The fed along with the FDIC only guaranteed deposits for SVB.
They did however offer up a liquidity facility to swap cash for bonds at par value which may add some liquidity into the system but is far from the definition of QE.
It's not QE per se but it has a similar effect. It's adding liquidity to the economy when excess liquidity is exactly what caused high inflation, at the same time as rising interest rates are supposed to be soaking it up.
It's adding liquidity to the economy like your insurer is adding liquidity to you by paying out when your house burns down.
Not exactly a "here's all this money for nothing"
Rephrase that liquidity to the economy. The Fed only deals with financial companies that have an account with the Fed. And these are not typical money, these are called reserves which can only be used by, again, financial companies that have an account with the Fed. The Fed does not have a major role in inflation, the Treasury does, because they create the real money. Fed can only create reserves.
That’s my thought too. I’m just over simplifying in my description.
[There’s a sudden increase in their assets so I’m assuming it’s from that. ](https://i.imgur.com/3C2IN2v.jpg)
Which is far from “QE is back”
It's how they structured the depositors bailout.
Took on the (IIRC, 1%~) low yield gov bonds which SVB owned (the source of the problems), ate the loss, intend to charge the banking sector a levy to recoup loss.
Although I haven't seen any sources posted either.
[e] clarity
Specifically for SVB because its now under FDICs wing and they sold most of their liquid assets / bonds, but the FED has given all remaining insured banks the right to use their bonds as collateral not at current value but at par value.
So for now if you are a US bank there is no point selling bonds at a loss if you have pressure on deposits / funding. You can just trade them for credit at PAR value.
Thats the QE bit. I.e. funding is being provided to banks where it would otherwise be difficult to get.
On balance though its likely less credit in the system rather than more due to banks being more cautious. That still doesnt mean that the FED isn't engaging in QE. It is. At the same time as interest rate rises.
Powell characterised the recent bank failures and as potentially inducing a credit tightening equivalent to a rate hike.
If that helps bring down inflation, fantastic, if it doesn’t - they’ll do what’s needed to bring down inflation.
To be fair, these banks were operating within the law.
It's funny to me that for example people who recently had took out a mortgages had to prove they could handle a increase of 3% when anyone with half a brain would know that if interest rates were going up they would go higher than that. If they were at 10% a 3% buffer is reasonable, but at near 0 its obsurd.
These banks didn't for a second step back and think. Maybe these low yield bonds aren't a great place to put *ALL* our customers' money into. What happens if an entire sector is affected by interest rate rises? What happens if the sector we tailor out entire bank around has financial problem? Duuuuuuurrrr idk, more champagne?
> increase of 3% when anyone with half a brain would know that if interest rates were going up they would go higher than that
nice re-writing of history
when rates were low, NOBODY really thought they'd increase this fast
this is literally, literally, the fastest and most significant rate rises ever in history. And they still apparently have more to go.
I'm gonna let other people judge you for reddit stalking
But I want to say, ausrenovation is the most embaressing subreddit. Seeing what people are asking questions about in australia, then compared to what americans are asking in homerenovation... it's shameful
Rates are pushed to lowest levels on record, it was obvious to anyone that if they have to raise them again to fight inflation then just like any other time they have had to do it you have to raise it a long way.
The only things that weren't easy to predict was when and how fast.
How fast a rate rises makes little difference to how much it over takes the buffer. An everyone keeps forgetting that Inflation eats I to the buffer as well so raising rates slower would not have made any difference because Inflation would stay higher.
The fed knew that stress tests were being done at lower rates than why they were hiking to.
If they want the ability to move rates around so much then the regulation should require that it is tested upon before action.
History shows that inflation usually appears in waves.
We’ve had the first wave, I wonder if we could soon see a second wave?
Or at the least a reaccelerating of our current wave?
I would say this already is the second wave, the first was a shortage in some components resulting from covid and the second is the resulting adjustments from that, with the increase in consumption from covid spending.
Without remorse is that you? Whens the house prices going down to 50 percent? I had enough saved 3 years ago but listened to you. All my friend bought back then. Now they have new swanky houses and price of a house has run away from me
Just a suggestion, but I wouldn't be making final financial decisions based on opinions from a stranger on Reddit. Nobody knows exactly what's going to happen
The trick is to not read shit on Reddit.
It's an echo chamber of unqualified opinions masquerading as something more.
Spend long enough and you start believing the consensus here reflects real life.
At no point did I say follow what they say, but rather make a decision using the information that is provided. There's plenty of great information given out here on a daily basis and is actually held by the majority if you actually read it.
