Morning Report: Yields continue to rise

Vital Statistics:

 LastChange
S&P futures3,668-6.50
Oil (WTI)84.940.39
10 year government bond yield 4.31%
30 year fixed rate mortgage 7.10%

Stocks are lower this morning as global rates continue to rise. Bonds and MBS are down.

The resignation of Liz Truss doesn’t seem to have had an impact on UK assets, as the pound and gilts continue to drop. The pain in gilts is spilling over into other sovereign debt with Treasury yields briefly hit 4.34% this morning.

The CFPB’s funding arrangement has been ruled unconstitutional, according to a Federal Appeals Court. Elizabeth Warren’s idea for the CFPB was to have it funded by the Federal Reserve, which is outside the purview of Congress. This would make it impossible for Congress to cut its funding. This potentially could vacate some rulings the Bureau has made in the past. I don’t think there is anything that would affect the mortgage business, however. I believe the actual litigation in question concerns payday lenders.

The Fed Funds futures have been inching upwards. A 75 basis point hike in two weeks is more or less a lock, and the December futures have a 60% chance for another 75 basis points and 40% for only 50. They are then looking at another 25 bps in February, which will put the Fed Funds rate at a range of 4.75% – 5%, where they pretty much remain for the rest of 2023.

Note that a month ago, a target rate of 4.5% – 4.75% wasn’t even considered.

Since monetary policy acts with a lag, the string of 75 basis point hikes starting in June, the economic impact of this has barely begun to hit. The Atlanta Fed’s GDP Now index sees 2.9% in Q3, which seems optimistic, given that one strong retail sales print caused them to revise upward that number from about 0.5% to 2.5%.

I find it hard to believe that we see a massive growth acceleration in the midst of a tightening cycle, but that is what their models are saying.

34 Responses

  1. Brooks actually has a good column today:

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  2. NYT did some decent reporting here:

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  3. Find it appalling that the biden admin wants to tank the Twitter deal on national security grounds.

    https://www.businessinsider.com/biden-elon-musk-twitter-deal-government-national-security-review-report-2022-10

    There is absolutely zero impact on national security with a social media site. The only threat is to the democrat party.

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    • That’s hilarious given their stance on Tik Tok and the previous reaction when Trump talked about making the Chinese sell the American subsidiary.

      What they are really saying is that free speech is a threat to national security (which may actually be true, at least as far as national security is construed these days. It’s certainly what the Russians, Chinese, and Iranians believe about social media).

      On the other hand, it does give Musk a way out of the deal.

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    • Even the threat to the Democratic Party is highly debatable. It’s more like it’s unpalatable and disruptive of the exclusive cliques of the Democrat-media complex. It’s more than the left just doesn’t want it, and anything they don’t want should be illegal and a matter of national security.

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  4. I will be interested to see where the next application of the principle of not enforcing laws that have a “possible negative impact on people of color” is.

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  5. These are great. Eddie Murphy on the Tonight Show with Johnny Carson in 1983 & 1987.

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  6. Lead pipe fucking certain!

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    • Sure, sure.

      These people are either gaslighting or incapable of rational thought.

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    • Over time, a principled, steadfast, uncompromising conservative party will be able to strangle MAGA. It will achieve that worthy goal by losing virtuously.

      These fucking people…. Though I suspect she will attract more democrats than conservatives.

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      • I would vote for her!

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        • Which is why the left is playing with fire here

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        • Only if Trump is not running…………..otherwise I would vote for Biden again and hold my nose!

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        • lms:

          otherwise I would vote for Biden again and hold my nose!

          If you voted for Biden, you would be voting for unknown, nameless, faceless leftists to run the executive branch. You can’t seriously think he is the one driving policy. He is simply following directions (to the extent that he is even able to do that.)

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        • I get the sense he drove policy on Afghanistan. Primarily that but, you know, he’s not so great at management that I actually think things would be a lot better if he were driving policy.

          I have about as hard a time or imagining a circumstance in which I’d vote for Biden as lmsinca has imagining a circumstance where she’s vote for Trump.

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        • KW:

          he’s not so great at management that I actually think things would be a lot better if he were driving policy.

          It’s not management skills that make policy good or bad to me. It’s the policy ideas themselves. And my only point to lms was that we really don’t know who is making policy right now. Whether one thinks current policy is good or bad, there is no accountability because we have no idea who is driving it. The only thing we do know is that it almost certainly is not the clearly declining Biden.

          A case in point…does anyone believe that Biden made the decision to do this interview, or is the driving force behind articulating the talking points he espouses in it?

          https://nowthisnews.com/news/nowthis-presidential-forum-biden-trans-right

          A vote for Biden is literally a vote for unknown, unnamed forces running the country.

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        • I’m assuming it’s mostly Gen Xers and some millennials with college degrees and, you know, Jill Biden.

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        • “Management” might not have been the correct word choice. I don’t think he’s great at policy … or politics … even when he was more cognitively capable.

          We don’t know whose really behind the policies specifically but ultimately he’s the fulcrum around which they leverage their power. So voting him out would have a similar salutary effect as if he was responsible for his own horrible policies.

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        • Or if Dems can come up with someone better!

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  7. Among the many weird things in the piece, who so the constituency that is judging the Administration on Covid and it’s variants?

    https://www.washingtonpost.com/politics/2022/10/22/joe-biden-presidency/

    Which constituency is that?

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  8. Sure, why not.

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  9. There’s no way this could backfire.

    “The Trump Tapes: 20 interviews that show why he is an unparalleled danger

    By Bob Woodward
    Associate editor
    Oct. 23 at 2:00 p.m.

    In more than 50 years of reporting, I have never disclosed the raw interviews or full transcripts of my work. But after listening again to the 20 interviews I conducted with President Donald Trump during his last year as chief executive, I have decided to take the unusual step of releasing them. I was struck by how Trump pounded in my ears in a way the printed page cannot capture.”

    https://www.washingtonpost.com/opinions/interactive/2022/trump-tapes-bob-woodward-interviews-audiobook/?itid=hp_opinions_p001_f005

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    • Even Woodward’s wife warned him:

      “Woodward: What do you think?

      Walsh: You were really shouting at him.

      Woodward: I was. To get in a word edgewise.

      Walsh: Your shouting, though, was really loud.

      Woodward: It’s okay. It’s okay.

      Walsh: You want to get more information from him, not–

      Woodward: I know. Like this. I agree.

      Walsh: — telling him what he needs to do.

      Walsh: You kind of sounded like you were telling him what to do.

      Woodward: Yeah. Well —

      Walsh: You don’t want to do that.

      Woodward: Okay. But we’re in a different world now, sweetie.”

      Like

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