Did we make the turn yesterday? - There was a hawkish tone - Mortgage rates are up - Inflation spiked to 5%.. "Came in hot" --jPow - Unemployment benefits end in Sep for many - Markets flat today - Expectations for 2023 rate increases moved from one (March) to two. Yesterday we talked about talking about talking about tapering (I think that's right). Is this the first screech of a fledgling hawk? Is it after midnight? Last call coming?
Historically the markets have actually celebrated when interest rates start to hike.... with the notion, "rates are up because the economy is doing well/better", so the rate hike is no biggie. The markets have tolerated/deflected a few-to-several hikes with the notion, "the economy is strong enough it can absorb the rate hikes and still grow". This deflection of higher rates continues "up to a point". Then one day, the market decides that rates are too high... and starts to sell off in earnest. We're seeing lots of gnashing over the potential for the 1st rate hike.. perhaps 2 years in the future. Will it be different this time??
What about tapering? Call me crazy, but I still think that the QE from the Mortgage Crisis is still in play. It's layers of QE!
Same sort of thing. The notions of "rate hikes" and "tapering" are all about liquidity and "reigning-in the availability and price of credit". Any restriction is a negative... but "how much" of a negative? Enough to derail the economy or markets or more of a "bother for now"? I don't recall any talk of "taper" until Bernanke's reign of terror. We don't have much in the way of precedent. After the market's "taper tantrum" in Bernanke's time (a decline of ~5% if I recall), the markets resumed advance. Of course THIS time the market is so extended that even the 1st sign of reigning-in credit might send the markets into apoplexy. Or could just lead to a bigger correction before the advance resumes which seems more likely.
No, that would be semi-annually. Bi-annually is every two years. Both are irreverent fun. This only the first time you've seen me hand out these awards? Heh, you've missed many of them my friend.
Not according to my Funk and Wagnalls... bi•an•nu•al bī-ăn′yoo͞-əl ► adj. Occurring twice each year; semiannual. adj. Occurring every two years; biennial. Occurring twice a year: arbitrarily distinguished from biennial (which see). More at Wordnik from The American Heritage® Dictionary of the English Language, 5th Edition. Oops... I'm coming across as a grammar Nazi. Didn't mean to. Was only going for a joke.