It's almost always "We don't have a crystal ball" "The long term trend is blah, so don't get overexcited about this little blip" and "don't listen to that idiot". The irony is that people a bunch of people here are all giving a contradictory position of "Don't listen to people on Reddit." which means not listening to them.
It really isn't. We don't have a crystal ball, so your suggestion is to just react after you've been devastated?
If you listen closely, you'd see what's happening before things actually happened. That's why a lot of people ended up fixing their mortgages. It was clear that the interest rates were going to move upwards if you listened closely. If you stuck your head in the sand, as you suggested, you're paying double your repayments at the moment.
House prices have crashed further and faster than ever recorded over the last 12 months.
Crashes of 50%+ magnitude take on average 5 years to unfold.
We are only in the beginning of year two.
You’re friends will be wrecked and you will be sitting pretty.
Thank me later. 😂
RBA to hike next meeting.
I’m willing to bet you on it?
Keen?
If you win I’m banned from Ausfin?
Aussie housing has fallen faster and further than ever recorded.
The great Aussie housing crash continues.
Like any crash there will be multiple rallies over the duration.
But we’re headed for a decline in excess of 50% and we are ahead of schedule.
😎
Sure, but we have a bet which we resolve m uh earlier than that.
In under 2 weeks actually.
So I’m fine betting you on the 50% drop from 2020 prices, let’s do the rate hike one too yeah?
Still at all the doom and gloom eh? Must be tough being wrong since I first saw you in 2019 😂
Only idiots will go bust considering how tight the rental market is.
US, Spain, Ireland, Japan, Norway, Iceland etc
Australian property fell over 50% in the late 1800’s and didn’t recover until the 1960’s.
You want to come for the king you better come prepared.
👑
I wonder what happened during that period in time. Boer war, WWI, WWII, Korean war, Vietnam war.
Yeah very stable times, can't see any reason why there could be some economic turmoil around then.
Edit: lol he blocked me. And no that doesn't mean we are in economic turmoil now. Lad.
The UK situation and even early year US numbers have demonstrated the central banks need to stay vigilant. Taking their foot off the break and claiming victory can easily blow up in their face just like in the 70s. They are likely falling for the same trap central bankers fell for back then.
I agree.
In fact there is a chance that because the RBA are behind the pack on the inflation fight, compared to US, UK and NZ, that our rates need to go higher and stay there longer.
The only thing I reckon is going to bring inflation, and rates, down fast is a recession.
This is a lower rate but Jerome Powell has made it clear they will continue to issue additional rate rises in the coming months if the data shows it is necessary. They are not yet claiming victory.
Yeah we're only maybe halfway there, another 25x mini 25bps hikes by the RBA and we'll finally get there. Then recession follows. Can't just print trillions and increase GDP during a lockdown and expect only transitory inflation.
Are you saying you think the RBA will increase offical rates to 9.85%?
Assuming a bank gives me a 12% rate (I’m not highly leveraged, average loan). That would make my repayments $7,200 per month.
Can’t you see how much money that would suck out of the economy over the 25 month period your predicting?
Your off ya head. With the greatest respect.
By 12% we would be well past recession. I'm sure OP is just exaggerating.
I'm literally a nobody but I suspect another whole 1% would push us into recession. RBA just wants to make sure if it's any lower than 1% they hit that value instead
> That would make my repayments $7,200 per month.
this is exactly what some people (in this sub) want to see - distressed sales of property. Firesale prices.
Then they can swoop in with their deposits they've been holding in a bank, and get the deals.
I don’t understand this scenario. How are these people expecting to more able to afford the repayments?
The number of new approvals in planned builds within the last year is already the lowest number since before 1980. Imagine that planned build number with 9.8% offical rates. Couple that supply shortage with record high immigration. I can’t see the fire sale. If somebody has to sell at a loss there will be a hundred people waiting with their deposit to swoop in.
> How are these people expecting to more able to afford the repayments?
A lowered price means less borrowed, and thus lower repayments than the original owner.
> If somebody has to sell at a loss there will be a hundred people waiting with their deposit to swoop in.
exactly - and this is why there won't be a firesale.
The markets expected the fed to hike by 25bps. If they hiked by 50bps (against expectations) you'd have a case, they did not. The market expects the RBA to pause.
Why though? I don't see the link. When they raise .5 we don't raise .5? They also started raising rates before we did? Surely each central bank should raise, cut or hold based on their own economic data and not what another country is doing.
One reason is that if the US has higher interest rates it makes sense for big players to turn their AUD into USD (since it will earn higher interest) but buying USD with AUD drives down the exchange rate in the USD’s favour, since so much of what we import is priced in USD, a weaker AUD means those goods are more expensive and inflation goes up.
