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January 14th - According to a report from the National Association of Realtors (NAR), existing home sales in the U.S. rose 5.1% month-over-month in December. On a monthly basis, home sales increased in all regions. On a year-over-year basis, sales increased in the South, remained flat in the Midwest and West, and declined in the Northeast. NAR Chief Economist Lawrence Yun stated, "2025 will remain a challenging year for homebuyers, with record high home prices and historically low existing home sales. However, market conditions began to improve in the fourth quarter, with mortgage rates declining and home price growth slowing. After seasonal adjustment, December home sales reached their highest level in nearly three years, with widespread increases across all four major regions." The economist added, "Inventory levels remain tight. Homeowners are more cautious in deciding whether to list or withdraw their properties due to low seller willingness to sell. Similar to previous years, more homes are expected to enter the market starting in February."On January 14th, Federal Reserve Chairwoman Paulson reiterated on Wednesday that she expects the Fed to cut short-term interest rates later this year if the economy performs in line with her expectations of moderate inflation and a stable job market. In prepared remarks for a Philadelphia Chamber of Commerce event, Paulson stated, "My baseline expectations are rather modest," anticipating inflation to fall to around 2% by the end of the year, a stable job market, and economic growth remaining at around 2%. She noted, "If all of this happens, then some modest adjustments to the federal funds rate later this year might be appropriate." Regarding the job market, Paulson reiterated, "The labor market is clearly slowing, but it hasnt collapsed." She believes risks have increased, which is one of the key reasons she supported the FOMCs 75-basis-point rate cut last year.US business inventories rose 0.3% month-on-month in October, below the expected 0.2% and the previous reading of 0.20%.US existing home sales rose 5.1% month-over-month in December, below the expected 2.2% and the previous months figure revised up from 0.50% to 0.7%.Federal Reserves Paulson: The U.S. economy is not doing well in every aspect right now.

Powell Got One Thing Right, “high interest rates … will bring pain”

Alice Wang

Oct 17, 2022 16:29

Bonds, currencies, stocks, and precious metals will all see exceptionally high volatility as a result of the recent string of very significant rate rises.

Correlation between Bond Yields, Rate Increases, and Inflation

The September CPI inflation data, which was published by the BLS yesterday, revealed a 0.4% rise in inflation for the month of September. According to the data, the CPI inflation index decreased by 0.1% from the previous month's year-over-year of 8.3% to 8.2% in September. The core CPI, however, attracted the most interest. September saw an increase in the core CPI from 6.3% YoY in August to 6.6% YoY.


The temporal lag between interest rate increases and actual inflation is inherent, and the Federal Reserve prefers to base its monetary policy on the core level of inflation. In spite of this, a rise in core inflation after the Federal Reserve aggressively increased interest rates from near zero to between 300 and 325 basis points over the course of the last five consecutive FOMC meetings this year—including three consecutive rate hikes of 75 basis points each in June, July, and September—clearly indicates that the recent rate hikes are having a nominal effect on reducing inflation.


However, they have significantly impacted the United States' growing debt instrument yields. After accounting for today's 1.68% rise, the 10-year Treasury note yield has now above 4% and is sitting at 4.02%. Thirty-year U.S. bond yields are not far behind, at 3.997%.

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