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******** mortgage rates have been artificially held lower – much lower – than they would otherwise have been. *******
New York Fed Stuns with New Report: At Year End Its Trading Desk Owned 38 Percent of All 10-30 Year U.S. Treasuries
New York Fed's SOMA Share of U.S. Treasury Market
By Pam Martens and Russ Martens: May 26, 2022 ~
On Tuesday, the New York Fed’s trading desk released its annual report showing what it was up to in 2021. The New York Fed is the only one of the Federal Reserve’s 12 regional Fed banks to have a trading desk operation with speed dials to Wall Street’s trading houses, so we’re always interested in reading the “official” version of what’s been happening there.
The report is a deeply sanitized version of the facts on the ground. (For example, there is nothing in the report to indicate that the New York Fed has established a second trading floor near the futures exchange in Chicago.)
However, there is one paragraph in the newly-released report that took our breath away. It reveals that the New York Fed’s trading operation (officially called the System Open Market Account or SOMA) currently owns 38 percent of all outstanding U.S. Treasury Securities with 10 to 30 years remaining until maturity. (See the last two paragraphs on page 33 of the report.)
There are multiple reasons that this detail takes our breath away. First of all, the U.S. Treasury market is massive – at $22.6 trillion as of year-end 2021. That any one entity controls a big chunk of the market is deeply concerning. (The same report showed that the New York Fed’s trading desk owned 25 percent of all maturities of outstanding Treasury debt.)
The New York Fed’s trading desk owning 38 percent of the 10-30 year Treasuries is also deeply alarming because it is that maturity range that has a dramatic impact on the interest rate of the 30-year fixed-rate residential mortgage, the most popular mortgage among first-time homebuyers historically. It means that the New York Fed’s gobbling up of these 10-year U.S. Treasury Notes and 30-year U.S. Treasury Bonds, to the tune of 38 percent of the market, has created artificial demand for these instruments that would not otherwise exist. That, in turn, means that mortgage rates have been artificially held lower – much lower – than they would otherwise have been.
Even more alarming, it means that the recent announcements by the Fed that it will be reducing its purchases of Treasury securities and shrinking its balance sheet by reducing the amount of principal payments that are rolled over into new Treasury securities, is going to have a dramatic impact on residential mortgage rates.
The chart below shows how the 30-year fixed rate mortgage has risen since the Fed made its first announcement of QE tapering on November 3, 2021 and subsequent tapering announcements. The 30-year fixed rate mortgage has spiked from an average of 3 percent to 5.25 percent as of May 19 of this year – an increase of 75 percent. The dramatic spike in the rate over a period of just seven months has priced many first-time home buyers out of the market.
30-Year Fixed Rate Mortgage Rates, November 3, 2021 to May 19, 2022
The Fed calls its purchases of Treasuries and other debt instruments “Quantitative Easing” or QE. The Fed embarked on three rounds of QE between 2008 and 2012 in an effort to stimulate the economy and get it back on a sound footing after Wall Street crashed the economy with its derivatives and subprime debt bombs in 2008.
When the repo market blew up in the fall of 2019, the New York Fed cranked up its QE operations again and ramped them up further when the pandemic hit in 2020. In June of 2020, the Fed began purchasing a total of $120 billion in debt securities each month, a larger amount than during the 2008 financial crisis.
The Fed’s balance sheet has grown from $924 billion on December 26, 2007 – prior to the financial crash of 2008 – to $8.99 trillion as of last Wednesday.
ya, your right 'Cash-car-e' speaks next week to say "we are pausing rate hikes"
you herd it first
get with it or get left behind 'weed dude'
*****
Five star post IMO.
THIS BEAR MARKET RALLY WON'T LAST, IT WILL REVERSE HARD WHEN THE NARRATIVE CHANGES BACK TO HIGH INFLATION AND LOWER PROFITS. PREVIOUS LOWS WILL BE TAKEN OUT. ACCUMULATE SQQQ WHILE ITS CHEAP. MAYBE EVEN CHEAPER NEXT WEEK. IF SO I WILL ADD SOME MORE, BUT AT LEAST I HAVE SOME IN THE EVENT THERE IS A GAP DOWN ON TUESDAY.
