1 billion a week, to A$4 billion a week.

The Bank of Japan, one of the most voracious money printers over the years in terms of the size of its economy, behind only the tiny Swiss National Bank, has already been tapering its asset purchases for months. With the BoJ, one has to look at the numbers, not at the mumbo-jumbo in the press releases. The BoJ publishes its balance sheet numbers every 10 days.

The balance sheet data release on July 2 revealed that its total assets, after months of slowing purchases, actually fell by ¥7.7 trillion ($70 billion) at the end of June compared to the end of May, to a still gargantuan ¥717 trillion ($6.5 trillion):

The three-month moving average of its monthly QE purchases shows the ongoing trend: In April, May, and June, its total assets increased by an average of only ¥0.78 trillion per month, the smallest increase since the beginning of Abenomics in 2012:

The Bank of Canada announced the first reduction in its purchases of Government of Canada bonds in October last year, from C$5 billion to C$4 billion, when it also ended buying mortgage-backed securities. In March 2021, it started unwinding its liquidity facilities, citing “moral hazard” as reason. In April, it announced a further reduction in its purchases of Government of Canada bonds, to C$3 billion, citing “signs of extrapolative expectations and speculative behavior” in the housing market.

The assets on its balance sheet have now dropped from C$575 billion at the peak in March, to C$481 billion as of June 30:

The Bank of England announced in May that it would reduce its asset purchases, tapering the bond purchases from £4.4 billion a week to £3.4 billion a week.

Like the Bank of Canada had denied in October that its tapering was actual “tapering,” the BoE also denied that its tapering was tapering, calling it instead an “operational decision” that “should not be interpreted as a change in the stance of monetary policy.”

The reason this tapering isn’t tapering, according to BoE governor Andrew Bailey at the post-meeting press conference, is that the BoE didn’t change its “fixed amounts” of its overall QE target of £895 billion, it’s just buying less per week to get to this target.

The Central Bank of Turkey shocked the financial world in March with a shock-and-awe rate hike of 2 percentage points, from 17% to 19%, to tamp down on raging inflation and prop up the lira, when economists had expected a rate hike of half that magnitude. Shortly after the shock-and-awe rate hike, Turkey’s President Recep Tayyip Erdoğan came up with his own shock-and-awe move: he fired the governor of the Central Bank. Under the new governor, the policy rate has remained at 19%.

The Central Bank of Brazil has hiked its policy rate three times by a total of 2.25 percentage points, since mid-March, 75 basis points each time. The first of the rate hikes was shock-and-awe, with economists expecting much less of a hike. Since March, the Central Bank has raised its policy rate from 2.0% to 4.25%, and has put more rate hikes on the table, to tamp down on raging inflation.

The Bank of Russia has been “surprising” economists with multiple rate hikes, and steeper rate hikes than expected, starting March 19 with a 25-basis-point rate hike, when none was expected, followed on April 23 with a 50-basis-point hike, and on June 11, with another 50-basis-point hike. Over the period, it had raised its policy rate from 4.25% to to 5.50%.

The next policy meeting is scheduled for July 23. And Bank of Russia Governor Elvira Nabiullina has already prepared the markets for the possibility of a shock-and-awe rate hike of up to 100 basis points. The reason: raging inflation, which the Bank of Russia, as she said, sees as “not transitory.”

The Bank of Mexico hiked its policy rate by 25 basis points on June 24, to 4.25%, also surprising economists that had not expected a rate hike. No one ever appears to be expecting rate hikes.

Norges Bank, the central bank of Norway, which never got into QE, confirmed repeatedly that it would start raising interest rates in the second half of this year, now likely in September, and put two more rate hikes on the table for next year.

The Riksbank, Sweden’s central bank, announced in late April that it is following through on its plan and end its QE program by late 2021.

The Fed itself is now discussing when and how to reduce its asset purchases. The Fed still claims that it sees the raging inflation as “transitory” or “temporary.” In its announced sequence, it will end its asset purchases first; then after the balance sheets stops growing, the Fed will hike its policy rates; then later, the Fed may shrink its balance sheet. This was the sequence last time, when inflation was still below the Fed’s target, and that’s the plan going forward.

The gradual pace assumes that this raging inflation, the worst since 1983 even according the Fed’s own low-ball measure, of today is truly “temporary.” But if it turns out that business and consumer behavior with regards to inflation has changed — as I see and allege all over the place, including in the largest retail category, auto sales — which would render this raging inflation much more persistent, then the Fed may belatedly come up with its own shock-and-awe treatment to get a handle on it.

I had no trouble at all raising professional rates to my customers last month by about 10%.

Everyone sees inflation all around and everyone is charging more for everything. It was an easy sell with no pushback at all.

Everyone knows it’s just ‘keeping up’ with utilities, insurance and everything else around us (and them) up about 10% in the last year or so.

For many employees, NOT increasing their portion of health insurance is tantamount to a large raise (but maybe not 10%).

“I had no trouble at all raising professional rates to my customers last month by about 10%.”

Then your customers better raise their prices and rates an equivalent amount or they are losing the inflation race.

That is how roaring inflation gets started.

can’t wait to see how HIGHER FUEL PRICES is gonna get passed along

Wolf what do you make of the flattening yield curve? 10 year seems to be rather bearish for growth going forward considering how high inflation is right now.

The Fed is STILL buying $120 billion a month in Treasuries and MBS. That pushes down long-term rates. Forget the yield curve during QE; it’s meaningless.

If the Fed wants to let long-term rates to rise, it should end QE now, meaning stop adding to its balance sheet now, and forget about the slow process of tapering its purchases, and then in two months start reducing its balance sheet. Then watch the yield curve steepen as the market is then free to respond to inflation, which is not the case now.

FED knows exactly what they are doing and are doing what they want to do which is not what they stated to do.

The explicit purpose of the Fed’s asset purchases is to increase the wealth disparity between the wealthy and the bottom 50%. And it works wonderfully. The Fed calls this the “wealth effect.” Nothing is accidental here:

I know these facts. Nothing new here, however, my question was that if this can work with this much pressure on the lower class.

