Savings rates in the US are back on the decline, falling to 3.5% in July.
In mid-2022, we saw the savings rate bottom at ~2.5% after hitting a record ~35% in 2020.
However, savings rates are dropping sharply again and on track to hit their lowest levels since 2008.
Excess savings in the US are about to mark their 24th consecutive monthly decline.
The stimulus era is over.
In mid-2022, we saw the savings rate bottom at ~2.5% after hitting a record ~35% in 2020.
However, savings rates are dropping sharply again and on track to hit their lowest levels since 2008.
Excess savings in the US are about to mark their 24th consecutive monthly decline.
The stimulus era is over.
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Auto loan delinquency rates are now at their highest levels since 2008.
Since the Fed started raising rates in March 2022, auto loan delinquency rates have nearly doubled.
For Q2 2023, the auto loan delinquency rate in the US jumped to 7.3%.
This is up from 6.9% in Q1 2023 and above pre-pandemic levels.
Moody’s said that auto loan delinquencies will hit 10% in 2024.
Consumers are feeling the pain of higher rates.
Since the Fed started raising rates in March 2022, auto loan delinquency rates have nearly doubled.
For Q2 2023, the auto loan delinquency rate in the US jumped to 7.3%.
This is up from 6.9% in Q1 2023 and above pre-pandemic levels.
Moody’s said that auto loan delinquencies will hit 10% in 2024.
Consumers are feeling the pain of higher rates.
For the first time since July 2022, CPI inflation has risen for 2 straight months.
Much of this has been driven by a 10.5% jump in gasoline prices over the last month.
Rent inflation still stands at 7.8% and shelter inflation stands at 7.3%.
Many of the items that people use every day are still seeing inflation rates well above 5%.
Higher oil prices are only making things worse.
What does the Fed do if oil prices rise back above $100?
Much of this has been driven by a 10.5% jump in gasoline prices over the last month.
Rent inflation still stands at 7.8% and shelter inflation stands at 7.3%.
Many of the items that people use every day are still seeing inflation rates well above 5%.
Higher oil prices are only making things worse.
What does the Fed do if oil prices rise back above $100?
The 10-year note yield is now up over 400 basis points from its recent low.
However, it's now back to its average level dating back to 1970 of 4.50%.
This is the first time that the 10-year note yield is back to its historical average since 2007.
In the 1980s, the 10-year note yield rose as high as 16% before topping out.
It really puts in perspective how much higher treasury yields can go.
We are ONLY at the historical average.
However, it's now back to its average level dating back to 1970 of 4.50%.
This is the first time that the 10-year note yield is back to its historical average since 2007.
In the 1980s, the 10-year note yield rose as high as 16% before topping out.
It really puts in perspective how much higher treasury yields can go.
We are ONLY at the historical average.
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Interestingly, credit spreads are NOT currently pricing in a recession.
Both investment grade and high yield spreads are well below levels seen in previous recessions.
With IG and HY spreads at ~180 and ~400 bps respectively, it would appears that nothing is wrong.
These spreads were 5x higher in 2008, 3x higher in 2020, and 2x higher in 2001.
Maybe the Fed can avoid a recession after all.
Both investment grade and high yield spreads are well below levels seen in previous recessions.
With IG and HY spreads at ~180 and ~400 bps respectively, it would appears that nothing is wrong.
These spreads were 5x higher in 2008, 3x higher in 2020, and 2x higher in 2001.
Maybe the Fed can avoid a recession after all.
US Treasuries saw their 32nd straight week of inflows last week, by far the longest streak since 2008.
This came as the 10-year note yield pushed above 4.50% for the first time since 2007.
US deficit spending is major factor impacting this with much less attention than the Fed.
The US is issuing over $10 billion PER DAY in Treasuries to cover deficit spending.
Bond markets are being flooded with supply which is driving rates higher.
US deficit spending is costing ALL borrowers more money.
Something must change.
This came as the 10-year note yield pushed above 4.50% for the first time since 2007.
US deficit spending is major factor impacting this with much less attention than the Fed.
The US is issuing over $10 billion PER DAY in Treasuries to cover deficit spending.
Bond markets are being flooded with supply which is driving rates higher.
US deficit spending is costing ALL borrowers more money.
Something must change.
Crude oil prices just briefly crossed above $95 for the first time since August 2022.
However, this $95 level is even more significant as it is where the US last emptied the majority of its oil reserves.
This time around, US reserves are nearly 250 million barrel emptier, their lowest since 1983.
