I wonder if Canada (BoC) will follow this. I hope not!
Inflation in Canada is currently right at their 2% target rate so they are unlikely to raise ... this time.
Fed hikes rates as inflation worries push up bond yields
171–180 of 242 posts
Re: Fed hikes rates as inflation worries push up bond yields
#172Earlier quoted context omitted.
You have to look at the current context. Bond yields have been spiking, mostly because of the inflation expectations from oil prices and tariffs (mostly oil prices). Mortgages mostly track 10 year yields, which is why when fed dropped the rates back to back, the mortgage rates didn’t come down. The current hike (and the next one) is supposed to create a deflationary pressure, but also provide confidence to the market…
what I'm saying is that Fed hikes interest rates → bonds sell off → yields rise → mortgage rates rise. This is logical and empirically observed. But you are right on the longer term effect. Zooming out: Fed hikes → inflation cools → inflation expectations fall → yields fall → mortgage rates fall. But the latter is not guaranteed, and it takes time. I'm unsure to understand how the ceiling and floor mechanisms work. B…
> Fed hikes interest rates → bonds sell off → yields rise
This part isn’t true. It can happen, but not always, especially right now.
Re: Fed hikes rates as inflation worries push up bond yields
#173Earlier quoted context omitted.
I don’t understand why central banks seem to use such a blunt object like interest rates for every inflation problem. It would make sense to rise if the cause of inflation was accelerated economic activity, not price rises due to supply restrictions. How does hurting mortgage holders even more help with not starting wars? All it can do is have a double dampening effect on the economy as people pull back their discret…
> hurting mortgage holders How does raising rates hurt mortgage holders? They locked in their interest rate when they got the mortgage?
Not all mortgages are fixed rate.
Re: Fed hikes rates as inflation worries push up bond yields
#174Earlier quoted context omitted.
What results? Overnight interbank loan rates, yes, immediately. The effect of those rates on the economy? It will take time to propagate. Heck, some important committees only meet like twice a year.
> What results? Inflation numbers, companies firing, and the magnitude of fictional numbers on financial markets. Lots and lots of things are slower to react, but those 3 are quite big and hard to ignore.
Layoffs are abnormally low right now, well below the rate a decade before 2020.
Here is data: https://fred.stlouisfed.org/series/JTSLDR
Inflation is a bit higher, but not shockingly so, here is the data:
https://fred.stlouisfed.org/series/CPIAUCSL#
In terms of "fictional numbers on wall street", I don't see any real data there, but if you have access to something then please share.
Re: Fed hikes rates as inflation worries push up bond yields
#175Earlier quoted context omitted.
> hurting mortgage holders How does raising rates hurt mortgage holders? They locked in their interest rate when they got the mortgage?
Not all mortgages are fixed rate.
95% of mortgages are fixed rate in the US. And even that number is too low, most of the ARMs are taken out by businesses, not households.
Re: Fed hikes rates as inflation worries push up bond yields
#176Earlier quoted context omitted.
The (vast?) majority of the debt happened as the result of the Republican party both increasing spending and cutting taxes every time it lands someone in the White House and before midterms flip the House back to Democrats. There's a fair argument to be made that the Democrats could/should have reversed these disastrous fiscal policies when they gained power, but it's important to be wary of Murc's Law while also ack…
> The (vast?) majority of the debt happened as the result of the Republican party both increasing spending and cutting taxes every time it lands someone in the White House and before midterms flip the House back to Democrats. Both parties have run an increasing deficit, with the only outlier being a small amount of time in the late 90s. The deficit is largely caused by social security outlays, medicare/medicaid outla…
Maybe you mean something different, but not every recent president has "run an increasing deficit"
Reagan: +74B
Bush: +103B
Clinton: -382B
Bush: +1.5T
Obama: -747B
Trump: +2.1T
Biden: -1T
Where change in deficit is the final budget deficit - starting budget deficit
So, every Republican president runs an increasing deficit and every Democrat president runs a decreasing deficit.
Re: Fed hikes rates as inflation worries push up bond yields
#177Earlier quoted context omitted.
The (vast?) majority of the debt happened as the result of the Republican party both increasing spending and cutting taxes every time it lands someone in the White House and before midterms flip the House back to Democrats. There's a fair argument to be made that the Democrats could/should have reversed these disastrous fiscal policies when they gained power, but it's important to be wary of Murc's Law while also ack…
> The (vast?) majority of the debt happened as the result of the Republican party both increasing spending and cutting taxes every time it lands someone in the White House and before midterms flip the House back to Democrats. Both parties have run an increasing deficit, with the only outlier being a small amount of time in the late 90s. The deficit is largely caused by social security outlays, medicare/medicaid outla…
Under Bill Clinton, in 2000 we ran a (small) surplus, but even then, the shock of running a surplus hid the fact that the debt increased during his term overall. That was the last president in which there was even one year of the debt decreasing, all other presidents increased the debt. Here is data:
https://www.macrotrends.net/2496/national-debt-growth-by-yea...
Re: Fed hikes rates as inflation worries push up bond yields
#178Earlier quoted context omitted.
Supply is way up and sales are way down, on average: https://wolfstreet.com/2026/09/10/sales-of-existing-single-f... This could be the catalyst to lower prices if sellers get spooked, especially if gas prices keep going up.
Your graph shows that home sales have been at a constant rate for the last 3 years. They are way down from 2020-2021, when covid plus low interest rates caused a home buying frenzy, but this is not new. We've been in this regime for the last 4ish years, 25 basis points is not going to change anything. In fact, interest rates are lower now than they were a year ago. That's not to say that rising rates aren't a sign of…
Sales have remained low (at GFC levels) while inventory has continued to climb. In other words supply is up and demand is flat. Doesn’t look good to me, but I’m not a professional market analyst.
It all depends on how long buyers (in aggregate) are willing to hold out, or if they are simply unable to buy at these prices. And nobody really knows that.
Re: Fed hikes rates as inflation worries push up bond yields
#179Prediction: 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 t…
A 0.25% rate hike is going to cause a recession? How, exactly, would that happen? Honestly it seems your post is heavy on politics but I am not seeing an actual argument anywhere in there. My canned response to people being upset at various policies or ratios, whether it is inflation, or bond yields, or market movements, is to ask them what they think the correct value should be. Stop complaining about the movement a…
At this point its probably more like 12% temporarily because the more correct way to measure it is to take the 1980s inflation measure (from before all the medelling to make it artificially lower) and raise rates by 25 bips every quarter until that number is zero, then back it off slowly
Re: Fed hikes rates as inflation worries push up bond yields
#180Earlier quoted context omitted.
I would love to hear what was "radical" or "divisive" about Obama's policy. A significant portion of the country disliking him because of his skin color doesn't make his policies "radical"
A universal health care mandate were both radical and divisive, and the popular nickname for the ACA today is "Obamacare". I happen to think the policy was a good idea, and voting to keep it in play was the best vote of John McCain's career ... but it was definitely both radical and divisive. Now, much of the "mandate" has been stripped away, health care remains a mess, and access is far from affordable, but you can'…
> A universal health care mandate were both radical and divisive
It seems quite ironic, given the frequent complaints about the inability of Congress to either govern effectively or fix health insurance (for many and various definitions of "fix"), that the ACA was so divisive. At least it got passed! Yet given the opportunity twice (2017-2019, 2025-2027), a politically viable alternative hasn't been offered up by opponents of the ACA, let alone being able to fully repeal it.