The hottest Interest Rates Substack posts right now

And their main takeaways
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Bank of England holds rates, but...

Off to Lunch • 334 implied HN points • 01 Feb 24
💰 Finance Monetary Policy Inflation Business News Economy Interest Rates
  1. The Bank of England decided to keep interest rates at 5.25%, despite a split vote among committee members.
  2. Inflation is still high in the UK at 4%, above the Bank's 2% target, but recent data suggests a slowdown in the economy.
  3. The Bank's monetary policy report hints at inflation potentially dropping to 2% in the near future, but interest rates may not be cut until sustained evidence is seen.

Thoughts on Inflation

America in Crisis • 139 implied HN points • 01 May 24
💰 Finance Inflation Interest Rates Government Policy Economic History
  1. The reduced-price model shows how cycles in prices correspond to inflation, especially during wartime when inflation tends to be higher due to deficit spending.
  2. The quantity theory of money explains the relationship between economic activity, money supply, and inflation, showcasing the importance of monetary factors in historical economic events.
  3. Analyzing the current inflation outlook using the money balance model highlights the potential for continued inflationary pressures and the challenges the Federal Reserve faces in managing inflation through interest rate adjustments.
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The Definitive Guide to Bonds

Market Sentiment • 432 implied HN points • 02 Apr 23
💰 Finance Investments Bonds Portfolios Interest Rates ETFs
  1. Leverage in bond investments can work well but also lead to significant losses if market conditions change rapidly.
  2. Bond prices are impacted by interest rate movements, where older bonds may lose value with rate hikes.
  3. The choice between individual bonds and bond ETFs depends on factors like diversification needs, fees, and level of investment sophistication.

Yen’s Short-Term Fluctuations and Long-Term Weakness

Japan Economy Watch • 299 implied HN points • 14 Dec 23
💰 Finance Currency Economy Inflation Interest Rates Trade
  1. Short-term fluctuations of the yen depend on interest rate gaps between Japan and the US, influencing investors to buy/sell yen.
  2. Long-term weakness of the yen is influenced by the competitiveness of Japanese exports, affecting the overall value of the yen.
  3. The purchasing power of the yen relative to its trading partners has decreased significantly over the past 50 years, impacting Japanese households and companies.

A política monetária nos EUA se encontra em território restritivo?

O Observador de Corcyra • 412 implied HN points • 26 Feb 23
💰 Finance Monetary Policy Inflation Interest Rates Economic Analysis Macroeconomics
  1. The US monetary policy has been restrictive with significant impact on the economy and financial conditions.
  2. There are debates on whether the current monetary policy pace is appropriate or if adjustments should be made.
  3. Models and projections show the complexity of predicting inflation and the impact on future monetary policy decisions.

Lawler: Early Read on Existing Home Sales in November

CalculatedRisk Newsletter • 23 implied HN points • 17 Dec 24
💰 Finance Real Estate Interest Rates Economic Indicators Market Trends Home Sales
  1. Existing home sales increased in November, reaching an annual rate of 4.09 million. This is a 3.3% increase from October and 4.6% higher than last November.
  2. The median price for existing single-family homes went up by about 5.3% compared to last year. This suggests a growing demand in the housing market.
  3. There is ongoing discussion about the 'neutral' interest rate, which affects how restrictive monetary policy is. Recent economic growth may lead to higher estimates of this rate among officials.

How Much Change When BOJ Eventually Tweaks? Part 1

Japan Economy Watch • 139 implied HN points • 11 Mar 24
💰 Finance Monetary Policy Economic conditions Interest Rates Central Banking Inflation
  1. Interest rate changes depend on both BOJ policy and financial market conditions, and a policy tweak is likely to result in a gradual, minor impact on rates.
  2. BOJ's intention appears to be maintaining accommodative financial conditions by making small adjustments to policies like the overnight rate and yield curve control.
  3. BOJ's decision-making process is influenced by the balance of risks in moving too early or too late, with a focus on clear evidence of sustained wage growth before significant policy changes.