The “lower class” is missing one thing here: lots of firepower, which is exclusively the domain of the government. As our great leader recently proclaimed: “F-15s and nukes.” But for all that, there is this constant obsession with gun control. Which is kind of odd.

If the lower class don’t like pressure, there is another solution, hand outs. Which on the surface looks good until one realizes, there is this slow and inevitable upward creep of prices.

“But for all that, there is this constant obsession with gun control. Which is kind of odd.”

For F-15s, etc. (sans nukes) success against small arms, see “Afghanistan” and with F-4s, F-105s, etc. (sans nukes) against same see “Vietnam.” Sure, they had a terrain and jungle cover advantage, but the main point is that conventional armies don’t fare well against gorilla forces.

If a significant portion of the US population ever turned violently against DC, it would all be over for them relatively quickly. Which is exactly why they’re making such a HUGE deal about 6 Jan and why they want to scrub the military of “extremists.” They know that.

They seem to be well equipped to fit the camel with a backbrace and continue to lower its standard of living into greater degrees of miserable squalor.

QE has only a small effect on the long curve. The curve is saying there is no reflation.

QE and the hoopla around it have a HUGE effect on the long end of the curve. That is its explicit purpose. That is why it exists. Obviously not a minute by minute or day by day basis, but over the longer term.

If the Fed wants a 4% 10-year yield, it can do that just fine by ending QE and unloading its balance sheet, with some real hoopla around it, such as inflation being real, no problem.

BTW. the 10-year yield is DOUBLE what it was a year ago!

Amen. I just heard reports about more, major, mainland Chinese companies defaulting on their bonds. If so, and if enough finally fail, as expected because most are Ponzi schemes, that may be the trigger that starts a US stock market avalanche when so many stocks bought on margin are sold by brokers to mitigate their damages because over leveraged persons that gambled using margin cannot cover their margin calls.

If not now, I expect the collapse by October.

To clarify, even mainland Chinese companies that start out with the best of intentions can be suddenly ordered by the CCP to use all of their funds bail out this or that company of a CCP member, lover, or crony. Thus, all mainland Chinese may suffer sudden, fatal losses because most CCP-linked companies, particularly state owned enterprises, are run with the competence, ability, and business expertise possessed by drunken chipmonks, since CCP members are distinguished by their greed and incompetence.

I am sure that The Zetas gang in Mexico has greater business expertise than the CCP gangsters.

The Fed primarily buys shoe term treasuries not 10 yr

The Fed buys across the spectrum in proportion to outstanding maturities.

You can check out the last two weeks of purchases here. This includes all kinds of bonds, including 30-year long bonds.

The US is relying on a strong dollar to maintain demand for their paper. Russia stepped over the line this weekend. It’s game over for Putin. When the real fireworks start they will all be piling into dollars. When Russia is done say goodbye to the American insurrectionist movement as well. All the other CBs of the world know what their next move is, and that doesn’t include buying their own paper. US is lender of last resort. The global financial system will bend but not break, hopefully.

Can you please elaborate in concrete terms?

He is modern day Paul Revere warning us that the Russians are coming.

meaning corrupt govt can keep spending until other countries stop using our currency to make settlement with BIS

Buck is still the safest port in a storm. Developing nations write their sovereign debt in dollars. If the US wanted to compete with the EURO they could revisit the AMERO. Why sully the brand? “The US does not support a weak dollar policy..” JY, in response to previous admins policy. Yields come back down and Fed is no longer behind the curve. Remarkable that CBs work in concert, doing the right thing at the right time, tapering, raising rates, and the US (dollar) benefits. It’s almost as if, that’s what they want.

It is theft, plain and simple….and violation of at least two of the THREE Fed mandates, for those scoring at home.

But who would jump up and stop this game of pumping assets …. to thus save the People from a ruinous inflation? Good question. Waiting.

To your last question, I don’t know who will stop it but it’s heartening to see more people asking this question.

You won’t find too many people who’s 401K’s are still growing by double digits for the past 13 years…hard to hear them complaining when they dollar cost average each month and are seeing their “retirement” continue on Fed induced growth of equities…Many of these folk could care less about “Wealth Inequality” so long as their account continues to grow. Should we experience another 2001 or 2008 drop…then the war drums of the common man may start to beat…

Yeah, perhaps, but the “common man” only has $30 or $40k in those 401Ks. So if the “growth” is due to inflation, and not actual economic growth, he’ll be worse off.

The “common man” quit his job because he got a $1,200 stimulus check.

“Should we experience another 2001 or 2008 drop…then the war drums of the common man may start to beat…”

Only about half of US population own stocks, and the lion’s share of that is concentrated in hands of top 10% of Americans (income level). This very fact illustrates the Fed’s signature Wealth Effect operation (wealth disparity) in action.

My point is that for most of our population stocks rising or falling are not a meaningful factor in their daily lives or financial status.

They are busy keeping a roof over their heads and food on table.

Why isn’t anyone asking why the fed is even buying MBS, especially rmbs? Almost as if they are trying to fuel a housing bubble…

But hey, a new SPAC though right?

But hey, FOMC meeting though right?

Larry Summers was asking why Fed is still buying MBS last week.

When we have to go to that hack Larry Summers to get words of wisdom then you know we are in serious trouble.

Larry is a progressive. He is pretty certain current policy is too accommodative and is going to create a stagflation disaster and progressives take the blame.

Watched a couple interviews. He kept saying it’s simple arithmetic and he is worried.

“Why isn’t anyone asking why the fed is even buying MBS,…”

EVERYONE is asking that. Fed heads are already proposing to end MBS purchases faster than Treasury purchases.

Oh no, that’s not going to be good for the housing market.

Don’t worry, once the market tank. Weimar Powell will be back for the rescue. Right now they are just imagining about thinking about thinking stop buying MBS. We are still not there yet.

IMHO, the Fed is buying MBS so that when the bulk of the asset side of their balance sheet turns to dust, they will at least hold title to some residential real estate.

IIRC, the Rentenmark (which replaced the worthless Reichsmark in 1923) was backed by farm land and commercial real estate.

In an era marked by accelerated/accelerating money printing, it would seem that the CBs are likely to have to operate with some significant degree of backstage coordination, lest foreign exchange rate changes badly impact intl trade flows.