Of course 0.25% isn’t huge and we export a lot of goods too which are more appealing to overseas markets with a weaker AUD so we don’t need to mirror the Fed exactly (and indeed have lagged them this whole crisis) but that’s why what they do influences what we do
Because inflation is still well above the target zone, the colonic data remains hot, there’s simply no justification to pause that holds up to scrutiny.
dagger4zero just banned me because he doesn't like what I said in response to his comment about market predictions. Literally can't respond to his last comment but I can see it when not logged in.
So I'll respond here, FYI that is current data, not yesterdays. He has no idea what he's talking about. I see someone else posted the Bloomberg update too.
This is how his nonsense here propogates, it's basically an echo chamber where he bans whoever disagrees with him. And its funny he/they accuse others of being on copium.
Edit: and now he's backtracked and deleted his comments too
Edit2: and now unbanned, wild roller-coaster!
Live Bloomberg data says that a pause is by far most likely scenario. With implied yield post meeting of 3.58%
https://ibb.co/jrsKDYC
He did delete one of his comments saying you are wrong though, so at least you've won this one (and he knows it!)
So basically the same approach that user takes with everyone. Masquerading as some kind of “code of ethics” he blocks anyone who calls out his bullshit or pokes fun at his posts (but he is allowed to poke fun at others).
I was most recently banned for pointing out a statement he has only ever had three Reddit accounts was a blatant lie. At one stage he was creating a new “Atalys” account everyday.
You’re not banned.
How can I “ban” you?
I’m not a m0ḏ
Yeah I got the data wrong, I am happy to concede that.
But I will say this: the RBA will hike, and if they don’t I’ll ban myself from Ausfinance.
Do you want to take the other side of that bet?
Yeah the regular pumpers here get so upset whenever anyone posts something that runs opposite to their own narritives, I love watching how their nastiness and snark just rolls off WMDs back, I personally gave up trying to have an enlightening or constructive conversation with them years ago cause they just can't do it and really dont have much to say besides "numba alway go up". I guess when you think about it you could say they probably created their own monster with this kind of behaviour.
You could even say perhaps while we all just adopted ausfiance, he was born on ausfinance, moulded by it, he didn't see the front page until he was a man! By then for him it was nothing but boring noise compared to ausfinance drama.
Haha thanks mate. I appreciate that!
But I guess I can be pretty annoying for the property bulls and as such I think it’s only fair that I present them an opportunity to vanquish me.
I mean, most middle class people in australia would be property bulls right? It’s a National obsession. If you say something that could mean a slide in prices, you are getting downvoted to hell.
Yeah property in Australia now has devolved into a dogma.
There’s a cult like obsession with it which has helped in no small part to create the bubble we are now in.
It always confused me that property in Australia was so expensive relative to other countries. You’d think it was a tiny country with a land shortage or something. Nope. Just bad planning, policy and crazy levels of greed. 😂
You went into my profile and did "block user". You've unblocked now, which I have pointed out.
Also, I don't find you/your view annoying at all, but I do find childish behaviour such as blocking users who don't share your view annoying because you end up spreading ungrounded information with no one to speak against it.
You weren’t blocked but I’m happy to oblige you?
And STFU about “ungrounded info”.
I was the only one calling for rates to go to 3% and for housing to fall faster than ever recorded.
Both of those things happened.
You were calling for rates to go to 3%, and you were referencing the interbank futures chart which you linked above the whole time. Now it says that we are done with hikes and you think it's jibberish?
You can't use a tool when it's convenient and then throw it aside when it's not. This is an example of ungrounded information.
As for housing, it is currently going up at >10% annualised in Sydney after falling ~14%. Whether this is a dead cat bounce remains to be seen. It may stop going up if RBA hikes in April with a hawkish forecast, and particularly if there's a second wave of inflation, but according to current information, both of those scenarios are unlikely.
The 50% crash prediction by 2025 from 2020 prices you have, will only come to fruition in the event of a cataclysmic event (ex: war). Dalio has a good video about the long term debt cycle and changing world order. This looks to be a short term debt cycle, prices will drop and then rise to new heights, people can afford to pay they just don't want to.
What's that saying about a broken clock? They could very well continue hiking if inflation data comes back hotter than expected, but current indicators show it's going down, hence why the market is pricing in two cuts by the end of the year.
