Oh, and the other part of the rise in borrowing rates is the inflation premium and the associated rise in the expected funds rate, in case anyone was wondering:
The article reports, without naming names, that some “big Wall Street banks” shut down electronic quotes for Treasury prices. I suspect they did not trust that they could match trades at the quoted price, creating a potential loss for the bank; that’s a symptom of illiquidity.
This is not a financial crisis, but it does increase the risk. Inability to convert assets to cash is the stuff of financial crisis, and there is an obvious deterioration underway. It probably doesn’t help that the cost of carry is both uncertain and perhaps rising. Nor does it help that the priced-in odds of default are rising.
Macroduck
There is a good bit of press attention on an article published by the Royal United Services Institite which argues that the U.S. is nearly out of sophisticated offensive and defense munitions as a result of our war against Iran:
The article backs up what a good many military analysts have been saying for a couple of weeks. The article goes into some detail about the likely persistence of the problem. U.S. arms suppliers are so far not working to replace spent weapons because they have not received firm orders from the Pentagon for replacement weapons. Once orders are placed, refilling weapons inventories will take five years.
The press mostly claims the article is from RUSI. It is not. RUSI makes clear it is an opinion piece written by guest authors. Even so, the article seems well founded.
This seems important context for the felon-in-chief’s new urgency to strike a deal. Soon, the U.S. will be down to dropping “dumb” bombs, which would mean exposing our aircraft to attack. U.S. ground troops, meanwhile, have not depleted their munitions. The easy part of the war is just about over.
ottnott
Every recitation of the destruction and horror brought on by the relentless corruption and incompetence of MAGA rule should end with that infamous punch line…The Aristocrats!
Macroduck
Can you write that on a family blog?
Macroduck
The headlune says it all:
“Pentagon prepares for weeks of ground operations in Iran”
Which partly accounts for the rise in term premium:
https://fred.stlouisfed.org/graph/?g=1UfX6
Which partly accounts for the rise in Treasury rates:
https://fred.stlouisfed.org/graph/?g=1UfXv
Which partly accounts for higher private borrowing costs:
https://fred.stlouisfed.org/graph/?g=1UfXR
Which partly accounts for the slowdown in mortgage applications:
https://www.tradingview.com/symbols/FRED-M0264AUSM500NNBR/?timeframe=60M
Oh, and the other part of the rise in borrowing rates is the inflation premium and the associated rise in the expected funds rate, in case anyone was wondering:
https://fred.stlouisfed.org/graph/?g=1UfYh
In a related development, Treasury liquidity is down, volatility up:
https://archive.is/842tv#selection-1599.0-1599.71
The article reports, without naming names, that some “big Wall Street banks” shut down electronic quotes for Treasury prices. I suspect they did not trust that they could match trades at the quoted price, creating a potential loss for the bank; that’s a symptom of illiquidity.
This is not a financial crisis, but it does increase the risk. Inability to convert assets to cash is the stuff of financial crisis, and there is an obvious deterioration underway. It probably doesn’t help that the cost of carry is both uncertain and perhaps rising. Nor does it help that the priced-in odds of default are rising.
There is a good bit of press attention on an article published by the Royal United Services Institite which argues that the U.S. is nearly out of sophisticated offensive and defense munitions as a result of our war against Iran:
https://www.rusi.org/explore-our-research/publications/commentary/over-11000-munitions-16-days-iran-war-command-reload-governs-endurance
The article backs up what a good many military analysts have been saying for a couple of weeks. The article goes into some detail about the likely persistence of the problem. U.S. arms suppliers are so far not working to replace spent weapons because they have not received firm orders from the Pentagon for replacement weapons. Once orders are placed, refilling weapons inventories will take five years.
The press mostly claims the article is from RUSI. It is not. RUSI makes clear it is an opinion piece written by guest authors. Even so, the article seems well founded.
This seems important context for the felon-in-chief’s new urgency to strike a deal. Soon, the U.S. will be down to dropping “dumb” bombs, which would mean exposing our aircraft to attack. U.S. ground troops, meanwhile, have not depleted their munitions. The easy part of the war is just about over.
Every recitation of the destruction and horror brought on by the relentless corruption and incompetence of MAGA rule should end with that infamous punch line…The Aristocrats!
Can you write that on a family blog?
The headlune says it all:
“Pentagon prepares for weeks of ground operations in Iran”
https://www.msn.com/en-us/news/world/pentagon-prepares-for-weeks-of-ground-operations-in-iran/ar-AA1ZD3El