by David Haggith, Liberty Sentinel:
News of new jobs is supposed to be great, right? So, what kind of weird world do we live in when it is considered horrible? Welcome to Fedworld where most market decisions are nothing but bets on what the Fed will be doing next with its free money for millionaires.
Today we saw that in action as good job news kicked some reality into the FedMed-addled heads of investors about Fed tightening, which they have been denying all year. Suddenly, they realized they had a lot of catching down to do to align with a tightening target that readers here know the Fed has been heading to all along … even before the Fed knew it. Obviously, the Fed didn’t know it, given that the Fed has revised its tightening targets all along the way as these article have said would happen.
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While workers report in today’s survey that they don’t feel the job market is strong, the number of new jobs was high enough that it caused Treasuries to take a rocket ride up past 4.8% yields on the 10-YR bond. The 30-YR joined the move, also rising to its highest point in 16 years. All because those jobs means the Fed will going “higher for longer” just like it has been speaking into the disbelieving heads of bond investors and stock investors for a long time. In fact, Atlanta Fed president Raphael Bostic emphasized today that the Fed should hold rates higher for longer “for a long time.”
Rising yields combined with the jobs report caused the stock market to finally have a heart attack and plunge 500 points intraday on the Dow. It closed the day down 430 points, which wiped away all of the gains the Dow had seen this year!
MarketWatch reports that banks are now bracing for a recession. Two weeks ago, it seemed like everyone in the mainstream media, as I reported, believed there would be no recession and that a soft landing was practically certain. I stuck to my guns. Just like my endless refrain of “no pivot” to all the pivot heads last year, I’ve stayed with inflation is likely going to rise again, forcing the Fed to tighten harder into a deep recession, which means a lot more serious trouble for stocks.
Trying to make a soft landing when yield rates are this inverted for something like 16 months now looks like this:
As a result of today’s thrill ride in Treasury yields, mortgage interest rates also shot up toward 8%. In keeping with this week’s housing theme, another video posted below explains how new-home housing, which escaped the same Fed-caused shortage problem that has swept up existing homes to new reaches for reasons described yesterday and in my last “Deeper Dive,” is now looking ready to collapse.
The producer of the video lays out how overstressed to the breaking point home builders are likely becoming in their efforts to hold down new-home prices. Prices have already fallen, unlike the soaring prices of existing homes that have hit a new all-time high, which is also an inversion of reality because new homes usually sell for more than existing homes, but the producer in the video says a huge avalanche in new home prices is likely to ensue quickly, making this inversion even more grossly distorted unless there rush downward catches existing homes in it wake. This was covered in yesterday’s Wealthion video.
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