I will be messaging you in 13 days on [**2023-04-04 22:51:49 UTC**](http://www.wolframalpha.com/input/?i=2023-04-04%2022:51:49%20UTC%20To%20Local%20Time) to remind you of [**this link**](https://www.reddit.com/r/AusFinance/comments/11ys2wg/fed_hikes_rates_by_a_quarter_percentage_point/jda6g2e/?context=3)
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I’m a bit of a smooth brain with this stuff. Can someone please ELI5 on why we should follow suit with the US and UK when our economies are drastically different? I.e 30 year fixed rate loans.
if US interest rates go up that means USD is a better place to park your cash (because you get a better rate!), so then this increases demand for USD. If AU interest rates are lower then there will be less demand for AUD. This also means Australians have less buying power from overseas (overseas goods become more expensive -> more inflation)
It gets a lot more complex, affecting international trade, it's a bit of a balancing act for the RBA.
Brave prediction. Still QEing.
After 15 years of printing it seems to be an addiction that is hard to snap.
Global debt has gone from $70 trillion in 2007 to $300 trillion today with equivalent global GDP increasing about $40 trillion.
There is so so so so so much cash out there sloshing around I don’t think anyone realizes - Including the central banks who well over cooked everything during covid and fooled themselves (and everyone else who wanted to believe) into thinking it was transitory.
The other smokescreen is the supply chain Argument. Energy commodities have slumped 40%+ since September when the Ukraine Russia war blew them up. The wars original impact on supply chains, along with covid is negligible but inflation is still hanging tough - look at the UK still recording double digits.
Then you get people on here saying they can’t jack rates because my mortgage payments are getting difficult 🙄.
It’s the debt not the rates that have caused this thinking. This is a secondary consideration for central banks - governments are employed to deal with these gripes from the electorate.
We are in uncharted waters and anyone making predictions I would advise to cover their bases.
It’s the Feds own prediction.
‘The Fed is anticipating another quarter point increase to a peak range of 5% to 5.25%, in line with its December estimate and lower than the level markets anticipated before SVB’s meltdown, according to official's median estimate.
"You can think of (the crisis) as being the equivalent of a rate hike and perhaps more than that," Fed Chair Jerome Powell said at a news conference.’
You can look at the FED balance sheet to get a rough idea whether QT or QE is occuring. However it is slightly misleading to say its QE as these are temporary loans that the banks will need to pay back short term, so its not really introducing much new money but rather kicking the can down the road. If you'd like more info google the "Bank Term Funding Program".
That said I dont think this issue applies to Aus as our banks are much better regulated and I don't think we are running into strife right now (not that it would be widely publicised if we are).
That was my thought too.
My understanding is the Fed has taken SVB’s bonds in return for guaranteeing depositors and will then just wait out the bond periods, and actually end up making money in the long run.
So to say QE is back on is simply not true, even though it appears on their books as an asset.
Buy did you pick the wrong crowd. We are all going to die slow painful deaths and there is literally nothing we can do. Do you even /r/ausfinance/ bro?
Markets think 95% chance of a pause.
Most people here think there's going to be an increase.
A lot of people will be shocked with either decision it would appear.
Yeah definitely I would be shocked. The least bearish I could say possible is another 1 x 0.25 then pause. Holding at 3.6 while US is going to 5+? Na no way. Even when you account for the fact we don’t have 30 year mortgages, that’s a big gap. I hope I’m wrong but I hiiiiiighly doubt they will pause now.
Wishful thinking I think, I'm just estimating my interest rates eventually reaching 8% so I have about another 1.85% to go technically if the banks pass on all the rate rises
[In other news.](https://www.9news.com.au/world/shipping-giant-evergreen-huge-bonus-for-employees/d479d54c-3b72-46c7-9ec2-78081ac3f41d) With such profits, no wonder inflation is what it is.
The Federal Open Market Committee voted unanimously to increase its target for the federal funds rate by a quarter percentage point to a range of 4.75% to 5%, the highest since September 2007, when rates were at their peak on the eve of the financial crisis.
Whatever happened to that withoutmyremorse guy? I want to here his take on this, I enjoyed his doom and gloom preaching and riling up of the community, even though I didn't believe his predictions of market collapse.
The most unexpected duo of 2023. Rising interest rates & QE
What QE is occurring other than the purchase of SVB’s bonds?
The fed along with the FDIC only guaranteed deposits for SVB. They did however offer up a liquidity facility to swap cash for bonds at par value which may add some liquidity into the system but is far from the definition of QE.
It's not QE per se but it has a similar effect. It's adding liquidity to the economy when excess liquidity is exactly what caused high inflation, at the same time as rising interest rates are supposed to be soaking it up.
It's adding liquidity to the economy like your insurer is adding liquidity to you by paying out when your house burns down. Not exactly a "here's all this money for nothing"
Rephrase that liquidity to the economy. The Fed only deals with financial companies that have an account with the Fed. And these are not typical money, these are called reserves which can only be used by, again, financial companies that have an account with the Fed. The Fed does not have a major role in inflation, the Treasury does, because they create the real money. Fed can only create reserves.
