More of the Same

The last few months have seen a lot of action but little change, meanwhile the underlying fundamentals continue to deteriorate. The housing market has seen steady weakening, and who can be surprised? When 10-year Treasury yields are pushing the 5% mark and mortgage rates are seeing 3-year highs it is only a matter of time before prices give some. How much remains to be seen, but buyers have definitely pulled back.
The "shocking" thing is that the bond market has ignored the Fed's 15 interest rate hikes. Of course, one doesn't cover much ground when taking baby steps as the Fed as done for the last few years. It would seem that the vigilantes are registering a vote of "No confidence" in "Helicopter Ben". It's not really his fault, but he will surely get the blame before it is all over. Hopefully, his predecessor, the "Maestro" will take his share, but I don't count on justice being delivered in this world. I reiterate my prediction that the Fed will need to raise rates to 5.25% in order to quell the runaway liquidity floating the system today. This was a radical projection as little as six months ago, yet it is appearing that it may be too conservative! Pity the poor bond investors! They may have an opportunity to trade out in the next year, if a flight to "quality" is triggered by some global mishap(s). But that will probably be the final opportunity to dump the near worthless paper the international finance mavens have foisted upon us. The bull markets in oil and gold are probably the very early stages of multi-year moves that will really shock investors and the world. There is probably a very vicious shakeout dead ahead for these commodities, but in the long run, they will be more valuable than greenbacks, or Euros, or Yen or any fiat currency.