¥144 Is Weakest Since Last November

Japan Economy Watch • 359 implied HN points • 23 Jun 23
💰 Finance Economy Interest Rates Inflation Currency
  1. The weakening of the yen is closely tied to the gap between Japanese and American 10-year government bond rates, with a 97% correlation.
  2. Investors are learning to trust the statements of central banks like the BOJ and US Fed more, impacting market behavior and currency values.
  3. The chronic weakness of the yen reflects Japan's loss of competitiveness, leading to a trade deficit, higher consumer prices, and lower real wages.

Why 3 US banks collapsed in 1 week: Economist Michael Hudson explains

Geopolitical Economy Report • 358 implied HN points • 15 Mar 23
💰 Finance Banking Regulation Derivatives Interest Rates
  1. Economist Michael Hudson discussed the collapse of US banks, noting similarities to the 2008 financial crisis and the reliance on government bailouts.
  2. The Federal Reserve's handling of interest rates and bailouts in response to bank collapses indicates systemic issues in the financial sector.
  3. Derivatives, specifically highly leveraged bets, are looming as a significant risk for the banking sector and could trigger the next big crash.

ICE Mortgage Monitor: Refinance Activity Increased Especially for Rate/Term Refinances

CalculatedRisk Newsletter • 23 implied HN points • 09 Dec 24
💰 Finance Mortgage Interest Rates Housing Market Delinquencies
  1. Refinance activity surged in September and October, with over 300,000 borrowers taking advantage of lower interest rates. This was the highest refinance volume in 2.5 years.
  2. Mortgage delinquencies decreased slightly in October, dropping below pre-pandemic levels. However, serious delinquencies are still slowly rising year over year.
  3. Home prices saw a small increase in October, with growth edging up to 3.0%. But there are signs that this rate might soften again soon due to rising interest rates and potential demand pullbacks.

Once in a Lifetime Opportunity in German Residential Real Estate Stocks

Modern Value Investing • 294 implied HN points • 21 Apr 23
💰 Finance Real Estate Investing Stocks Market Analysis Interest Rates
  1. German residential real estate stocks offer 200% upside based on their NAV
  2. Potential for German residential real estate stocks to re-establish dividends at 3-4%, translating to a 200% near term upside
  3. Investing in German residential real estate offers a long-term opportunity with potential returns of 5-6x over 10 years

Australia's coming housing bust

Asian Century Stocks • 275 implied HN points • 11 Oct 23
💰 Finance Housing Market Interest Rates Economic Impact Market Trends
  1. Australia's housing market has experienced a long boom driven by various factors like low interest rates, commodity exports, and immigration.
  2. The affordability of Australian properties is a concern with high housing market values, low rental yields, and high household debt compared to income.
  3. Rising interest rates, declining job market, and decreasing migration from mainland China could lead to a potential housing market slump in Australia.

The LIBOR scandal, part 1: background

The Jolly Contrarian • 79 implied HN points • 08 Apr 24
💰 Finance Interest Rates Derivatives Risk management Banking
  1. Banks have structural interest rate risk, which they manage by borrowing at a low rate and lending at a high one.
  2. The LIBOR rate was created as a benchmark for banks to set their interest rates and trade standardized instruments.
  3. Interest rate swaps changed the game by allowing banks to trade interest rates with counterparties, impacting how they managed their structural interest rate risk.

Data Update 3 for 2023: Interest Rates and Bond Returns

Musings on Markets • 599 implied HN points • 31 Jan 23
💰 Finance Interest Rates Bonds Investment Market Analysis Economic Trends
  1. In 2022, both stocks and treasury bonds saw very bad returns, with treasury bonds performing the worst in historical terms. Investors lost significant money as interest rates rose sharply, which was unexpected for a market often seen as safe.
  2. Interest rates increased due to rising inflation and not just the actions of the Federal Reserve. As inflation went up, so did investor expectations, which led to higher rates across the board.
  3. Corporate bonds were also hit hard, especially lower-rated ones, leading to increased costs for companies. As a result, many companies may struggle to pay back debt, especially if the economy weakens.

The Japanese Maginot Line

The Dollar Endgame • 239 implied HN points • 13 Aug 23
💰 Finance Monetary Policy Central Bank Interest Rates Government debt Quantitative Easing
  1. The Bank of Japan's shift in monetary policy caused chaos in FX and stock markets. The volatility in bond markets led to unscheduled bond-buying operations.
  2. Yield Curve Control aims to keep bond yields in a tight range to suppress yields and maintain accommodative monetary policy. This strategy becomes crucial in Japan with high government debt.
  3. The BoJ is strategically intervening in bond rates, pushing them back down whenever they approach a certain threshold. They aim to maintain confusion and market control.