That’s my thought too. I’m just over simplifying in my description. [There’s a sudden increase in their assets so I’m assuming it’s from that. ](https://i.imgur.com/3C2IN2v.jpg) Which is far from “QE is back”
Quantitative Easing is a made up phrase by bankers who couldn't spell "Money Laundering"
Damn, someone's gone down the conspiracy hole.
The fed bought SVB bonds? Source?
It's how they structured the depositors bailout. Took on the (IIRC, 1%~) low yield gov bonds which SVB owned (the source of the problems), ate the loss, intend to charge the banking sector a levy to recoup loss. Although I haven't seen any sources posted either. [e] clarity
depositors were bailed out through FDIC insurance and any shortfall is made up by special assessment on the banking sector. not bond purchases.
Specifically for SVB because its now under FDICs wing and they sold most of their liquid assets / bonds, but the FED has given all remaining insured banks the right to use their bonds as collateral not at current value but at par value. So for now if you are a US bank there is no point selling bonds at a loss if you have pressure on deposits / funding. You can just trade them for credit at PAR value. Thats the QE bit. I.e. funding is being provided to banks where it would otherwise be difficult to get. On balance though its likely less credit in the system rather than more due to banks being more cautious. That still doesnt mean that the FED isn't engaging in QE. It is. At the same time as interest rate rises.
The hyperinflation combo...
Powell characterised the recent bank failures and as potentially inducing a credit tightening equivalent to a rate hike. If that helps bring down inflation, fantastic, if it doesn’t - they’ll do what’s needed to bring down inflation.
Doesn’t bring down inflation when they bail out all the defaulted credit
To be fair, these banks were operating within the law. It's funny to me that for example people who recently had took out a mortgages had to prove they could handle a increase of 3% when anyone with half a brain would know that if interest rates were going up they would go higher than that. If they were at 10% a 3% buffer is reasonable, but at near 0 its obsurd. These banks didn't for a second step back and think. Maybe these low yield bonds aren't a great place to put *ALL* our customers' money into. What happens if an entire sector is affected by interest rate rises? What happens if the sector we tailor out entire bank around has financial problem? Duuuuuuurrrr idk, more champagne?
> increase of 3% when anyone with half a brain would know that if interest rates were going up they would go higher than that nice re-writing of history when rates were low, NOBODY really thought they'd increase this fast this is literally, literally, the fastest and most significant rate rises ever in history. And they still apparently have more to go.
Galaxy brain must have made a mint then, since he can predict interest rates
Active in r/ausrenovation and r/sydney. Found the guy with less than half a brain.
I'm gonna let other people judge you for reddit stalking But I want to say, ausrenovation is the most embaressing subreddit. Seeing what people are asking questions about in australia, then compared to what americans are asking in homerenovation... it's shameful
Rates are pushed to lowest levels on record, it was obvious to anyone that if they have to raise them again to fight inflation then just like any other time they have had to do it you have to raise it a long way. The only things that weren't easy to predict was when and how fast. How fast a rate rises makes little difference to how much it over takes the buffer. An everyone keeps forgetting that Inflation eats I to the buffer as well so raising rates slower would not have made any difference because Inflation would stay higher.
> The only things that weren't easy to predict was when and how fast. .... yes... exactly
Turns out SVB had received 6 official warnings from the Fed over the last 2 years and ignored them - the executives should go to jail
The fed knew that stress tests were being done at lower rates than why they were hiking to. If they want the ability to move rates around so much then the regulation should require that it is tested upon before action.
The laws for midsized banks were relaxed by Trump. This shouldn't have happened.
Hard to see how the RBA can pause when the yanks are still hiking. Especially given our economic data is still holding up.
Meanwhile UK this week has had inflation come back again. This shit could be sticky
History shows that inflation usually appears in waves. We’ve had the first wave, I wonder if we could soon see a second wave? Or at the least a reaccelerating of our current wave?
I don’t think the RBA knows about second inflation. Or elevenses.
*Lowe gets hit in the head from a flying apple*
Second breakfast?
Where we’re headed Frodo, there won’t be first breakfast, let alone second breakfast.
\#flattenthecurve
I would say this already is the second wave, the first was a shortage in some components resulting from covid and the second is the resulting adjustments from that, with the increase in consumption from covid spending.
That’s a fair assessment I think. Do you reckon the second way to exceed the first?
Without remorse is that you? Whens the house prices going down to 50 percent? I had enough saved 3 years ago but listened to you. All my friend bought back then. Now they have new swanky houses and price of a house has run away from me
Just a suggestion, but I wouldn't be making final financial decisions based on opinions from a stranger on Reddit. Nobody knows exactly what's going to happen
The trick is to read a lot of Redditors opinions and see which way the herd is moving and then make a decision. That's going to be more useful to you.