Therefore, refilling reserves now would be MORE EXPENSIVE than what the same reserves sold for a year ago.
What do you call it when the US sells high and buys higher?
However, this $95 level is even more significant as it is where the US last emptied the majority of its oil reserves.
This time around, US reserves are nearly 250 million barrel emptier, their lowest since 1983.
Therefore, refilling reserves now would be MORE EXPENSIVE than what the same reserves sold for a year ago.
What do you call it when the US sells high and buys higher?
JUST IN: US net interest payments as a percentage of government receipts rise to 15%.
This percentage has doubled over the last 2 years and now is at its highest since 1998.
The US is about to see its first ever year with $1 trillion+ in interest expense.
At the same time, US Federal tax receipts are now down 8.4% on a 12-month basis.
We have rapidly rising debt levels with rising rates and falling government revenues.
What’s the game plan here?
This percentage has doubled over the last 2 years and now is at its highest since 1998.
The US is about to see its first ever year with $1 trillion+ in interest expense.
At the same time, US Federal tax receipts are now down 8.4% on a 12-month basis.
We have rapidly rising debt levels with rising rates and falling government revenues.
What’s the game plan here?
JUST IN: 10-Year Note Yield rises to 4.68%, its highest level since October 2007.
Treasury yields are now up 7 of the last 8 days as the historic run higher continues.
The 10-year note yield is up 40 basis points since last week's Fed meeting and 430 basis points since 2020.
Meanwhile, the average rate on a 30-year mortgage just hit 7.83%, its highest in 23 years.
Just another day.
Treasury yields are now up 7 of the last 8 days as the historic run higher continues.
The 10-year note yield is up 40 basis points since last week's Fed meeting and 430 basis points since 2020.
Meanwhile, the average rate on a 30-year mortgage just hit 7.83%, its highest in 23 years.
Just another day.
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BREAKING: The US government is now just 48 hours away from a shutdown.
This comes less than 3 months after the largest debt ceiling crisis since 2011.
Meanwhile, the government is borrowing over $14 billion PER DAY and spending $3 billion per day on interest expense alone.
All while the US long-term credit rating was downgraded for the first time in over a decade.
Simply put, the system is broken.
This comes less than 3 months after the largest debt ceiling crisis since 2011.
Meanwhile, the government is borrowing over $14 billion PER DAY and spending $3 billion per day on interest expense alone.
All while the US long-term credit rating was downgraded for the first time in over a decade.
Simply put, the system is broken.
BREAKING: August PCE inflation, the Fed's preferred inflation metric, RISES to 3.5%, in-line with expectations of 3.5%.
Core PCE inflation fell to 3.9%, in-line with expectations.
Headline inflation is rising, but core inflation is finally falling.
What does the Fed do now?
Core PCE inflation fell to 3.9%, in-line with expectations.
Headline inflation is rising, but core inflation is finally falling.
What does the Fed do now?
You can’t make this up:
1. Median Mortgage Payment: $2,900
2. Median Rent Price: $1,900
It now costs ~$1,000/month more to buy a house than to rent.
Meanwhile, the average new car payment is now at $750/month.
The average interest rate on a used car loan just hit a record 14%.
All while credit card debt hit $1 trillion for the first time ever with record interest rates of 25%.
Basic necessities are becoming unaffordable for Americans.
1. Median Mortgage Payment: $2,900
2. Median Rent Price: $1,900
It now costs ~$1,000/month more to buy a house than to rent.
Meanwhile, the average new car payment is now at $750/month.
The average interest rate on a used car loan just hit a record 14%.
All while credit card debt hit $1 trillion for the first time ever with record interest rates of 25%.
Basic necessities are becoming unaffordable for Americans.
US housing market affordability is, by far, at its lowest point in history.
Even in the worst part of the 2008 financial crisis, affordability was ~15% BETTER than its current levels.
With the recent move higher in treasury yields, we should see 8%+ mortgages within a week or so.
This also means that the median home payment will soon cross $3,000/month for the first time ever.
Homebuyers are now spending 50% of median PRE-TAX household income on house payments.
Buying a house is now a luxury.
Even in the worst part of the 2008 financial crisis, affordability was ~15% BETTER than its current levels.
With the recent move higher in treasury yields, we should see 8%+ mortgages within a week or so.
This also means that the median home payment will soon cross $3,000/month for the first time ever.
Homebuyers are now spending 50% of median PRE-TAX household income on house payments.
Buying a house is now a luxury.