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Fed hikes rates as inflation worries push up bond yields

reuters.com

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Re: Fed hikes rates as inflation worries push up bond yields

#21

Post by jrflo »

iamnothere wrote: post #9
leptons wrote: post #3

Earlier quoted context omitted.

This comment isn't helpful. Please explain for those of us without a degree in economics.

Higher rates means financing/borrowing is more expensive. Mortgage rates will go up, possibly pushing home prices down. This is neutral for buyers because of higher rates, but bad for sellers. Loans (personal or business) will be harder to come by. Layoffs, or at least hiring freezes, are more likely. Companies will move into a defensive rather than an growth mode. Higher unemployment will lead to more desperation, a…

Home prices are sticky on the way down, 25 basis points won't change much

Re: Fed hikes rates as inflation worries push up bond yields

#22

Post by maerF0x0 »

lenerdenator wrote: post #10

Should have been this high years ago. The country - particularly this industry, information technology - got addicted to cheap cash. Worse, people didn't want to pay any of it back in tax, so bond yields are going to go up on the debt that was issued to cover deficit spending. Should be interesting to see how this impacts the AI hyper-scalers. They were already burning through cash like a furnace and were running out…

> want to pay any of it back in tax

If they dont pay it back in tax, they pay it back in debasement of their savings and entitlements

Re: Fed hikes rates as inflation worries push up bond yields

#24

Post by hdgvhicv »

kadoban wrote: post #7
leptons wrote: post #3

Earlier quoted context omitted.

This comment isn't helpful. Please explain for those of us without a degree in economics.

Inflation is high, so interest rates need to go up to try to slow that, but the economy isn't doing amazing already, and higher interest rates won't help that. Not to mention the US debt is _high_ as hell and bond yields mean that's more expensive. And the country is run by a broken fool who has no interest or ability to fix any of that.

It’s worse than no ability to fix it — he caused a large part of it for unclear reasons

Re: Fed hikes rates as inflation worries push up bond yields

#25

Post by tossandthrow »

iamnothere wrote: post #9
leptons wrote: post #3

Earlier quoted context omitted.

This comment isn't helpful. Please explain for those of us without a degree in economics.

Higher rates means financing/borrowing is more expensive. Mortgage rates will go up, possibly pushing home prices down. This is neutral for buyers because of higher rates, but bad for sellers. Loans (personal or business) will be harder to come by. Layoffs, or at least hiring freezes, are more likely. Companies will move into a defensive rather than an growth mode. Higher unemployment will lead to more desperation, a…

Neutral for buyers? Absolutely not.

As a buyer you rather want to take out a loan in a high interest rate environment than a low interest rate environment, given that the monthly payment is the same.

1000 usd extra paid towards your mortgage actually makes a difference when the rate is 15% compared to when it is 1.5%

Re: Fed hikes rates as inflation worries push up bond yields

#27

Post by dabinat »

Prediction: this causes a recession in two years, right after a Democrat wins the White House, who will be blamed for it. The economy will turn around after a few years, just in time for a Republican to win and claim they fixed it.

This is how Republicans have a reputation for being economically savvy despite actual evidence to the contrary, because the general population doesn’t understand that economics runs on a time delay.

Re: Fed hikes rates as inflation worries push up bond yields

#28

Post by ojbyrne »

lenerdenator wrote: post #10

Should have been this high years ago. The country - particularly this industry, information technology - got addicted to cheap cash. Worse, people didn't want to pay any of it back in tax, so bond yields are going to go up on the debt that was issued to cover deficit spending. Should be interesting to see how this impacts the AI hyper-scalers. They were already burning through cash like a furnace and were running out…

"years ago" seems like the wrong criticism. Today's rate is lower than the rates from December 2022-October 2025. That seems like years ago.

Re: Fed hikes rates as inflation worries push up bond yields

#29

Post by SoftTalker »

maerF0x0 wrote: post #22
lenerdenator wrote: post #10

Should have been this high years ago. The country - particularly this industry, information technology - got addicted to cheap cash. Worse, people didn't want to pay any of it back in tax, so bond yields are going to go up on the debt that was issued to cover deficit spending. Should be interesting to see how this impacts the AI hyper-scalers. They were already burning through cash like a furnace and were running out…

> want to pay any of it back in tax If they dont pay it back in tax, they pay it back in debasement of their savings and entitlements

Yep, inflation is just another kind of tax, and one that's quite hard to avoid.

Re: Fed hikes rates as inflation worries push up bond yields

#30

Post by jrflo »

lenerdenator wrote: post #10

Should have been this high years ago. The country - particularly this industry, information technology - got addicted to cheap cash. Worse, people didn't want to pay any of it back in tax, so bond yields are going to go up on the debt that was issued to cover deficit spending. Should be interesting to see how this impacts the AI hyper-scalers. They were already burning through cash like a furnace and were running out…

To be honest though cash hasn't been cheap for a while, not really since 2021. We have been in relatively high interest rates for the entire AI boom. Going from 350-375 to 375-400 won't be a huge shock for hyperscalers. Interest rate are still lower than when many made their initial investments in 2023-2025
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