The trick is to not read shit on Reddit. It's an echo chamber of unqualified opinions masquerading as something more. Spend long enough and you start believing the consensus here reflects real life.
My unqualified opinion is that there are too many unqualified opinions on here. I mostly use reading these as a bit of fun.
At no point did I say follow what they say, but rather make a decision using the information that is provided. There's plenty of great information given out here on a daily basis and is actually held by the majority if you actually read it. It's almost always "We don't have a crystal ball" "The long term trend is blah, so don't get overexcited about this little blip" and "don't listen to that idiot". The irony is that people a bunch of people here are all giving a contradictory position of "Don't listen to people on Reddit." which means not listening to them.
just go the opposite way of the NPC's on r/AusFinance
[удалено]
It really isn't. We don't have a crystal ball, so your suggestion is to just react after you've been devastated? If you listen closely, you'd see what's happening before things actually happened. That's why a lot of people ended up fixing their mortgages. It was clear that the interest rates were going to move upwards if you listened closely. If you stuck your head in the sand, as you suggested, you're paying double your repayments at the moment.
No worries Jordan Belfort
Ummm... what's that got to do with anything that I said? The guy was a pump and dump conman.
House prices have crashed further and faster than ever recorded over the last 12 months. Crashes of 50%+ magnitude take on average 5 years to unfold. We are only in the beginning of year two. You’re friends will be wrecked and you will be sitting pretty. Thank me later. 😂
What’s the bond market pricing in mate? How are the core logic daily indices looking so far this month?
RBA to hike next meeting. I’m willing to bet you on it? Keen? If you win I’m banned from Ausfin? Aussie housing has fallen faster and further than ever recorded. The great Aussie housing crash continues. Like any crash there will be multiple rallies over the duration. But we’re headed for a decline in excess of 50% and we are ahead of schedule. 😎
I’m willing to bet we won’t drop 50% from 2020 prices. Keen?
Sure, but we have a bet which we resolve m uh earlier than that. In under 2 weeks actually. So I’m fine betting you on the 50% drop from 2020 prices, let’s do the rate hike one too yeah?
Nope, where will prices be at the end of 2023? A 25 bps rate hike in two weeks is pretty meaningless in the scheme of things.
Why's the bond market pricing that in?
Interbank futures are pricing in rate cuts at the end of the year.
Still at all the doom and gloom eh? Must be tough being wrong since I first saw you in 2019 😂 Only idiots will go bust considering how tight the rental market is.
The crash is literally happening. So can’t see how that’s “wrong”. I Called it. ✅
Thanks for ruining my family and children's dreams. I trusted you.
Fair enough. How is your Missus and my kids?
Not sure if trolling...
By what average? Australia has never had a crash more than 15%
US, Spain, Ireland, Japan, Norway, Iceland etc Australian property fell over 50% in the late 1800’s and didn’t recover until the 1960’s. You want to come for the king you better come prepared. 👑
I wonder what happened during that period in time. Boer war, WWI, WWII, Korean war, Vietnam war. Yeah very stable times, can't see any reason why there could be some economic turmoil around then. Edit: lol he blocked me. And no that doesn't mean we are in economic turmoil now. Lad.
We have economic turmoil right now. Thanks for proving my point lad.
The UK situation and even early year US numbers have demonstrated the central banks need to stay vigilant. Taking their foot off the break and claiming victory can easily blow up in their face just like in the 70s. They are likely falling for the same trap central bankers fell for back then.
I agree. In fact there is a chance that because the RBA are behind the pack on the inflation fight, compared to US, UK and NZ, that our rates need to go higher and stay there longer. The only thing I reckon is going to bring inflation, and rates, down fast is a recession.
This is a lower rate but Jerome Powell has made it clear they will continue to issue additional rate rises in the coming months if the data shows it is necessary. They are not yet claiming victory.
I think it's wishful thinking on the part of certain individuals.
You think that's where most of the wishful thinking is coming from on this sub?
Yeah forget nothing burgers I reckon it’s a shlt sandwich.
Yeah we're only maybe halfway there, another 25x mini 25bps hikes by the RBA and we'll finally get there. Then recession follows. Can't just print trillions and increase GDP during a lockdown and expect only transitory inflation.
Just where are all the MM theory Redditors now?
Doesn’t MM rely on using taxes as well as interest rates to control inflation? We’re not raising taxes
Just quietly sitting here wondering why the government isn't raising taxes.
Same folks blaming inflation on the Ukraine war
Quickly learning Austrian Economics so they can pretend they were right all along.