That said, other countries’ tapering and/or dramatic rate hikes suggest a prelude to US tightening sometime relatively soon.

I think your right in the coordination, but surely the USD has had its run and the US as reserve currency is fostering a world that can not recover. It’s been 21 years since the dotcom bubble burst, and we have been in ‘recovery’ ever since, because of the Fed’s disastrous measures. The only way the world recovers now is for the USD to lose reserve status, and debt to matter again.

“… we have been in ‘recovery’ ever since, because of the Fed’s disastrous measures.”

Viewed from any angle, it is apparent this period has assuredly NOT been a normal recovery but an ongoing financial emergency with sirens and horns blaring as evidenced by Fed and Sugar Daddy U.S. Sam’s ongoing (13 years and counting) monetary and fiscal tidal wave (QE, ZIRP, and now MMT).

For me, the best measure for how bad things have been is just how long the Fed has implicitly or explicitly forced the 10 year Treasury (a benchmark competitor that corporate bonds/loans are more or less priced against) to be under 5%.

They have done so for the last 18 years…and kept it under 3% (!!) for 10 of those 18 years.

For the preceding 35 yrs (1967 to 2002), the 10 yr Treasury was less than 5% for…1 yr.

And it was above 7% for 20 of those yrs.

So a decent argument can be made that things have been sufficiently bad in a macro sense for the last 18 yrs, that the Fed has either explicitly acted (via money printing) or implicitly (via uncountered intl savings flows) to slash savings/lending rates by more than half (from 7% to 3%).

That isn’t a sign of strength…it is a sign of macroeconomic weakness (far below full employment, borrowers who die off at rates above 3%, etc.)

ZIRP will soon end; the currrency tensions are palpable

The Fed have already been pointing out problems for months.

The higher asset valuations go the higher the risk for losses.

Inflation will only be temporary if the everything bubble crash is around the corner.

Unless you all expect pay rises when everyone has just lost 25-50%?

Continued Fed yield curve control seems pretty surreal with inflation well in excess of 5%. The FED seems to have lost its collective mind. With today’s plunge, the yield on the 10 year has now dropped 25% over the last several months.

I shudder to think what the next round of inflation numbers will look like.

Maybe history is about to repeat itself.

ECB tighten after the financial crisis? Hahaha. The ECB started bailing out entire countries to counter the Euro Debt Crisis and save the euro. It cut its rate from 4% in 2008 to 1% in 2009 and then, except for two minor squiggles, kept cutting rates until they were negative, which they still are.

On top of that, it started all kinds of balance sheet activities, including its LTRO loans and bond purchases.

This had nothing to do with the economy but with the debt crisis — meaning that the ECB was trying to keep the currency union, the Eurozone, glued together without losing members, such as Greece, Italy, or Spain through a sovereign bond default (though Greece did default). It was bailout mania for the sake of the euro.

The FED will start taper QE jawboning relatively soon, but hikes won’t come for at least 3-4 years from now. Powell was appointed by Trump so any sudden moves are politically inadvisable.

2022 – that’s my guess for hikes.

Wasn’t that the theme of Apocalypse Now. :-)

Or for some, “kill the rabbit!”

I’d go with Anton Bruckner’s Symphony No. 4, which was premiered in Vienna, 20 February 1881, by Wolf’s great-grandfather Hans Richter and the Vienna Philharmonic. (just guessing – same last name, eh?)

“In the first movement after a full night’s sleep the day is announced by the horn.” -Bruckner

It is my favorite piece to listen to when driving my M4 at a brisk pace.

Sure you mean No. 4 ? seems a bit wishy-washy for a blast in an M4!

Bach’s Toccata and Fugue in D Minor . Often heard in vampire movies.

I lead a team where we evaluate wages across our network on a weekly basis. Over the past couple months, we have approved wage increases for dozens and dozens of cities. Each week, another dozen or so. And these aren’t small increases either. We are talking about 30-50%. People who used to make $10/hour are now making $15, people who were making $12/hour are now making $17, and so on. And we are still struggling to hire!

At the bottom rungs of the labor market, inflation is severe.

Finally try cutting management pay should help cover expenses

I haven’t made those low of wages since 1980, and I’m a blue collar guy. That was over 40 years ago….and we have free healthcare. Does anyone think this situation can last? I don’t see how it can.

Stay ensconced in the safe and quaint woods of Vancouver Island Paulo, the wider world is far too harsh for you.

it’ll be interesting what the fed says at Jackson hole in august. Maybe they hit at tapering but I bet they won’t pull the trigger just jawbone as usual.

The advice remains the same; always buy the cheapest house on the best street (or neighborhood, if be the case).

Policy ranges from negative % to 19% for the listed countries. But all are having crazy inflation problems. Could this Genie have gotten out of the bottle? It takes time as mentioned previously to have these rates take hold and control inflation is the fundamental thinking. But these WTF charts show inflation is raging around the world

^^ not charts rather the details for the Countries

Yes Mr.Richter,all of a sudden new winds are a-blowin’…

Hmm…when Kennedy told the citizens of Berlin that he was no more than some form of jelly donut, Oswald proved the point by puncturing that pastry. Doubtful that Powell would risk revealing the flaw in his own bakery, but perhaps he might go with a german word describing a sticky bun since Taperer has no meaning in German.

I see the Fed as a Drunken Sailor slowly chewing a giant wad of bubblegum in order to eventually plug a surging geyser type leak in a sinking U.S. sailboat. The longer the Fed Sailor Powell and Crew dawdles, the lower the boat sinks and the more difficult it becomes to steer. I can see the U.S. Ship of State totally under water, and Sailor Powell, up to his neck in choking putrid seawater, telling the populace that all is well, just going through a little rough spot on the cruise to prosperity.

Being so far behind the curve on reversing Loosey Goosey Monetary Policy that could have been tapered/ tightened beginning in 2014 and normalized based on market determined costs of capital by 2018, THAT THE ODDS OF A FED PANIC ARE PROBABLY AT 80% AT THIS POINT. This is why I still think these Drunken Sailors will be forced to raise rates sequentially beginning in the Fall of this year. REDUCING THE FED BALANCE SHEET VIA TAPERING MONTHLY PURCHASES OF TREASURIES AND MBS IS WAY TOO SLOW OF A PROCESS TO PLUG THE HOLE IN THE U.S. VESSEL IN TIME TO SAVE THE DAY.

