Monday, April 29, 2024

If Treasury Bonds Hit 5%, You're Gonna See Some Serious S$$t

Peter Schiff now argues that the Federal Reserve and US Treasury are being forced to confront the reality that inflation is persistent, which has led to an increase in yields, recently reaching 4.7% on the 10 year, the highest since November.

The thought process, for financial neophytes, is that bond traders will continue to sell bonds, driving yields up, in order to make it difficult for the Fed to cut rates - and essentially forcing the Fed to fight inflation head-on instead of capitulating to the economy and markets.

Put simply, the Fed faces a dilemma: it needs to raise rates to combat inflation and make Treasuries more appealing, but higher rates would exacerbate the already burdensome debt servicing costs and threaten industries reliant on borrowing.

The only way the Fed can possibly tame inflation is with interest rates so high that everything collapses.

A serious implosion in commercial real estate would certainly bleed into the banking sector, beginning a chain reaction.

The FDIC determined that compared to other alternatives, Fulton Bank's acquisition of Republic Bank is the least costly resolution for the DIF, an insurance fund created by Congress in 1933 and managed by the FDIC to protect the deposits at the nation's banks.

Republic Bank is the first U.S. bank failure this year; the last failure was Citizens Bank, Sac City, Iowa on November 3, 2023. 

https://quoththeraven.substack.com/p/if-treasury-bonds-hit-5-youre-gonna?r=qtpff&utm_campaign=post&utm_medium=web&triedRedirect=true

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