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THE WOLF STREET REPORT

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QE Giveth, QT Taketh Away: German Home Prices vs. ECB Balance Sheet

by Wolf Richter • Sep 22, 2023 • 75 Comments

The QT show started less than a year ago. German home prices -11%, ECB assets -19%.

Treasury Market Gets Memo with Subject Line: “Higher for Longer” but Someone Scribbled next to it, “Maybe Forever?”

by Wolf Richter • Sep 21, 2023 • 138 Comments

“Neutral rate” creeping higher? Oh dearie! Bloodbath at the long end.

Demand for Existing Homes Falters Further. Price Cuts, Days on Market, New Listings Rise. Prices Languish below 2022 Peak

by Wolf Richter • Sep 21, 2023 • 182 Comments

New listings rose in August, when they normally fall in August, an interesting break in the seasonal pattern.

“Carefully,” Dude: Powell at the Press Conference

by Wolf Richter • Sep 20, 2023 • 155 Comments

Our drunken sailors “hate inflation, hate it,” and are in a foul mood, but are in good shape and keep spending.

In Very “Hawkish Hold,” Fed Keeps Rates at 5.50% Top of Range, Sees One More Hike in 2023, Only Two Rate Cuts in 2024, to 5.25%. QT Continues

by Wolf Richter • Sep 20, 2023 • 198 Comments

The shocker was the infamous “dot plot”: Higher for even longer, ending the year 2024 at 5.25%.

Sign of Tight Labor Market, Strength of Ecommerce: Amazon to Hire 250,000 for Holidays, up from 150,000 Last Year, Boost Wages, Offer Sign-on Bonuses

by Wolf Richter • Sep 20, 2023 • 45 Comments

While fewer and fewer Americans head to the malls.

Worst “Rent” Inflation since 1983 & Red-Hot Homeownership CPI Fuel Canada’s CPI Surge. Bank of Canada in a Pickle of its Own Making

by Wolf Richter • Sep 19, 2023 • 140 Comments

Inflation dished up another nasty surprise. Other costs jumped too. Gasoline didn’t help. This was a broad-based mess.

Congrats, America 🥂We Made it! Government Debt Spikes past $33 Trillion: +$1.6 Trillion since Debt Ceiling, +$2.2 Trillion from Year Ago

by Wolf Richter • Sep 18, 2023 • 235 Comments

Trillions whooshing by so fast they’re hard to see.

Fed’s Cumulative Operating Losses Exceed $100 Billion. Rate of Weekly Losses Begins to Slow as QT Drains RRPs and Reserves

by Wolf Richter • Sep 18, 2023 • 41 Comments

Not that the losses matter to the Fed, but they matter to the Budget Deficit.

Fed’s Balance Sheet Liabilities: RRPs Plunge, Reserves Rise after Bank Panic, Currency in Circulation Dips after Pandemic Spike, TGA Gets Refilled

by Wolf Richter • Sep 16, 2023 • 116 Comments

QT’s impact on the Fed’s liabilities, and massive movements between them.

The Most Splendid Housing Bubbles in Canada: Price Drops Spread amid Slowing Sales, Rising Supply, Bank of Canada Tightening

by Wolf Richter • Sep 15, 2023 • 127 Comments

The Home Price Benchmark Index is down 13% from peak in March 2022. The Canadian housing market is in a category of its own, in terms of craziness.

Our Drunken Sailors Splurged at Stores & Auto Dealers amid Lower Prices of Durable Goods, Partied at Eating & Drinking Places, and Paid an Arm and a Leg at Gas Stations

by Wolf Richter • Sep 14, 2023 • 166 Comments

They spent a record amount more at bars & restaurants than at food & beverage stores, which tells us something about our drunken sailors.

The Acceleration of Inflation in the Second Half Has Begun, “Disinflation” Honeymoon Terminated

by Wolf Richter • Sep 13, 2023 • 329 Comments

Month-to-month CPI spikes, core CPI and core services CPI accelerate, despite ongoing massive health insurance adjustment.

Tesla Price Cuts, Followed by other Automakers, Plus Surging Incentives, Hit Average Transaction Prices, after Toxic Spike

by Wolf Richter • Sep 12, 2023 • 145 Comments

Detroit automakers hugely overstocked, ready for a strike.

Investment-Grade Corporate Giants Suddenly Sell Huge Amounts of Debt to Front-Run even Higher Long-Term Yields

by Wolf Richter • Sep 11, 2023 • 175 Comments

Further pressuring long-term Treasury yields, amid fears of bad inflation “surprises.” Share buybacks a lot more expensive, but no problem either.

Mortgage-Rate Buydowns by Homebuilders Are Now All the Rage to Prop Up Sales, Lowering Effective House Prices in a Big Way, but Don’t Get Picked Up by House Price Data

by Wolf Richter • Sep 10, 2023 • 279 Comments

Appraisers have not yet caught on to it either.

“Unrealized Losses” on Securities Held by Banks, Oh Dearie, the Whole Schmear: +8%, to $558 Billion

by Wolf Richter • Sep 8, 2023 • 257 Comments

How do you lose 47% on 30-year Treasuries? Buy at auction in Aug 2020. Or carry them at purchase price and hide the “unrealized loss” in the footnotes.

Fed Balance Sheet QT: -$105 Billion in August, -$864 Billion from Peak, to $8.1 Trillion, Lowest since July 2021

by Wolf Richter • Sep 7, 2023 • 125 Comments

It shed 24% of the Treasury securities it had added during pandemic QE, footprint in ballooning Treasury market shrinks.

My Favorite Recession Indicator: The Next Recession Moves Further out of Sight

by Wolf Richter • Sep 7, 2023 • 221 Comments

There will be a recession, there’s always a recession eventually. But we’ll just have to keep watching for it.

Accelerating Inflation without Economic Growth: Bank of Canada Holds Rate at 5.0%, with Bias to Tighten Further. QT Continues

by Wolf Richter • Sep 6, 2023 • 94 Comments

The BoC already shed 50% of its QE assets, and the shedding continues.

Econ Rumblings

“Unrealized Losses” on Securities Held by Banks, Oh Dearie, the Whole Schmear: +8%, to $558 Billion

by Wolf Richter • Sep 8, 2023

How do you lose 47% on 30-year Treasuries? Buy at auction in Aug 2020. Or carry them at purchase price and hide the “unrealized loss” in the footnotes.

Fed Balance Sheet QT: -$105 Billion in August, -$864 Billion from Peak, to $8.1 Trillion, Lowest since July 2021

by Wolf Richter • Sep 7, 2023

It shed 24% of the Treasury securities it had added during pandemic QE, footprint in ballooning Treasury market shrinks.

Construction Spending for Factories Soars, after Decades in the Doldrums

by Wolf Richter • Sep 3, 2023

Driven by manufacturing plants for technologically advanced, high-value products. Automation is the great equalizer.

Our Drunken Sailors Are Drinking Directly from the Punch Bowl: Powell, Did You See That?

by Wolf Richter • Aug 31, 2023

But they’re earning more than they’re spending, and despite spending like drunken sailors, they’re saving a lot.

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