Economic history from 2006, 2007, and 2008

On May 10, 2006, the Fed said the following in a press release:

"The Committee sees growth as likely to moderate to a more sustainable pace, partly reflecting a gradual cooling of the housing market ... "

So they raised the interest rates for fed funds to 5 percent.

"As yet, the run-up in the prices of energy and other commodities appears to have had only a modest effect on core inflation, ongoing productivity gains have helped to hold the growth of unit labor costs in check ... "

So does that mean, "Wages have stayed the same while electric bills, gas bills, water bills, and gasoline at the pump have gone up with the net effect being only a modest amount of price increases in meat, vegetables, and bread?"

"The Committee judges that some further policy firming may yet be needed to address inflation risks but emphasizes that the extent and timing of any such firming will depend importantly on the evolution of the economic outlook ..."

"So that means, "Things are going well. We don't expect any changes unless we have to raise your mortgage rates again."

All in May of 2006, before the global economic meltdown blind sided the smartest Bankers in the USA.

Fed to taper stimulus

Interest rates are going to rise starting today. I'm hoping that will be a slow and steady rise.

Why?

Here are several links to learn or unlearn more:

Yahoo Link

US News

A European perspective The Telegraph

Forbes

Today's market commentary

So boring but here's what daily commentary on what's happening in finance.




Tuesday
December 10, 2013

10-YEAR NOTES 99-14 (+11) 2.814%
FN 3.5% COUPON 100-08.5 (+12)
SUPPORT 3.00%
RESISTANCE 2.45%

Overnight, the market saw better buyers and the curve flattening continued. In the U.S., the market is opening up and 2s10s is 4.5 bps flatter. MBS are 1-3 tics tighter with UIC outperforming after underperforming yesterday. The big news today was the announcement by the FHFA to increase g-fees by 10 bps on all 30-Year mortgages as well as changing LLPAs to better reflect credit risk. These fees will go into effect in March/April of 2014 for Cash/Pools. On the taper front, Bullard spoke in St. Louis yesterday and was quoted as saying "a small taper [in December] might recognize labor market improvement while still providing the Fed the opportunity to carefully monitor inflation during the first half of 2014". As market participants attempt to discern whether the Fed tapers in December, January or March it appears the market is setup to handle any/all of the above based on the size of the taper. Regardless of how much the Fed begins to taper, they will still be taking down more than the supply and as long as the market is comfortable with the speed/trajectory and with inflation levels it appears we might be able to get an orderly exit (given the price action post payrolls). The more difficult time will be in 2H14 when the technicals of the Fed vs. Origination begin to skew toward the Origination side of the equation assuming we are still near historic tights on the current coupon basis vs. 10-Yrs.

At 11:00 AM EST there is a UST buyback in the 1/18-2/43 TIPS and at 1:00 PM EST there is a $30 billion 3-Year note auction.

Yes, I read this stuff.

MBS stands for Mortgage Backed Securities

The rest of the alphabet jargon goes over my head.

My take on it? Mortgage rates are going up. Interest rates on US 10 year bonds are going up. Lots of people expect the FED to taper off on it's support for low rates. Me, too.

End the Fed now! Or, yesterday works good, too.

I'm a fan of a stable currency, low inflation, and low interest rates.

Not everyone.

There are a few people who would strip power from our centralized banking system. I don't know who would set currency value, currency inventory, or interest rates. My personal guess would be Guido the Killer Pimp and his brother Bob the Loan Shark. If there's a bank in every dark alley, I guess we won't need a central bank.

Anyway, here's a good link to a discussion on currency value. At least the value of my favorite currency, the US dollar!