THE RECESSION HAS BARELY STARTED AND MSM TALKS AS IF THE WORST IS BEHIND US!
WALL STREET CROOKS ARE JUST SQUEEZING OUT WEAK SHORTS AND SUCKING IN NEW BAGHOLDERS BEFORE THE NEXT LEG DOWN!!!
LOL
This is the most obvious bear market everyone has anticipated. And that's why we will have these rallies. Short covering with low liquidity and market makers making sure that those premiums on the puts expire at zero.
That's why you should just trade the daily market. Buy the bullish indices when RSI is quite low and sell back when it is neutral and even go short when it is high. Works like a charm.
LOADED UP @ $47.49 WILL SEE WHAT NEXT WEEK BRINGS!!!
WALL STREET USUALLY PUMPS THE MARKET BEFORE MEMORIAL DAY WEEKEND!!!!!!
IN TIME THIS WILL ALL BE GIVEN BACK!!!!!!
LOAD UP ON SQQQ WHILE ITS CHEAP!!!!!
Remember if market goes up 4 more years of Joe Biden & Dems
Awesome SQQQ dip,government is lining up the pins so they can knock them over I can’t stop laughing Last month two weeks before fed spoke stock market went up big then sold off the week of Fed speaking.bahahaha
This is a set up bear rally people are going to get their heads chopped off next week Before fed speaks
Stock market only went up because 19 kids got killed Something wrong with our government. Stock market should be down this week. Stock market works off of people getting killed. Market really got happy after 19 kids die. Than CNBC & government pumped up Chinese stocks all week. Joe Biden hates America Loves China Billy Thorpe Children Of The Sun
It’s gonna be a party here the next couple years. Get The Party Started
SQQQ$This is a stick up give us all your money 8 )
QQQ $300 Target price $100 SQQQ $51.6 $300 TARGET PRICE WOOHOOOOOO
SQQQ TQQQ Good advice
After Amazon splits they’re finished same with Google
Appreciate the input.
short squeeze didn’t even get started yet Dow $15,000 coming
I think bitcoin has to hit $1000 before we head back up to $150,000 8 )- Apple target price $50
After this week if your long you’re going to get crush Watch out for the big green 8 )
Bull rally bearish market some TQQQ Medicine in order yesterday.
Meanwhile…Big Lots stock plunges after swinging to surprise loss and sales miss, and as gross margin contracted
Published: May 27, 2022 at 6:14 a.m. ET
Toyota cuts June output plan again, to 800,000 vehicles
SPACs Are Warning They May Go Bust
More than two dozen companies say they may not survive much longer
Alibaba, Tencent and JD.com all just posted their slowest revenue growth on record
PUBLISHED FRI, MAY 27 20224:15 AM
Homebuyer affordability decreased in April, with the national median payment applied for by applicants rising 8.8 percent to $1,889 from $1,736 in March. This is according to the Mortgage Bankers Association's (MBA) Purchase Applications Payment Index (PAPI), which measures how new monthly mortgage payments vary across time – relative to income – using data from MBA’s Weekly Applications Survey (WAS).
Utility companies nationwide warning consumers that most utilities will be adjusting their prices for electricity generation as high as 45 percent.
On June 1, customers will see “sharp increases” in their electric bills
Housing Bubble Getting Ready to Pop: Unsold Inventory of New Houses Spikes by Most Ever, to Highest since 2008, with 9 Months’ Supply, Sales Collapse at Prices below $400k
by Wolf Richter • May 24, 2022 • 306 Comments
Stocks of homebuilders swoon amid worst inflation in construction costs, shortages, and spiking mortgage rates that take buyers out of the market.