$74 per barrel oil is nowhere near being reflected in the supply chain’s costs to the extent it will be in the month’s ahead. Like a pig working its way through a python, the oil shock no one is talking about is going to guarantee that the transitory handle falls off into a PERSISTENT INFLATION handle going into 3rd Quarter, 2021. Dwindling inventories of cheaper oil are being depleted as Americans stomp on their Covid masks and take to the roads and skies. Pig poop is about to pop out the other end of the Supply Snake.

Interest rates are so messed up that it is impossible to predict what a normal yield curve would look like in this end game of the 2009 economic cycle. The recent air pocket in yields is due more to investors fleeing the Greatest Equity Bubble in History to the mistaken safety of debt instruments than any real attraction of earning a negative Real Rate over the next 30 years with a laughable 2% cover-nothing yield. The Bond Vigilantes will once again take the determination of interest rates at the longer maturities out of the hands of the Drunken Sailors at the Fed. The Fed will be forced to adjust short-term rates to catch up to the inflation pushed rates the market will impose upon them and the financial markets. Stocks will not fair well.

I wonder if the yield curve would be inverted without the Fed. The 2 year in the 4% range and the 10 year…??

Printing trillions from thin air is not a recovery, its a farse unless you returned back, but we all know it will never happen, a piece stolen is not returned back ever, unless the poilice catch you, but the police are the politicians who already are the rats, so nop.

The Fed is following the same playbook as Jimmy Carter’s Fed Chief Miller (former golf cart manager) did in 1976/1977. Following interest rates up after the the fact with meager incremental tightening. As a result interest rates will rise even without any Fed action leading to a housing financing credit crunch.

It’s a prevalent idea that inflation and increasing interest rates will bring down home prices, but Robert Shiller’s data over the 1976-1986 decade shows that housing price growth was above trend. A mortgage payment shrinks with rising inflation, which incentivizes buying, and inflation obviously increases price levels over the long term (including housing), by definition. Also, I am not talking my book – I would like lower prices.

This intrest rate environment fuels the .01 percenters. Good luck turning off that spickit of prosperity…

How do I get a sweet gig like being on the Board of the Bank of Canada? They can slash assets from their balance sheet… jack up interest rates… and still not tank their nation’s economy because the Crazy Gringos to the South (who are by far their biggest export market) are pouring gas on the fire with their own QE and fiscal stimulus.

We’re the Penthouse with a Meth Lab in the basement.

I don’t understand the view that the super rich don’t want interest rates to rise to the normal 6-8% or higher. If I was super rich and owned a bank, then that’s exactly what I would want. It would allow me to make massive profits lending money to the proles and for those that can’t pay back, I can transfer made up mortgages, into real assets, as I take your house. This is a policy that has worked in the past, so why not now. After all, chaos is wonderfully profitable.

If the 1% of the 1%, really do want everything, then this is what will happen and happen soon. It’s really up to them and their timing and there is little we proles can do about it.

Wolf since you offered your best guess about tapering I’d like to offer mine.

The Fed won’t taper. Instead they will give in to inflation and sacrifice the dollar.

The right thing to do is let rates rise but the political collateral damage is too great and the fed will take the easy way out and try to inflate the debt away.

There will come a time where the choice will be equally terrible. Hyperinflation or allowing the everything bubble to pop.

At that point the market will realize the Fed has no clothes. They’ll print to infinity but it will have no affect and rates will rise and the bubbles will pop. It is unavoidable.

The silver lining… or more appropriately the gold lining in this grim prediction is the dollar will be re-tethered to gold and the reset will be $10000 or more to a dollar.

Honest money will forced into existence but a decade of pain will result because our leaders let us down and we remained silent when we should have been screaming from the rooftops.

What would George Washington think of what has become of this great country he fathered? If he knew I wonder if he would have used birth control.

In developing/emerging markets, the local elites are perfectly happy with double digit inflation and high interest rates. Coming soon near you?

We poor muricans, all we get is a FED that’s daydreaming and thinking about thinking of tapering in some near or not so near future. You have to give credit where credit is due, looks like most of the other central banks have more balls than Weimar Powell, if only by a little. I am just hoping they will move to the next thinking stage of ending at least MBS purchase but I think there’s still 2 more thinking about thinking after that so maybe another couple of years to go…

And the Hungarian National Bank is not even mentioned despite it raising interest rates last week.

Look at the bright side: once we’re all making six figures we’ll be more equaler, right? These Fed PhD’s are wizards, creating “equity” through sleight-of-hand and well-timed mumbo-jumbo. The politicians can simply throw the gubmint into cruise control and collect their fortunes. While all the little countries undergo their terrors of inflation us Romans will enjoy the rewards of empire.

Negative interest rate government bond volumes are diminishing.

What blows my mind is the fact that Congress (who’s main job is to act as the financial branch of the USA Gov’t) is not even in the picture. Why hasn’t the media pointed out that it’s their JOB to ride herd on the Fed?

I realize it’s not as headline grabbing to actually do what they’re supposed to (vs. leading another sub-committee investigation into politically correct verbiage or ex-presidents sexual practices) but what’s it going to take to get them to actually do something about the economy?

Whew, what a mess of comments. Fed fed the 1% with financial asset bubble. The 1% also own lots of Treasuries with no interest income. So they would like some interest no? Fed raises % rates to funnel some more cash to 1%. Financial bubbles psssshhhhh out. 1% sweep in and buy cheaper financial assets. Start it all over. Got to love no government and out of control Capitalists/Oligarchs. The solution is simple. Tax wealth and trading markets. Tuition debt relief. Re-regulate markets. Break up monopolies.

All of that requires a revolution. Since muppets only know how to spend, then nothing will change.

Despite what they claim, the Fed is subject to the vagaries and influence of politics just like other government agencies. As the Misery Index continues to climb…especially for the large millennial voting block, one political party will try to blame the other for the pain caused by inflation and the growing wealth disparity. If Jerome Powell thinks he was under political pressure to do a 180 deg turn back in 2018, he ain’t seen nothing yet.