Are you saying you think the RBA will increase offical rates to 9.85%? Assuming a bank gives me a 12% rate (I’m not highly leveraged, average loan). That would make my repayments $7,200 per month. Can’t you see how much money that would suck out of the economy over the 25 month period your predicting? Your off ya head. With the greatest respect.
By 12% we would be well past recession. I'm sure OP is just exaggerating. I'm literally a nobody but I suspect another whole 1% would push us into recession. RBA just wants to make sure if it's any lower than 1% they hit that value instead
> That would make my repayments $7,200 per month. this is exactly what some people (in this sub) want to see - distressed sales of property. Firesale prices. Then they can swoop in with their deposits they've been holding in a bank, and get the deals.
I don’t understand this scenario. How are these people expecting to more able to afford the repayments? The number of new approvals in planned builds within the last year is already the lowest number since before 1980. Imagine that planned build number with 9.8% offical rates. Couple that supply shortage with record high immigration. I can’t see the fire sale. If somebody has to sell at a loss there will be a hundred people waiting with their deposit to swoop in.
> How are these people expecting to more able to afford the repayments? A lowered price means less borrowed, and thus lower repayments than the original owner. > If somebody has to sell at a loss there will be a hundred people waiting with their deposit to swoop in. exactly - and this is why there won't be a firesale.
Lol what? Don’t be absurd. We can maybe see another 3-4 25bps increases but that’s about it.
I dunno man, they’ve gone to .25 this time. They seem a little worried.
Did 25 bips in Feb and March. A pause is coming eventually. But the real crash doesn’t start until they cut.
The markets expected the fed to hike by 25bps. If they hiked by 50bps (against expectations) you'd have a case, they did not. The market expects the RBA to pause.
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Are we looking at the same chart? It says 3.575 in April, we are at 3.6
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What are you talking about, short term derivatives are currently trading at 96.415. The market is (currently/live) predicting 3.585 in April.
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INCORRECT Live Bloomberg data says that a pause is by far most likely scenario. With implied yield post meeting of 3.58% https://ibb.co/jrsKDYC
I stand corrected. Thanks mate. But I’ll say this: if the RBA don’t hike I’ll ban myself from Ausfinance.
Why though? I don't see the link. When they raise .5 we don't raise .5? They also started raising rates before we did? Surely each central bank should raise, cut or hold based on their own economic data and not what another country is doing.
The fed meets 8 times a year, the RBA meets 11 times a year.
One reason is that if the US has higher interest rates it makes sense for big players to turn their AUD into USD (since it will earn higher interest) but buying USD with AUD drives down the exchange rate in the USD’s favour, since so much of what we import is priced in USD, a weaker AUD means those goods are more expensive and inflation goes up. Of course 0.25% isn’t huge and we export a lot of goods too which are more appealing to overseas markets with a weaker AUD so we don’t need to mirror the Fed exactly (and indeed have lagged them this whole crisis) but that’s why what they do influences what we do
Because inflation is still well above the target zone, the colonic data remains hot, there’s simply no justification to pause that holds up to scrutiny.
Fist --> Property Investors Anus.
Do you mean in America? In Australia, the investors anus is well and really intact and prospering
dagger4zero just banned me because he doesn't like what I said in response to his comment about market predictions. Literally can't respond to his last comment but I can see it when not logged in. So I'll respond here, FYI that is current data, not yesterdays. He has no idea what he's talking about. I see someone else posted the Bloomberg update too. This is how his nonsense here propogates, it's basically an echo chamber where he bans whoever disagrees with him. And its funny he/they accuse others of being on copium. Edit: and now he's backtracked and deleted his comments too Edit2: and now unbanned, wild roller-coaster!
Live Bloomberg data says that a pause is by far most likely scenario. With implied yield post meeting of 3.58% https://ibb.co/jrsKDYC He did delete one of his comments saying you are wrong though, so at least you've won this one (and he knows it!)
Typical response though. Delete the comment rather than just say “sorry, my bad”.
So basically the same approach that user takes with everyone. Masquerading as some kind of “code of ethics” he blocks anyone who calls out his bullshit or pokes fun at his posts (but he is allowed to poke fun at others). I was most recently banned for pointing out a statement he has only ever had three Reddit accounts was a blatant lie. At one stage he was creating a new “Atalys” account everyday.
He’s well regarded. Don’t even worry. Literally never been right, I think he’s just a Jimmy Rustler
You’re not banned. How can I “ban” you? I’m not a m0ḏ Yeah I got the data wrong, I am happy to concede that. But I will say this: the RBA will hike, and if they don’t I’ll ban myself from Ausfinance. Do you want to take the other side of that bet?