Out of touch as ever, President Biden celebrated record-high gas prices Monday, gushing that the pump pain was part of “an incredible transition” of the US economy away from fossil fuels.
“[When] it comes to the gas prices, we’re going through an incredible transition that is taking place that, God willing, when it’s over, we’ll be stronger and the world will be stronger and less reliant on fossil fuels when this is over,” Biden said during a press conference in Japan following his meeting with Prime Minister Fumio Kishida.
BUY SQQQ ON DIP Going right back over $60 next week easy money here. I bought a whole Lotta extra shares that I don’t need so I can sell them and make this thing go up. Everyone knows how it is when you buy stock it goes down when you sell a stock it goes up. I always buy extra shares so I can sell some to make it go up lmfao WOOHOOOOOO WOOHOOOOOO SQQQ
They’re only here to fck with me lmfao SQQQ We’ll go up big time next week fed speaks in the next couple weeks
Watch the real time prices of BOTH SQQQ & TQQQ until you start getting a feel for the best times to buy and sell.
Paper trade it for awhile to self-analyze your strengths and your weaknesses.
You can be down on your investment quickly if you get on the wrong side of the direction the NASDAQ is going. Buying in thirds is more often wise than not.
Trade with small amounts at first. Be patient with yourself until you get better at picking highs and lows.
Be content to get on first base starting out. You can build up for doubles and triples as you gain confidence in your ability to detect NASDAQ direction.
Finally: PAPER TRADE!!!!!!!!!!!!!!!!!!!!!!!! Be content to be a MASTER at T & Q a year from now - five years from now. Not TOMORROW. It took many years of focused discipline for Michael Jordan to become the "Pro" that he became.
Hello. I have never played SQQQ b4 - what do you guys use to get your buy/sell points? Do you just read the QQQ chart or do you track the $COMPQ or $ADD or something else?
dont bet on it hommie
Your going to witness the biggest short squeeze in bitcoin history.
See you guys at 52 Wk low sub 28 before mid June.
EveryDollar SQQQ goes down I buy 8 )- I got it like that lol woohoooooo AC/DC Moneytalks
Lmfao I’ll keep buying the dips ty
Dang, tried to get cute and put a bid at $55.25 thinking the free fall would continue for the last hour and missed out. Maybe tomorrow.
Gonna have to wait a bit. Didn't do as anticipated.
Cramer says a seasoned technical analyst expects inflation peak, market rally into June
https://www.cnbc.com/2022/04/20/cramer-explains-why-seasoned-technical-analyst-larry-williams-expects-inflation-to-peak-and-the-market-to-rally-into-june.html $SQQQ
Planning on it crashing.
Fed speaks today markets will get crush
SQQQ$ $70 TARGET PRICE TODAY WOOHOOOOOO
Yes Oil and Gas stocks some of the few stocks left doing well but humorously also causing the markets to tank.
These higher transportation costs have recession and tanking stock markets written right in front of your face. Unless you are blind stock prices going much lower…Diesel prices $3.28 May 2021 and $5.60 May 2022
https://agtransport.usda.gov/Fuel/Historical-Diesel-Fuel-Prices/u2kh-s8ke
In the summer of 2008 an analyst said this… a few months later the economy was in full blown recession….
Lukman spoke with CNN in Vienna and defended the cartel's position, insisting the high price of crude would not result in a global economic downturn:
"We don't see a recession in the offing due to high oil prices. Oil prices at $138 are not going to cause recession in the global economy." He pointed out that industrialized economies "are less dependent on oil than they were before."
Just remember as in 2008 analysts will not tell you that high Oil gasoline and diesel prices will contribute to collapse of the economy and a full blown recession because these analysts are on mainstream media payroll sponsored by the oil lobbyists.
The higher Oil prices go the quicker the recession kicks in.
Did oil cause the downturn?