Nothing Goes to Heck in a Straight line, not even the dollar’s hegemony.

Toyota, pioneer of just-in-time inventory, goes: Hahahahaha…

The #1 weird phenomenon: The labor force.

Oil Bust Houston hardest-hit. San Francisco, once hottest US market, coddles up to it, followed by Los Angeles, Chicago, Washington D.C., Seattle, and Manhattan.

The used vehicle price spike will subside, partially, but the psychological aspects of inflation have set in.

Read full article at WOLF STREET

Even with some mortgage refi rates under 3%, consider these 8 things before you refinance your mortgage

MarketWatch 07 July, 2021 - 09:10am

Shop around: It’s essential that you look not only at rates from multiple lenders —find the best mortgage refinance rates in your area here — but also that you take into account closing costs, origination fees, appraisal fees, title search fees, application fees and attorney fees when applicable.

Consider a refi over a HELOC: If you’re looking to tap your home equity, you may want to do so with a cash-out refi rather than a home equity line of credit, McBride says: “Consider a cash out refinancing. You’ll get a lower, fixed rate without worries of future increases and be able to reduce the rate on your existing mortgage balance.”

Ditch your FHA mortgage insurance through a refi: Some people refinance to get rid of FHA (Federal Housing Administration) mortgage insurance. Here are details on how to do that. “They should wait until they have 20% equity,” Lewis advises of when to make this move.

Talk to a mortgage broker: Don’t want to do all the homework yourself?  A mortgage broker who serves as a middleperson between you and the bank can help you apply for loans and find competitive interest rates. They’re independent of specific banks and tackle a lot of the legwork including pulling documents and negotiating terms. Asking friends or family for referrals they’ve used is a great way to find a broker, but there are also online services that can help facilitate an introduction with one.

See also: 9 mistakes too many Americans make when trying to get a mortgage

Holiday weekends are a good time to buy a mattress, and plenty of award-winning mattresses are on sale now.

Mortgage And Refinance Rates Today, July 7 | Rates unpredictable

The Mortgage Reports 07 July, 2021 - 09:07am

Things were looking good for those rates first thing. However, the Federal Reserve will be publishing a crucial document at 2 p.m. (ET) this afternoon (more on that below). And its contents could send mortgage rates higher or lower — or leave them unchanged. So I have to say that mortgage rates today are unpredictable.

There’s no reason why you shouldn’t continue to float while mortgage rates gently drift down from their mid-June spike. However, the Fed is releasing a crucial document (see below) this afternoon that might — just possibly — change the direction of travel for these rates. So that’s an additional risk you should consider.

And be aware that recent downward movements could reverse at any time. Indeed, most in the mortgage industry and beyond expect those rates to rise fairly soon. So my personal rate lock recommendations must remain:

However, I don’t claim perfect foresight. And your personal analysis could turn out to be as good as mine — or better. So you might choose to be guided by your instincts and your personal tolerance for risk.

Here are some things you need to know:

So there’s a lot going on here. And nobody can claim to know with certainty what’s going to happen to mortgage rates in coming hours, days, weeks, or months.

This morning’s Financial Times contains the headline, “Yield on 10-year Treasury dips to lowest in four months.” That’s good because mortgage rates often track those yields closely. But why the fall?

The FT goes on to explain what it thinks is the driver. Namely, investors are backing away from the idea that the Federal Reserve will be forced to end its stimulus program early. Or, in its words, “traders cut bets on tighter Fed policy.”

Let’s avoid doing a serious dental examination of this particular gift horse. But let’s also not kid ourselves that our equine will necessarily live long. Because there’s a chance it won’t survive beyond 2 p.m. (ET) this afternoon.

That’s when the Fed releases the minutes of the last meeting of its key policy body, the Federal Open Market Committee or FOMC. Yesterday, investors were betting on those minutes revealing a relatively “dovish” committee with a wait-and-see approach. But, if they instead reveal an increasingly “hawkish” one, with many committee members arguing for tougher action soon, mortgage rates may rise.

So today’s another cliffhanger day. Mortgage rates could rise or fall on those minutes. But we won’t know which until after they’re released. And there’s always a chance that they’ll say nothing unexpected, in which case those rates may barely move.

The meeting those minutes recorded happened too long ago for the committee’s members to take into account the recent spike in oil and gas prices. Yesterday evening, The New York Times explained:

West Texas Intermediate, the U.S. oil-price benchmark, hit $76.98 a barrel on Tuesday, its highest level in six years, as OPEC, Russia and their allies again failed to agree on production increases. Prices moderated later in the day but remained nearly $10 a barrel higher than in mid-May.

Right now, the Fed firmly believes that inflation will prove a transitory phenomenon. However, as The Times’s article continues: ” … if rising oil prices lead consumers and businesses to believe that faster inflation will continue, that could be a harder problem for the Fed.”

For more background, read Saturday’s weekend edition of this column, which has more space for in-depth analysis.

Over much of 2020, the overall trend for mortgage rates was clearly downward. And a new, weekly all-time low was set on 16 occasions last year, according to Freddie Mac.

The most recent weekly record low occurred on Jan. 7, when it stood at 2.65% for 30-year fixed-rate mortgages. But then the trend reversed and rates rose.

However, those rises were mostly replaced by falls in April, though those moderated during the second half of that month. Meanwhile, May saw falls very slightly outweighing rises. Freddie’s July 1 report puts that weekly average at 2.98% (with 0.6 fees and points), down from the previous week’s 3.02%.

Looking further ahead, Fannie Mae, Freddie Mac and the Mortgage Bankers Association (MBA) each has a team of economists dedicated to monitoring and forecasting what will happen to the economy, the housing sector and mortgage rates.

And here are their current rates forecasts for the remaining quarters of 2021 (Q2/21, Q3/21, Q4/21) and the first quarter of 2022 (Q1/22).

The numbers in the table below are for 30-year, fixed-rate mortgages. Fannie’s were updated on June 16 and the MBA’s on June 18. Freddie’s forecast is dated April 14. But it now updates only quarterly. So its numbers are looking stale.