Economic Calendar for the Week of November 4th, 2024

Alex's Personal Blog • 32 implied HN points • 04 Nov 24
💰 Finance Earnings Reports Economic Indicators Interest Rates Market Trends Inflation
  1. This week has a packed economic calendar with important earnings reports coming from big companies like New York Times and Qualcomm.
  2. The U.S. elections are on Tuesday, which could distract from other economic updates but are still very important.
  3. Thursday is crucial as the Federal Reserve will announce their decision on interest rates, along with jobless claims data and several company earnings.

Reaping the Whirlwind: A September 2022 Inflation Update

Musings on Markets • 699 implied HN points • 27 Sep 22
💰 Finance Inflation Interest Rates Investment Market Trends Economic Impact
  1. Inflation has returned strongly in 2022 after a long period of stability. Many businesses and investors were caught off guard as they hadn't adjusted their strategies for high inflation.
  2. Rising inflation is leading to higher interest rates, which can impact the economy and market investments. This has caused a shift in investor behavior, making them more cautious.
  3. Higher inflation also makes the future of economic growth uncertain. Investors are nervous, and their outlook on the economy has worsened, affecting their investment decisions.

Will Kuroda Blink This Week?

Japan Economy Watch • 399 implied HN points • 14 Jan 23
💰 Finance Economy Interest Rates Inflation Currency Exchange Market Analysis
  1. The Bank of Japan is facing pressure to raise interest rates as the market challenges its efforts to keep rates down.
  2. Despite spending 5% of GDP on purchasing government bonds, the BOJ's attempts to control rates have not been successful.
  3. The future moves of the Bank of Japan will likely affect the yen's value, impacting inflation, trade competitiveness, and overall economic well-being of Japan.

Housing Market Preview 2024

The Sunday Morning Post • 117 implied HN points • 07 Jan 24
💰 Finance Housing Market Interest Rates Inventory Economic Impact Home Prices
  1. The housing market has a significant impact on the U.S. economy, representing 15-18% of GDP.
  2. High interest rates and low inventory in 2023 caused fewer transactions and high home prices.
  3. Predictions for 2024 include falling interest rates leading to more supply, potential modest price declines, and buyers becoming more rational.

Nobody Expected Our Current Interest-Rate Configuration

Brad DeLong's Grasping Reality • 153 implied HN points • 08 Mar 24
💰 Finance Interest Rates Monetary Policy Economic outlook Federal Reserve Inflation
  1. Many were surprised by the current interest-rate situation in the US, with rates significantly higher than expected.
  2. Market changes in 2022 led to a drastic increase in long-term real safe interest rates, signaling shifts in Federal Reserve policy.
  3. The current interest-rate configuration, considerably higher than anticipated, raised concerns about a looming recession among experts.

Inflation: Japan Stands Alone, Part I

Japan Economy Watch • 439 implied HN points • 06 Sep 22
💰 Finance Inflation Interest Rates Central Banks Global Economy
  1. Different countries are experiencing different types of inflation, each requiring unique solutions. Japan faces a dilemma with its low headline inflation and core inflation dominated by food and energy.
  2. Central bankers focus on core inflation for long-term trends while considering demand-pull and cost-push sources of inflation. Japan's inflation is mainly driven by cost-push forces, unlike the US and Europe where demand-pull forces are stronger.
  3. Dealing with cost-push inflation is more complex as it involves supply chain disruptions and input price spikes. Timing the response to inflation and adjusting interest rates involves balancing economic growth and avoiding recession.

