US 10-year interest rates are the world’s benchmark “risk-free” market. And as the chart shows, their yield has risen from 3.25% on 4 June to peak at 4.88% on Friday. Prices move inversely to yield. So that means prices have fallen 50% in 4 months.
Chemicals and the Economy
US interest rate rises start to threaten the housing market bubble
Most Americans can’t qualify for a mortgage today with prices and interest rates at generation-highs. Yet housing starts average a post-2007 record of 1.5m/month. Logic therefore suggests the US housing market could be heading for a repeat of the 2008 crisis
Asia’s debt crisis edges nearer, as Japan’s interest rates rise and China’s property bubble bursts
Bubbles are great fun while they last. But they are much less fun when they burst. For the past 20 years, central bank stimulus has created some of the largest bubbles ever seen. But now, led by developments in Japan and China, they are bursting
Chart of the Year – Our Sentiment Index proved a great guide to the S&P 500 in 2022
Nobody knows how markets will develop. But past performance is the best guide that we have. This is why our Sentiment Index is my Chart of the year for 2022.
Global economy set to go ex-growth as world population hits 8bn
Underlying growth has been slowing since 2000 as more people joined the Perennials generation. Now, the bursting of the central bank stimulus bubbles – combined with the impact of Russia’s invasion – will likely cause the global economy to go ex-growth.
Time to focus on the danger of corporate and household leverage as “subprime on steroids” comes to an end
The seeming genius of many private equity funds in recent years has been based on this ability to borrow at cheap rates during the ‘up’ part of the business cycle. Now we are heading into the ‘down’ cycle. And the central banks have abandoned Bernanke Theory and are back to worrying about inflation. So today’s excess leverage means many over-leveraged companies will go bust.
The world’s real estate bubbles start to burst, as central banks pivot to focus on inflation
Problems in the housing market aren’t just confined to the US, UK, Germany and China. The average house price/income ratio is now back to the highest level since records began. And the problem for homeowners is that potential buyers are already starting to disappear as mortgage rates rise – and affordability reduces.
China’s ‘perpetual motion’ housing machine has started to slow
Evergrande’s default will only be the first of many. Companies and countries that have “bet the ranch” on China’s “perpetual motion machine” need to urgently decide how to minimise their potential losses, whilst there is still time.
Chart of the Year – China’s shadow banking collapse means deflation may be round the corner
Last year it was Bitcoin, in 2016 it was the near-doubling in US 10-year interest rates, and in 2015 was the oil price fall. This year, once again, there is really only one candidate for ‘Chart of the Year’ – it has to be the collapse of China’s shadow banking bubble: It averaged around $20bn/month […]
Chemical output signals trouble for global economy
A petrochemical plant on the outskirts of Shanghai. Chinese chemical industry production has been negative on a year-to-date basis since February Falling output in China and slowing growth globally suggest difficult years ahead, as I describe in my latest post for the Financial Times, published on the BeyondBrics blog Chemicals are the best leading indicator for the […]