However, given so many unknowables, the current crop of forecasts might be even more speculative than usual.

Some lenders have been spooked by the pandemic. And they’re restricting their offerings to just the most vanilla-flavored mortgages and refinances.

But others remain brave. And you can still probably find the cash-out refinance, investment mortgage or jumbo loan you want. You just have to shop around more widely.

But, of course, you should be comparison shopping widely, no matter what sort of mortgage you want. As federal regulator the Consumer Financial Protection Bureau says:

Shopping around for your mortgage has the potential to lead to real savings. It may not sound like much, but saving even a quarter of a point in interest on your mortgage saves you thousands of dollars over the life of your loan.

Today’s mortgage and refinance rates  Average mortgage rates edged lower again last Friday, which was a good way to enter the long weekend. But, overall, they’re slowly drifting back down […]

Today’s mortgage and refinance rates  Average mortgage rates edged lower yesterday. Because markets shrugged off that day’s better-than-expected employment situation report. More on that below. Once again, I’m guessing that […]

Today’s mortgage and refinance rates  Average mortgage rates inched higher yesterday. So the tiny up-and-down movements continue. This morning’s jobs report turned out better than all but the most optimistic […]

The information contained on The Mortgage Reports website is for informational purposes only and is not an advertisement for products offered by Full Beaker. The views and opinions expressed herein are those of the author and do not reflect the policy or position of Full Beaker, its officers, parent, or affiliates.

Today's mortgage refinance rates: 20-year rates drop, while others edge up | July 7, 2021

Fox Business 07 July, 2021 - 08:34am

Quotes delayed at least 15 minutes. Real-time quotes provided by BATS BZX Real-Time Price. Market Data provided by Interactive Data (Terms & Conditions). Powered and Implemented by Interactive Data Managed Solutions. Company fundamental data provided by Morningstar. Earnings estimates data provided by Zacks. Mutual fund and ETF data provided by Lipper. Economic data provided by Econoday. Dow Jones & Company Terms & Conditions.

This material may not be published, broadcast, rewritten, or redistributed. ©2021 FOX News Network, LLC. All rights reserved. FAQ - New Privacy Policy

Based on data compiled by Credible, current mortgage refinance rates are trending up compared to yesterday. 

Mortgage refinance rates continue to fluctuate this week, with rates changing across all terms. Today’s 20-year refinance rates dropped -0.250 percentage points since yesterday — the lowest they’ve been since February. This could represent a particular bargain for homeowners who want to refinance into a shorter term and can take on a higher monthly payment in order to save interest costs over the life of their loan. Meanwhile, 30-year refinance rates edged up to 2.990% and 15-year and 10-year rates rose to 2.250%. 

If you’re thinking of refinancing your home mortgage, consider using Credible. Whether you're interested in saving money on your monthly mortgage payments or considering a cash-out refinance, Credible's free online tool will let you compare rates from multiple mortgage lenders. You can see prequalified rates in as little as three minutes.

The current rate for a 30-year fixed-rate refinance is 2.990%. This is up from yesterday.

The current rate for a 20-year fixed-rate refinance is 2.500%. This is down from yesterday.

The current rate for a 15-year fixed-rate refinance is 2.250%. This is up from yesterday.

The current rate for a 10-year fixed-rate refinance is 2.250%. This is up from yesterday.

You can explore your mortgage refinance options in minutes by visiting Credible to compare rates and lenders. Check out Credible and get prequalified today.

Today, mortgage refinance rates are mostly down compared to this time last week.

Think it might be the right time to refinance? To understand just how much you could save on monthly mortgage payments by refinancing now, crunch the numbers and compare rates using Credible's free online tool. Within minutes, you can see what multiple mortgage lenders are offering.

Current refinance rates, like mortgage interest rates in general, are affected by many economic factors, like unemployment numbers and inflation. But your personal financial history will also determine the rates you’re offered when refinancing your mortgage.

If you’re interested in refinancing your mortgage, improving your credit score and paying down any other debt could secure you a lower rate. It’s also a good idea to compare rates from different lenders if you're hoping to refinance so you can find the best rate for your situation. 

Borrowers can save $1,500 on average over the life of their loan by shopping for just one additional rate quote, and an average of $3,000 by comparing five rate quotes, according to research from Freddie Mac. Credible can help you compare multiple lenders at once in just a few minutes. 

If you decide to refinance your mortgage, be sure to shop around and compare rates from multiple mortgage lenders. You can do this easily with Credible’s free online tool and see your prequalified rates in only three minutes.

Credible is also partnered with a home insurance broker. If you're looking for a better rate on home insurance and are considering switching providers, consider using an online broker. You can compare quotes from top-rated insurance carriers in your area — it's fast, easy and the whole process can be completed entirely online.

If you’re seeking lower monthly payments on an existing home, Credible can help you keep an eye on current mortgage rates and find the right loan for your financial goals.

Before you dive into mortgage refinancing, be sure to check out these loan rates, which you can compare by annual percentage rate (APR), as well as interest rate:

Have a finance-related question, but don't know who to ask? Email The Credible Money Expert at moneyexpert@credible.com and your question might be answered by Credible in our Money Expert column.

This material may not be published, broadcast, rewritten, or redistributed. ©2021 FOX News Network, LLC. All rights reserved. FAQ - New Privacy Policy

Today's 20-year mortgage rates hit near five-month low | July 7, 2021

Fox Business 07 July, 2021 - 08:09am

Quotes delayed at least 15 minutes. Real-time quotes provided by BATS BZX Real-Time Price. Market Data provided by Interactive Data (Terms & Conditions). Powered and Implemented by Interactive Data Managed Solutions. Company fundamental data provided by Morningstar. Earnings estimates data provided by Zacks. Mutual fund and ETF data provided by Lipper. Economic data provided by Econoday. Dow Jones & Company Terms & Conditions.

This material may not be published, broadcast, rewritten, or redistributed. ©2021 FOX News Network, LLC. All rights reserved. FAQ - New Privacy Policy

Based on data compiled by Credible, two key mortgage rates have dropped and two have held steady since yesterday.

