Banks do not want to wait on loans and payments. Many people have a fraction of the money needed and to make their dream come true, they apply for loans. The People’s Bank of China offered 200 billion yuan ($29bn) of one-year loans to banks Friday. To Aleksander Kocic, derivatives strategist at Deutsche Bank AG, it’s something that has turned the world of fixed income on its head — transmuting an age-old principle of debt and converting the world’s biggest market into something theoretically far more risky. The amount, which is also more than three times the world’s annual economic output, has been driven by a $7.5 trillion surge in the first half of the year that shows no signs of slowing. We are also legally required to show the Annual Percentage Rate (APR) whenever we provide an interest rate. For example, If the rate of interest on a $100,000 loan is lowered from 8% to 7.1% the monthly payment (excluding taxes & insurance) you may make an annual savings of about $900 with the drop of 0.9 % (8 % – 7.1%). A 1% rate reduction is a lot more meaningful if you have a $200,000 mortgage rather than one that’s $100,000.
Total Checkable Deposits rose $34.9bn, while Savings Deposits declined $17.4bn. The U.S. dollar index declined 0.4% to 97.999 (up 1.9% y-t-d). August 7 – Bloomberg (Michelle Davis Carolina Millan): «Pressure from sliding commodities prices is spreading from the junk-bond market to a broader gauge of U.S. The Bloomberg Commodities Index dropped 1.0% this week (up 2.7% y-t-d). Japan’s Nikkei Equities Index declined 0.4% (up 16.4% y-t-d). Hong Kong’s Hang Seng Index fell 9.5%, with the Hang Seng Financials down 12.3%. Equities were bloodied throughout Asia. Three-month Treasury bill rates ended the week at 1.53%. Two-year government yields fell seven bps to 1.61% (down 88bps y-t-d). U.K. 10-year gilt yields dropped six bps to 0.73% (down 55bps). U.K.’s FTSE equities index declined 0.8% (up 8.5% y-t-d). Freddie Mac 30-year fixed mortgage rates rose six bps to 3.75% (down 119bps y-o-y). The Federal Reserve affects Apple Valley mortgage lender rates by raising. Federal Reserve Credit last week increased $6.6bn to $4.006 TN, with a nine-week gain of $280bn. Average new home prices in China’s 70 major cities rose 8.8% in August from a year earlier, compared with a 9.7% gain in July and the weakest pace since October 2018…
July 18 – Reuters (Jason Lange and Ann Saphir): «President Donald Trump wants a cheaper dollar, saying earlier this month the United States should match what he says are efforts by other countries to weaken their own currencies – giving them an unfair trade advantage. July 4 – Wall Street Journal (Nick Timiraos): «Federal Reserve officials have indicated there is a strong chance they will announce in September a decision to start shrinking the central bank’s portfolio of bonds and other assets, while putting off until December any further interest-rate increase. November 14 – Wall Street Journal (Harriet Torry): «The U.S. November 10 – Wall Street Journal (Ira Iosebashvili and Amrith Ramkumar): «Investors are piling into beaten-up assets from commodities to emerging-market stocks, powering a broad rally that reflects a brightening outlook for the global economy. ‘When I look at the current settings for monetary policy, my own outlook suggests we will continue to see growth in the economy around or slightly above the trend rate of growth, we see an unemployment rate at a 50-year low and continued job gains as recently as the most recent employment numbers,’ with positive wage growth for workers, Ms. George said… June 12 – Financial Times (Adam Samson): «Germany has sold medium-term Bunds at the lowest yield on record in the latest sign of how the uncertain outlook for Europe’s economy has depressed borrowing costs.
Article 50 exit process should last no longer than June 30… A recent Northwestern University study found that racial disparities in the mortgage market haven’t declined much in the last four decades when it comes to discrimination in loan denial and interest rates. In the near-term, China is facing a crisis of confidence in its small bank sector, rapidly rising corporate defaults and an increasingly fragile mortgage finance Bubble. Small Time Deposits dipped $2.7bn. The bad news for bondholders is that the last time this happened, it was accompanied by the biggest sell-off since the aftermath of the global financial crisis. Elsewhere, Fed holdings for foreign owners of Treasury, Agency Debt increased $1.6bn last week to $3.420 TN. That indicator is the term premium, which, for both Treasuries and German bunds, has snapped back from last quarter’s record lows. In aggregate, ETFs tracking stocks that swing less than the broader market have taken in over $22 billion for a record year… ‘I think we’re still in early days of adoption because I think ETFs are now moving to a level playing field,’ she said… I counted 15 plastic coolers in various states of repair(ALL of them needing repair), along with every conceivable discarded household and yard item you could think of.
