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Happy Day of the Dead II- 11/2/22

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in terms of UST buyback

Investors urge US Treasury to boost bond market liquidity with buyback scheme

Fed’s aggressive monetary policy has added to volatility in the normally boring $24tn market
[..]
The volatility has made it harder and more expensive for investors to buy or sell Treasury bonds in a market that is ostensibly the most liquid in the world.
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"Buybacks will give the market confidence that there is a backstop if things get too cheap,""Buybacks would allow banks to get [bonds] off their balance sheet when there are no buyers and would allow them to use their balance sheet more
[...] Post-2008 capital requirements made it more expensive for banks to own Treasury debt, so holdings relative to the size of the market have fallen
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Since then, hedge funds and high-speed trading firms have come to play a much larger role in the market, stepping in where banks have stepped back. As the structure of the market has shifted and the Treasury market has quadrupled in size, problems have proliferated, including the 2014 flash rally, the 2019 repo crisis and the March 2020 meltdown.

Source from Monday: https://www.ft.com/content/3218c8b4-76bc-4690-9a17-1cfa52eeb0ac

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“It is definitely a hard landing for housing,” he said. “Any hope of a soft landing really evaporated last spring, when it became so clear that our customers who are accustomed to such low mortgage rates just were going to go on strike.”

Myers was around during the last housing crash, which was brought on by a faulty mortgage market where just about anyone, qualified or not, could get a home loan. It caused a massive run on housing, based almost entirely on speculative buying and selling by investors. Single-family housing starts fell a stunning 80% from January 2006 to March 2009, but Myers notes that it was a slower turn compared with what is happening now.

“I think we’re seeing the most abrupt change in the market in my career, and I’ve been around a while,” he said. “I’ve never seen sales just turn off, which for us happened in May.”

https://www.cnbc.com/2022/10/31/homebuilders-say-steeper-downturn-is-coming-as-buyers-pull-back.html

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54 minutes ago, SiP said:

“It is definitely a hard landing for housing,” he said. “Any hope of a soft landing really evaporated last spring, when it became so clear that our customers who are accustomed to such low mortgage rates just were going to go on strike.”

Myers was around during the last housing crash, which was brought on by a faulty mortgage market where just about anyone, qualified or not, could get a home loan. It caused a massive run on housing, based almost entirely on speculative buying and selling by investors. Single-family housing starts fell a stunning 80% from January 2006 to March 2009, but Myers notes that it was a slower turn compared with what is happening now.

“I think we’re seeing the most abrupt change in the market in my career, and I’ve been around a while,” he said. “I’ve never seen sales just turn off, which for us happened in May.”

https://www.cnbc.com/2022/10/31/homebuilders-say-steeper-downturn-is-coming-as-buyers-pull-back.html

I know a little about real estate. 

Ahem. 

I've frequently pointed out the first the market freezes, the sales just stop. Then we have the Wile E. Coyote market for a few months. Then sellers look down after not getting any bids. Then prices collapse as volume picks up when sellers drop their asks. 

That's how it worked in 2005, and the same thing is happening now. 

Most of you here know that I acted on this expectation both in June 2005, and March 2022. About the only times I've actually followed my own advice. My homes were modest things, because I don't have all that many subscribers and I have modest needs anyway, but my sales paid off in harvesting about a half million in profit. Just felt like I had to take the money and run. 

Of course I know that I'm lucky in having the luxury of being able to make that decision with few repercussions. Not everyone does. 

Good luck to y'all homeowners out there. What's that I hear?

Jingle mail
Jingle mail,
Jingle all the way!

Oh what fun it is to have a house
Where I just don't pay ay!

Jingle mail
Jingle mail 
Jingle all the way,
Oh what fun it is to have a house
Where I just don't pay. 

Dashing to the door,
Then the sherriff comes,
He says get out, 
I say OK.
To the courthouse steps, Oyez! 
 

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10 minutes ago, Jimi said:

Did he just say terminal rate is likely higher than they previously thought?

Terminal rate? Is that like death to the system?  Oh I don't know.  100% interest on pick your Treasury security?

 I always recommend leaving terminal out of any name. The story I could tell about Chicago's Terminal Pharmacy.

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