What This Means: Today’s 20-year mortgage rates dropped to 2.500% for the first time in nearly five months, which could be a bargain for homeowners who want a shorter term and lower interest costs. Rates for a 30-year mortgage, the most common term, remained unchanged for five consecutive days. Rates for 15-year and 10-year terms continue to fluctuate, but today are mirroring each other at 2.125%.  

To find the best mortgage rate, start by using Credible, which can show you current mortgage and refinance rates:

Browse rates from multiple lenders so you can make an informed decision about your home loan.

Mortgage refinance rates continue to fluctuate this week, with rates changing across all terms. Today’s 20-year refinance rates dropped -0.250 percentage points since yesterday — the lowest they’ve been since February. This could represent a particular bargain for homeowners who want to refinance into a shorter term and can take on a higher monthly payment in order to save interest costs over the life of their loan. Meanwhile, 30-year refinance rates edged up to 2.990% and 15-year and 10-year rates rose to 2.250%. If you’re considering refinancing an existing home, check out what refinance rates look like:

If you want to get the lowest possible monthly mortgage payment, taking the following steps can help you secure a lower rate on your home loan:

Despite small day-to-day fluctuations, mortgage rates have held at historic lows for most of the year. Today’s average rate of 2.406% is the lowest in five days.

The current interest rate for a 30-year fixed-rate mortgage is 2.875%. This is the same as yesterday. Thirty years is the most common repayment term for mortgages because 30-year mortgages typically give you a lower monthly payment. But they also typically come with higher interest rates, meaning you’ll ultimately pay more in interest over the life of the loan.

The current interest rate for a 20-year fixed-rate mortgage is 2.500%. This is down from yesterday. Shortening your repayment term by just 10 years can mean you’ll get a lower interest rate — and pay less in total interest over the life of the loan.

The current interest rate for a 15-year fixed-rate mortgage is 2.125%. This is down from yesterday. Fifteen-year mortgages are the second most-common mortgage term. A 15-year mortgage may help you get a lower rate than a 30-year term — and pay less interest over the life of the loan — while keeping monthly payments manageable. 

The current interest rate for a 10-year fixed-rate mortgage is 2.125%. This is the same as yesterday. Although less common than 30-year and 15-year mortgages, a 10-year fixed rate mortgage typically gives you lower interest rates and lifetime interest costs, but a higher monthly mortgage payment.

Today, mortgage rates are mixed compared to this time last week.

Here are the predictions for how 30-year fixed rates will look for the rest of the year:

Actual average 30-year fixed rate in Q1 (January to March): 2.877%

A home insurance policy can help cover unexpected costs you may incur during home ownership, such as structural damage and destruction or stolen personal property. Coverage can vary widely among lenders, so it’s wise to shop around and compare policy quotes.

Have a finance-related question, but don't know who to ask? Email The Credible Money Expert at moneyexpert@credible.com and your question might be answered by Credible in our Money Expert column.

This material may not be published, broadcast, rewritten, or redistributed. ©2021 FOX News Network, LLC. All rights reserved. FAQ - New Privacy Policy

Mortgage refinance rates on July 7, 2021: Rates tick lower

CNET 07 July, 2021 - 08:00am

The current average interest rate for a 30-year refinance is 3.14%, a decrease of 6 basis points from what we saw one week ago. (A basis point is equivalent to 0.01%.) A 30-year fixed refinance will typically have lower monthly payments than a 15-year or 10-year refinance. If you're having difficulties making your monthly payments currently, a 30-year refinance could be a good option for you. However, interest rates for a 30-year refinance will typically be higher than rates for a 15-year or 10-year refinance. It'll also take you longer to pay off your loan.

The average rate for a 15-year fixed refinance loan is currently 2.45%, a decrease of 5 basis point over last week. Refinancing to a 15-year fixed loan from a 30-year fixed loan will likely raise your monthly payment. On the other hand, you'll save money on interest, since you'll pay off the loan sooner. You'll also typically get lower interest rates compared to a 30-year loan. This can help you save even more in the long run.

The current average interest rate for a 10-year refinance is 2.47%, a decrease of 4 basis points compared to one week ago. Compared to a 30-year and 15-year refinance, a 10-year refinance will usually have a lower interest rate but higher monthly payment. A 10-year refinance can help you pay off your house much quicker and save on interest. However, you should analyze your budget and current financial situation to make sure you'll be able to afford the higher monthly payment.

We track refinance rate trends using information collected by Bankrate, which is owned by CNET's parent company. Here's a table with the average refinance rates supplied by lenders across the US:

Rates as of July 7, 2021.

Bring your home up to speed with the latest on automation, security, utilities, networking and more.

Mortgage applications fall for third straight week - HousingWire

HousingWire 07 July, 2021 - 06:00am

Tune in to our live Virtual Demo Day Series starting on July 7th to experience demos from the most innovative tech companies in real estate.

Today’s HousingWire Daily episode features a crossover episode of HousingWire’s Housing News podcast. During the episode, Iorio and VandenHouten discuss their strategy for making JVs work and what makes a good joint venture partner.

The most recent pending home sales report shows there are good reasons a housing crash is not going to happen. Here are the key takeaways for the latest report.

This white paper will explore some of the forces transforming the real estate industry, along with an approach for meeting them head-on.

Activity at lowest level since beginning of 2020

Mortgage applications decreased again, this time falling 1.8% in the week ending July 2, 2021, according to the latest report from the Mortgage Bankers Association.

This marks the third straight week of application declines, and represents the lowest level since the January 2020.

“Treasury yields have been volatile despite mostly positive economic news, including last week’s June jobs report, which showed ongoing improvements in the labor market,” said Joel Kan, MBA associate vice president of economic and industry forecasting. “However, rates continued to move lower, especially late in the week.”

Kan said the 30-year fixed rate was 11 basis points lower than the same week a year ago, and refinance applications have trended lower than 2020 levels for the past four months.

Those who are filling out purchase mortgage applications are requesting bigger loan amounts, but there are fewer applicants. It has most acutely affected first-time homebuyers.

“Swift home-price growth across much of the country, driven by insufficient housing supply, is weighing on the purchase market and is pushing average loan amounts higher,” Kan said.

