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re: Betting markets are currently pricing in a 95% chance of no change in interest rates
Posted on 6/4/25 at 11:42 am to stout
Posted on 6/4/25 at 11:42 am to stout
quote:Right.
I didn't deny that Powell may be politically motivated anywhere in my post.
(1) Multitasking at this end and maybe wasn't clear. IMO Powell and/or the majority of the FOMC are deliberately seeking reasons to throw sand in the gears of the Trump economy. Basis for those actions is debatable
(2) The Fed is increasingly losing control of bond rates. Treasuries are proving more respondent to increased debt even at low inflation rates.
(3) Given #2, the risk is stunted economic growth d/t higher fed rates increasing the deficit/debt and driving bond rates further north.
(4) Frankly, I'm not sure, with a $37T debt, that the Fed 2% inflation target even remains reasonable.
0
Posted on 6/4/25 at 11:46 am to stout
quote:
I agree with you, especially if we could stay in a healthy 6% range. That is not so high that it kills the economy but high enough to demand somewhat of a correction back to affordability in the RE market.
That's a trillion per year in debt payments.
Posted on 6/4/25 at 12:03 pm to j1897
quote:$2.2T
That's a trillion per year in debt payments.
As you point out, that's the problem.
At a 6% C-of-C to balance the budget (i.e., just tread water, not really paying down debt), we'd have to budget $2.2T less spending on actual programs (defense, SS, CMS, etc.) than we bring in in revenue. In that scenario, $5T in revenue allots just $2.8T in noninterest spending. $2.8T comprises roughly a 50% across the board program cut in current spending levels.
This post was edited on 6/4/25 at 12:05 pm
Posted on 6/4/25 at 5:29 pm to Tomatocantender
quote:
So the economy was getting bad 1 month before the election to the tune of a 50 bips (not just 25) lowering?
I get what you're saying, but I'm talking about in general (ie: not looking at refi'ing a buttload of debt or trying to influence an election). But the result of that really underscores the point. He raised rates too much in too short of a time period and inflation reversed course almost instantly and only just recently started going back down again.
Aside from playing politics, we're likely going to have to see some real economic problems before Powell begins cutting. Due to the continued debt-creation by Congress (and consumers trying to offset inflation onto their credit cards so they don't have to adjust their lifestyles), those cuts are likely to be few and far between as that continued liquidity pump is going to keep us flirting with stagflation.
Posted on 6/4/25 at 5:31 pm to stout
quote:
ADP numbers out this morning show an economic cool down
Muh "4.6% GDPNow"...
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