As important as the public rate hikes are the amount of RePos the FED conducts, and also how strict or liberal it allows banks to create new loans via the yearly FED inspections to banks. As all this is not pblic or at least not public any more, it's hard to say how tight the money/credit supply is. That will decide if another asset class will get balooning after housing or whether everything will deflate in the course of this year. I personally believe the latter and sold/am selling my leveraged positions.
Freak
The Fed will stop the rate hikes as soon as it realizes that the housing asset class has started to unwind.
The critical issue going forward will be balance sheet strength of financial institutions, less regulator vigilance. If balance sheets start getting impaired it could have a marked effect on the ABS market too. If such a scenario occurs housing demand could get crushed as RE credit would become more constrained.
It seems we continue to have loose money Fed policy as evidenced by the record prices in copper, crude, zinc, gold, silver.
Why is the potential for higher commodity prices "particularly important", other than because commodity prices have shown up in the past couple of FOMC statements? I realize that energy prices end up in most other prices, but non-energy commodity prices end up overwhelmingly in goods sector stuff. Goods prices are lagging services prices. Productivity gains help more with goods than services prices. Why should we worry "particularly" about commodity prices?
As important as the public rate hikes are the amount of RePos the FED conducts, and also how strict or liberal it allows banks to create new loans via the yearly FED inspections to banks. As all this is not pblic or at least not public any more, it's hard to say how tight the money/credit supply is. That will decide if another asset class will get balooning after housing or whether everything will deflate in the course of this year. I personally believe the latter and sold/am selling my leveraged positions.
Freak
The Fed will stop the rate hikes as soon as it realizes that the housing asset class has started to unwind.
The critical issue going forward will be balance sheet strength of financial institutions, less regulator vigilance. If balance sheets start getting impaired it could have a marked effect on the ABS market too. If such a scenario occurs housing demand could get crushed as RE credit would become more constrained.
It seems we continue to have loose money Fed policy as evidenced by the record prices in copper, crude, zinc, gold, silver.
I'm real interested to see what happens to the dollar during this transition.
The fed will start cutting rates some time q4 this year or q1 next year.
The economy will soften due to the housing market but its not clear yet how much. It will probably be worse than what we expect.
The dollar should stay strong at least till June.
Watch out people, the one thing you can be sure of is the Fed will NOT move quickly to lower rates!
Why is the potential for higher commodity prices "particularly important", other than because commodity prices have shown up in the past couple of FOMC statements? I realize that energy prices end up in most other prices, but non-energy commodity prices end up overwhelmingly in goods sector stuff. Goods prices are lagging services prices. Productivity gains help more with goods than services prices. Why should we worry "particularly" about commodity prices?