The refinance share of activity decreased to 61.6% of total mortgage applications from 61.9% the previous week. On an unadjusted basis, the market composite index decreased 1% compared with the previous week. The seasonally adjusted purchase index also decreased only 1% from one week earlier.

The FHA share of total mortgage applications remained increased to 9.8% from the week prior, and the VA share of total mortgage applications increased to 10.8% from 10.5%.

Here is a more detailed breakdown of this week’s mortgage applications data:

Low housing market inventory has driven up home prices all over the U.S. But all is not hopeless: There are several reasons why housing inventory should pick up in the next several months and going into 2022. HW+ Premium Content

Fannie Mae’s Home Purchase Sentiment Index decreased by 0.3 points to 79.7 in June 2021, as survey respondents remain pessimistic towards home prices.

Don't have an account? Please Sign Up

Home loan amounts for purchases rising as mortgage applications fall

Fox Business 06 July, 2021 - 06:17pm

Quotes delayed at least 15 minutes. Real-time quotes provided by BATS BZX Real-Time Price. Market Data provided by Interactive Data (Terms & Conditions). Powered and Implemented by Interactive Data Managed Solutions. Company fundamental data provided by Morningstar. Earnings estimates data provided by Zacks. Mutual fund and ETF data provided by Lipper. Economic data provided by Econoday. Dow Jones & Company Terms & Conditions.

This material may not be published, broadcast, rewritten, or redistributed. ©2021 FOX News Network, LLC. All rights reserved. FAQ - New Privacy Policy

Tarek El Moussa, star of HGTV's 'Flip or Flop,' says the increase in luxury home sales is due to 'a huge transfer of equity.'

The average loan amount for buying a home in the U.S. continued to climb this week while loan applications across the board continued to drop, as low inventory in the market pushes the cost of purchasing to greater heights.

"Swift home-price growth across much of the country, driven by insufficient housing supply, is weighing on the purchase market and is pushing average loan amounts higher," Joel Kan, the Mortgage Brokers Association Associate vice president of Economic and Industry Forecasting, said in the MBS' latest report on its weekly mortgage survey.

The average loan amount for a purchase hit $405,300 this week, up from $405,000 last week as the numbers continue to climb.

The latest data show that mortgage application numbers continued to decline, after dropping the week prior to their lowest point since more than a year ago. However, interest rates for both conforming ($548,250 or less) and jumbo loan amounts (higher than $548,250) also declined in the most recent report – although they remained above 3%.

"Mortgage application activity fell for the second week in a row, reaching the lowest level since the beginning of 2020," Kan said. "Even as mortgage rates declined, with the 30-year fixed rate dropping 5 basis points to 3.15 percent, both purchase and refinance applications decreased."

"Treasury yields have been volatile despite mostly positive economic news, including last week’s June jobs report, which showed ongoing improvements in the labor market. However, rates continued to move lower – especially late in the week," he continued. "The 30-year fixed rate was 11 basis points lower than the same week a year ago, but many borrowers previously refinanced at even lower rates. Refinance applications have trended lower than 2020 levels for the past four months." 

Not only have refinance applications continued to drop lower, but refinance loan amounts also took a dip over the last week, going from an average of $297,700 down to $291,900.

This material may not be published, broadcast, rewritten, or redistributed. ©2021 FOX News Network, LLC. All rights reserved. FAQ - New Privacy Policy

Student loan interest rates sank to record lows between May, June: Is refinancing your private loans worth it?

Fox Business 01 July, 2021 - 02:34pm

Quotes delayed at least 15 minutes. Real-time quotes provided by BATS BZX Real-Time Price. Market Data provided by Interactive Data (Terms & Conditions). Powered and Implemented by Interactive Data Managed Solutions. Company fundamental data provided by Morningstar. Earnings estimates data provided by Zacks. Mutual fund and ETF data provided by Lipper. Economic data provided by Econoday. Dow Jones & Company Terms & Conditions.

This material may not be published, broadcast, rewritten, or redistributed. ©2021 FOX News Network, LLC. All rights reserved. FAQ - New Privacy Policy

Student loan refinance rates have been steadily falling since 2018, with 10-year fixed-rate loans setting new records for the month of June, according to data from Credible. 

The average interest rate on a 10-year fixed-rate loan fell from 3.61% to 3.59% between May and June 2021, among well-qualified borrowers who refinanced their student loans on Credible. This is the lowest interest rates have been since Credible started collecting data. For 5-year variable-rate loans, the average interest rate was 2.92%, down from 3.05% in May and falling below 3% for the first time in 2021.

If you're thinking about refinancing your private student loan debt, there's never been a better time to do so. Compare student loan interest rates across multiple lenders at once on Credible's online marketplace. Doing so will not affect your credit score. 

Student loan refinance rates fell to 3.50% during the week of June 14 for a 10-year fixed-rate loan, which is the lowest they've ever been. Rates have slightly increased since then, reaching 3.65% for the week of June 28. 

Average offered interest rates are among Credible users with credit scores of 720 or higher. The interest rate you're offered will vary based on a number of factors, including your credit score as well as the loan length and amount. 

A college education is an investment in your earning potential, but paying for college is a challenge of its own. There are many different types of loans to take out, and endless ways to pay off student loan debt once you graduate. 

People with college debt who refinanced their student loans to a shorter term on Credible saved more than $17,000 over the life of their loan. But while student loan refinancing may be able to save you thousands of dollars, but it's not right for everyone.

You shouldn't refinance your student loans if… You have federal student loans. Refinancing federal student loans to a private loan means you'll lose federal protections like an income-driven repayment plan, student loan forgiveness programs and hardship forbearance. 

You should refinance your student loan if… You can qualify for a lower rate than what you're currently paying on your private student loan debt. Unlike mortgage refinancing, student loan refinancing doesn't come with expensive fees like closing costs, so the most important factors to consider are your interest rate, loan length and monthly payments.

Use Credible's student loan refinance calculator to determine your overall savings and see if refinancing is right for your financial situation.

This material may not be published, broadcast, rewritten, or redistributed. ©2021 FOX News Network, LLC. All rights reserved. FAQ - New Privacy Policy

Business Stories

Top Stores