Free Republic

Statist central bankers plan to devalue their respective currencies and risk inflation even if The Fed tapers. Since Central Banks compete with each other, low rate pressures should keep US Treasury rates in line. Central bankers from Japan and the U.K. predicted their new campaigns to encourage expansion will work, sustaining support for global growth even as the Federal Reserve considers a reduction in stimulus. As the annual gathering of central bankers and economists in Jackson Hole, Wyoming, drew to a close yesterday, Bank of Japan Governor Haruhiko Kuroda said his souped-up asset-buying “has started to exert effects” on the...

Stanford University economist John Taylor feels that ‘Sooner the Better’ for Fed to unwind quantitative easing. Here is Taylor’s take on the first day of the Jackson Hole party. According to Taylor, academics outside the Fed revealed considerable skepticism about the effectiveness of the Fed’s quantitative easing and forward guidance programs. Of course Fed officials did not express the same doubts. The first paper was by Bob Hall. It argued that neither quantitative easing nor forward guidance was effective, or as he put it, “Both quantitative easing and forward guidance, as implemented by the Fed, are obviously weak instruments.” He...

According to CoreLogic, U.S. home prices rose 1.2% in June and were up 11.9% Year-Over-Year (YoY). lpsjune2013 LPS closely tracks the Case-Shiller 20 index, so it gives a nice preview of the yet-to-be-released CS index for June. hpmulti Notice that the FHFA Purchase Only Index is at a higher level and the FNC 20 RPI index is at a lower level. But all have been rising since early 2012. The increase in house prices are in spite of rising mortgage rates and lethargic purchase applications. mbapurchasefreddierate mtgratehp And a labor market where 75% of jobs created were part-time. LPS house...

Freddie Mac today released the results of its Primary Mortgage Market Survey® (PMMS®), showing average fixed mortgage rates following bond yields higher, and reaching new highs for the year, with the expectant release of the Fed’s comments around taper timing of its bond purchase program. 30-year fixed-rate mortgage (FRM) averaged 4.58 percent with an average 0.8 point for the week ending August 22, 2013, up from last week when it averaged 4.40 percent. A year ago at this time, the 30-year FRM averaged 3.66 percent. freddie30 Here is the Freddie rate against the 10 year Treasury yield. freddie30t30y Mortgage-backed securities...

Here are the minutes of the most recent FOMC meeting. Federal Reserve officials were “broadly comfortable” with Chairman Ben S. Bernanke’s plan to start reducing bond buying later this year if the economy improves, with a few saying tapering might be needed soon, minutes of their last meeting show. In other words, it was a hawkish set of minutes pointing to tapering. The reaction in the US Treasury 10 year yield? ust10082113 And agency MBS prices fell about 12 basis points. mbs082113 And the globe is awash in blood (as in rising sovereign yields). wbm082113 Here is a photo of...

So let's pretend for the moment that the Federal Reserve gets everything it has stated it wants. And even further, that Washington, D.C. gets everything it wants, too. The credit markets are repaired, and massive new loan growth flows out the door. Loans are made to businesses that hire gobs of new people. Consumers borrow and borrow some more to go to school and buy homes, cars, and gadgets. Inflation remains low and job growth explodes. Tax receipts climb and the deficit falls. The stock market goes higher and higher, gold falls and then falls some more, as confidence in...

Global sovereign yields are up across the board this morning. wbm081913 And the US Treasury 10 year yield is at its highest point since July 28, 2011 — the is over 2 years. ust10081913 Fed Chair Ben Bernanke will not be attending the retreat this year. The Federal Reserve began buying Treasuries as part of its outright purchase program. Here is a list of long-term bond purchase targets. Clearly, The Fed is hoping to push down the long-end of the curve. yc081913 Has The Fed run out of ammo? I think the answer is yes.

The inflation numbers were released yesterday showing an increase of 0.2%, according to the Bureau of Labor Statistics. The Year Over Year inflation rate is 2%. cpiyoy081613 House prices have come roaring back from the burst of the housing bubble. crecs cshpfnc But the housing portion of the CPI measure, owners equivalent rent of residences YoY, shows a different pattern. Although house prices have skyrocket, owner’s equivalent rent has been at 2.1% or so since May 2012. rentoecpi If we compare the Case-Shiller house price index to the owner’s equivalent rent, we see a different picture. csyoyrentequiv If house prices...

Fed Chairman Ben Bernanke’s term as chairman of the Fed expires at the end of the year and President Obama has quite ungraciously indicated his intent to replace him, remarking that he had, “already stayed a lot longer than he wanted or he was supposed to.” Despite what Mort Zukerman has argued in his column titled “Mistreating Ben Bernanke, the Man Who Saved the Economy,” policy under Bernanke has not been good, to say the least. Policy before the crisis expanded created credit, kept rates too low for too long, generating a second, but this time catastrophic, boom-bust cycle. Since...

Here is the written statement from the Federal Reserve Board of Governors. Note that The Fed has changed the word “moderate” to “modest.” That is known as a downgrade. Surprise, surprise, surprise! The Fed Funds Target remains unchanged. fedfundstarget The Taylor Rule, believe it or not, called for a LOWERING of the Fed Funds Target. tayloru;e073113 The Federal Reserve said it will maintain its $85 billion in monthly bond purchases and persistently low inflation could hamper the expansion. fedbal073113 The Fed did note concern for rising mortgage rates, a sign that they might taper slowly. mbaavgpurch073113 The 10 year Treasury...