The implication that almost all of the downturn of 2008 could be attributed to the oil shock is a stronger conclusion than emerged from any of the other models surveyed in my Brookings paper. Unquestionably, there were other very important shocks hitting the economy in 2007-08, most notably the problems in the housing sector. But housing had already been subtracting 0.94% from the average annual GDP growth rate over 2006:Q4-2007:Q3, when the economy did not appear to be in a recession. And housing subtracted only 0.89% over 2007:Q4-2008:Q3, when we now say that the economy was in recession. Something in addition to housing began to drag the economy down over the later period, and all the calculations in the paper support the conclusion that oil prices were an important factor in turning that slowdown into a recession.
There is also an interactive effect between the oil price shock and the problems in housing. Lost jobs and income were an important factor contributing to declines in home sales and prices, and the biggest initial declines in house prices and increases in delinquencies were in the areas farthest from the urban core, suggesting an interaction between housing demand and commuting costs. Once house price declines and concomitant delinquencies reached a sufficient level, the solvency of key financial institutions came into doubt. The resulting financial problems turned the mild recession we had been experiencing up until 2007:Q3 into a much more severe downturn in 2008:Q4 and 2009:Q1. Whether those financial problems were sufficiently insurmountable that we would have eventually arrived at the same crisis point even without the extra burden of the recession of 2007:Q4-2008:Q3 is a matter of conjecture. But it seems to me that oil prices indisputably made an important contribution to both the initial downturn and the magnitude of the problems we’re currently facing.
It is also interesting that the observed dynamics over 2007:Q4-2008:Q4 are similar to those associated with earlier oil shocks and recessions. The biggest drops in GDP come significantly after the oil price shock itself. What we saw in earlier episodes was that the drops in spending caused by the oil price increases resulted in lost incomes and jobs in affected sectors, with those losses then magnifying other stresses on the economy and producing a multiplier dynamic that gathered force over subsequent quarters. The mortgage delinquencies and financial turmoil in the current episode are, of course, not the specific stresses that operated in earlier downturns, but the broad features of that multiplier process are surprisingly similar to the historical pattern.
My paper concludes that the economic downturn of 2007-08 should be added to the list of recessions to which oil prices appear to have made a material contribution.
Acknowledgment: The above was adapted from testimony by the author before the Joint Economic Committee of the US Congress and summaries at the website Econbrowser.
In the summer of 2008 an analyst said this… a few months later the economy was in full blown recession….
Lukman spoke with CNN in Vienna and defended the OPEC cartel's position, insisting the high price of crude would not result in a global economic downturn:
"We don't see a recession in the offing due to $138 a barrel oil prices. Oil prices are not going to cause recession in the global economy." He pointed out that industrialized economies "are less dependent on oil than they were before."
Ohhhh yeaaaaaaaaaaaahhhhhh
Q Q Q trades $287 that’s exactly where SQQQ is going weeeeeeeeeee
SQQQ TRADING OPPORTUNITIES, MULTIPLE SKIM TRADES ADD UP!!!!
Market is trading like 2002 NASDAQ will lose half its value
2022 worse then 2008 because of wages.. 2008 news….Friday’s spike in the July contract for light crude on the New York Mercantile Exchange marks the largest single-day increase in oil prices on record. The contract hit an intraday record of $139.12, breaking the previous trading record of $135.09.
""It's pure hysteria, absolute panic," he added.
The rally highlighted concerns that retail gas prices, which have surged near a nationwide average of $4 a gallon, will continue to crimp consumer spending and fuel inflation.
Stocks fell more than 400 points Friday due to the rally in crude prices and a report from the Labor Department that showed the unemployment rate rose to 5.5% in May from 5% in April, the biggest monthly jump in more than two decades. The economy lost 49,000 jobs, marking the fifth straight month of job losses.
Bear sits next to guy.
ProShares UltraPro Short QQQ seeks daily investment results, before fees and expenses, that correspond to three times the inverse (-3x) of the daily performance of the Nasdaq-100 Index®.
Invesco QQQ holdings as of May 7, 2024.
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