The Market Vs. The Bank of Japan

Japan Economy Watch • 319 implied HN points • 20 Dec 22
💰 Finance Market Interest Rates Inflation Financial Markets
  1. Market pressure forced the Bank of Japan to increase the maximum rate of 10-year Japan Government Bonds
  2. BOJ Governor Kuroda believes the rate hike was a technical measure, not a start of tightening monetary policy
  3. The outcome will be shaped by factors like BOJ's bond purchases, impact of interest rate rises on businesses, value of the yen, and course of inflation

In Search of a Steady State: Inflation, Interest Rates and Value

Musings on Markets • 679 implied HN points • 11 May 22
💰 Finance Inflation Interest Rates Investment Economics Market Trends
  1. Inflation has become a major issue for the economy, causing instability in markets with unpredictable effects on stock prices. Understanding inflation's impact is important for making investment decisions.
  2. As inflation rises, interest rates also climb, leading to increased borrowing costs and affecting how risky investments are perceived. This creates uncertainty for investors about how to respond.
  3. There are different potential outcomes for the economy based on inflation trends, ranging from a quick stabilization to severe recession risks. Investors need to adapt their strategies depending on which scenario seems more likely.

PROJECT SYNDICATE: What Is the Fed Thinking?

Brad DeLong's Grasping Reality • 161 implied HN points • 06 Feb 24
💰 Finance Monetary Policy Interest Rates Inflation Economy
  1. The US Federal Reserve is hesitant to adjust its policy interest rate despite the economy being in balance.
  2. The Fed remains cautious about aligning rates with the neutral rate due to uncertainties in the economic outlook and inflation risks.
  3. The announcement of maintaining the federal funds rate range at 5.25-5.5% raised concerns given the already balanced US macroeconomy.

Why Are Mortgage Rates Rising?

Spilled Coffee • 24 implied HN points • 23 Oct 24
💰 Finance Mortgage Rates Interest Rates Economic Growth Affordability Housing Market
  1. Mortgage rates are influenced by the 10-Year Treasury Yield, which reacts to the economy's growth and inflation expectations. Even though the Fed cut interest rates, mortgage rates have actually gone up because of the rising Treasury Yield.
  2. Currently, the 30-Year Fixed Mortgage rate is at 7.26%, the highest since July, showing a steady rise despite expectations for a decrease. This rise has persisted for four consecutive weeks.
  3. High mortgage rates and low affordability are causing home sales to decline significantly, with September recording the lowest closed sales of existing homes since 2012. Mortgage applications also dropped sharply, indicating a cooling housing market.

BRIEFLY NOTED: 2024-02-12 Mo

Brad DeLong's Grasping Reality • 146 implied HN points • 12 Feb 24
💼 Business Economics Journamalism Spatial Computing Industrial Policy Interest Rates
  1. Capital is increasingly substituting labor, affecting income inequality and job opportunities.
  2. Some New York Times reporters display lack of awareness about key policies and issues, raising questions about the purpose of journalism.
  3. The Apple Vision Pro VR headset is considered innovative but not without limitations, targeting a specific tech-savvy audience.

Dialing Back Restraint

The Transcript • 79 implied HN points • 05 Feb 24
💰 Finance Economy Policy Inflation Labor markets Interest Rates
  1. The Federal Reserve suggested that interest rates may have reached their highest point in this tightening cycle and could start decreasing later this year.
  2. The Fed is cautious about lowering rates too soon and wants to see sustained progress in managing inflation before making any major moves.
  3. Despite some challenges with inflation, the overall economy, especially the job market, remains strong.

Reading Kuroda's Mind

Japan Economy Watch • 239 implied HN points • 21 Jan 23
💰 Finance Monetary Policy Interest Rates
  1. Bank of Japan Governor Kuroda defied market expectations and successfully maintained Japan Government Bond rates below his target, causing losses for speculators.
  2. The perception of high inflation in Japan is misleading due to factors like food and energy prices and statistical illusions.
  3. To achieve sustained inflation and reach the 2% target, Japan needs significant wage hikes, as monetary policy alone has not been sufficient.

Paul Schmelzing Is Coming to Berkeley to Talk About Interest Rates since 1310!

Brad DeLong's Grasping Reality • 130 implied HN points • 11 Feb 24
💰 Finance Interest Rates Economic Growth Financial Markets
  1. The graph shows a decline in global real interest rates over 800 years, challenging the idea of 'secular stagnation'.
  2. Interest rates' evolution over history raises questions about the relationship between the rate of profit, societal changes, and financial market dynamics.
  3. Factors like technological progress, income growth, and human behaviors impact the slope of the real intertemporal price system, affecting interest rates.