Here is the written statement from the Federal Reserve Board of Governors. Surprise, surprise, surprise! The Fed Funds Target remains unchanged. fedfundstarget The Taylor Rule, believe it or not, called for a LOWERING of the Fed Funds Target. tayloru;e073113 The Federal Reserve said it will maintain its $85 billion in monthly bond purchases and persistently low inflation could hamper the expansion. fedbal073113 The 10 year Treasury rate rose this morning, then fell on The Fed’s announcement. ust10073113 The Dow Jones Industrial Average had a similar reaction. dow073113 The announcement said that The Fed will remain accommodative until the labor market...

The Fed’s Zero Interest Rate Policy (ZIRP) have favored commercial real estate more than housing. Here is a chart of Moody’s/RCA composite commercial real indices (office in white, apartments in yellow and the composite commercial index in green). Commercial property values bottomed out at the end of 2009 and beginning of 2010, depending on the property type. rca073013 Now, if I overlay the S&P Case-Shiller 20 metro index (purple) on the commercial indices, you can see the lackluster recovery of housing (until March 2012) compared to the commercial recovery. crecs Here is a chart of the Moody’s/RCA composite commercial real...

George Santayana, and before him the 18th-century British philosopher-politician Edmund Burke, had history in mind in observing that those who forget the past are condemned to repeat it. Events five years ago hardly qualify as "history," yet the evidence is mounting that many supposedly well-informed people have forgotten what got the U.S. into—and out of—the worst financial crisis since the Great Depression. How else to describe the common attitude toward the Federal Reserve and its chairman, Ben Bernanke? The Fed and Mr. Bernanke were instrumental in pulling the country—and ultimately the world economy—back from the abyss. Yet the heroic effort...

Federal Reserve Chairman Ben Bernanke may be stepping down when his term expires in January. If that happens, President Obama gets to nominate his successor. The leading candidates are Fed Vice Chair Janet Yellen and former Treasury Secretary Larry Summers. Both Yellen and Summers are from elite, liberal universities (University of California at Berkeley and Harvard University, respectively). Both are similar to Bernanke in terms of policies. Yellen is quiet and Summers is … well, Summers – quite opinionated. It is doubtful that other respected candidates like Jeff Lacker at the Richmond Fed or Thomas M. Hoenig from the Kansas...

Submitted by Simon Black of Sovereign Man blog,Over the past several decades, people around the world have become so brainwashed that few people really give much thought anymore to the safety of their currency.It’s not something people really understand... there’s apparently some Wizard of Oz type figure at the top of the hill pulling all the levers of the monetary system. And we just trust them to be good guys.This is partially true. Today’s financial system is dominated by central bankers who have been awarded nearly dictatorial control of global money supply.In allowing them to set interest rates, they...

Rep. Michele Bachmann wants to know: How in the world has the federal government not reported any increase in the national debt in 56 days? As Federal Reserve Chairman Ben Bernanke testified before the House Financial Services Committee Wednesday, Bachmann asked how there could be no increase reported in the total debt when the government is racking up about $4 billion a day in new debt. “After nearly 10 years as the head of the Federal Reserve, Chairman Bernanke could not answer my question today in Financial Services Committee,” Bachmann told WND. She wondered if there’s a political motive involved....

Bank of America Corp.’s shareholder equity declined in the second quarter as the company’s bond portfolio sustained the biggest hit from rising interest rates among top lenders. The second-biggest U.S. bank by assets reported a $4.22 billion drop in a measure of equity that includes changes in bond holdings, currency translations and pension adjustments. The bulk was from unrealized losses in the securities portfolio, including a $5.73 billion decline in the value of government-backed mortgage securities. It is no mystery as to why BofA lost money. Between April 1st and June 30th, agency MBS took a beating (particularly after May...

On June 17, Barack Obama had one of his most awesome reality TV events of the year when he fired central bank chairman Ben Bernanke on PBS with liberal mope and host Charlie Rose moderating. “He essentially fired Ben Bernanke on the spot and gave him a fairly tepid testimonial afterward,” said former Fed Governor Laurence Meyer, in an interview on CNBC the next day. And the bankers have been in revolt ever since. The government, meanwhile, has revised the economy’s performance downward. The newest do-over by government economists comes three months after they gave the economy one of the...

U.S. housing starts unexpectedly fell in June to the lowest level in almost a year. hs071713 Mortgage applications dropped 2.61% from the preceding week. However, mortgage PURCHASE applications actually rose slightly 0.5%. mbapurchase071713 And as you can see, the Bankrate 30 year fixed-rate average mortgage rate fell last week. Over the long term, we are still stuck at purchase application levels from the mid 1990s. mbaprchlt071713 Of course, median household income in real terms has been falling which doesn’t bode well for the size of the pool of good quality borrowers. household-income-real1-13a Mortgage refinancing fell 4.19% from the preceding week...

Tomorrow, Federal Reserve Chairman Ben Bernanke will testify in the House Financial Services Committee tomorrow. Certainly, Chairman Bernanke will tout bubbles in the stock market, bond market and he might even discuss a possible housing bubble. But other than bubbles, Congressmen need to ask Mr. Bernanke about the painfully slow real GDP growth and employment recovery. Both Goldman Sachs and JP Morgan Chase have lowered Q2 Real GDP growth to 1%. Retail sales, although in Q3, were disappointing in today’s release. usretail071513 Tepid GDP growth and rising adjusted monetary base is not a great combination. moneyrelgdp As a consequence, M2...