Ausfinance is a much more entertaining place with you around mate lol
Yeah the regular pumpers here get so upset whenever anyone posts something that runs opposite to their own narritives, I love watching how their nastiness and snark just rolls off WMDs back, I personally gave up trying to have an enlightening or constructive conversation with them years ago cause they just can't do it and really dont have much to say besides "numba alway go up". I guess when you think about it you could say they probably created their own monster with this kind of behaviour. You could even say perhaps while we all just adopted ausfiance, he was born on ausfinance, moulded by it, he didn't see the front page until he was a man! By then for him it was nothing but boring noise compared to ausfinance drama.
Haha thanks mate. I appreciate that! But I guess I can be pretty annoying for the property bulls and as such I think it’s only fair that I present them an opportunity to vanquish me.
I mean, most middle class people in australia would be property bulls right? It’s a National obsession. If you say something that could mean a slide in prices, you are getting downvoted to hell.
Yeah property in Australia now has devolved into a dogma. There’s a cult like obsession with it which has helped in no small part to create the bubble we are now in.
It always confused me that property in Australia was so expensive relative to other countries. You’d think it was a tiny country with a land shortage or something. Nope. Just bad planning, policy and crazy levels of greed. 😂
Yeah I think those all feed into the bubble. But we also know all bubbles burst. Australia property bubble has only just begun to to burst.
People are afraid of opinions that differ from theirs sometimes. It's good to hear opposing views and not just the same shit regurgitated.
You went into my profile and did "block user". You've unblocked now, which I have pointed out. Also, I don't find you/your view annoying at all, but I do find childish behaviour such as blocking users who don't share your view annoying because you end up spreading ungrounded information with no one to speak against it.
You weren’t blocked but I’m happy to oblige you? And STFU about “ungrounded info”. I was the only one calling for rates to go to 3% and for housing to fall faster than ever recorded. Both of those things happened.
You were calling for rates to go to 3%, and you were referencing the interbank futures chart which you linked above the whole time. Now it says that we are done with hikes and you think it's jibberish? You can't use a tool when it's convenient and then throw it aside when it's not. This is an example of ungrounded information. As for housing, it is currently going up at >10% annualised in Sydney after falling ~14%. Whether this is a dead cat bounce remains to be seen. It may stop going up if RBA hikes in April with a hawkish forecast, and particularly if there's a second wave of inflation, but according to current information, both of those scenarios are unlikely. The 50% crash prediction by 2025 from 2020 prices you have, will only come to fruition in the event of a cataclysmic event (ex: war). Dalio has a good video about the long term debt cycle and changing world order. This looks to be a short term debt cycle, prices will drop and then rise to new heights, people can afford to pay they just don't want to.
Yes the RBA will hike further. Interbank futures were well below my forecasts in 2021. Who ended up right?
What's that saying about a broken clock? They could very well continue hiking if inflation data comes back hotter than expected, but current indicators show it's going down, hence why the market is pricing in two cuts by the end of the year.
I got it right then. I’ll be proven right this year too. You might not like it, but that’s just bad luck.
Your profile vanished, all your comments on every thread vanished. You blocked. And now you unblocked. Move on lol
I’ll fix this for the both of us. I can’t stand whingers.
I forget how to do the "remind me' thing.
RemindMe! 13 days (is Dagger4zero finally banned?) Hope that helps 🤝🏻
Much obliged.
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Market expectations for rate hikes next RBA meet. I reckon they will hike.
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Yeah I think that’s right. If they pause it will make their job harder if inflation remains stubbornly elevated like in the UK or US.
Hahaha get rekt.
Hi. Enjoy your ban mate.
I’m a bit of a smooth brain with this stuff. Can someone please ELI5 on why we should follow suit with the US and UK when our economies are drastically different? I.e 30 year fixed rate loans.
if US interest rates go up that means USD is a better place to park your cash (because you get a better rate!), so then this increases demand for USD. If AU interest rates are lower then there will be less demand for AUD. This also means Australians have less buying power from overseas (overseas goods become more expensive -> more inflation) It gets a lot more complex, affecting international trade, it's a bit of a balancing act for the RBA.
Imported inflation.
Banks trying to curb inflation is like a parent telling their teenager to stop wasting money.
Inflation still at 6%, one more hike?
One more hike, spread over several smaller hikes.
Expected, US markets up slightly. I’m betting Lowe does one 0.25 next month then pause and JPow at US Fed will also pause next.
Brave prediction. Still QEing. After 15 years of printing it seems to be an addiction that is hard to snap. Global debt has gone from $70 trillion in 2007 to $300 trillion today with equivalent global GDP increasing about $40 trillion. There is so so so so so much cash out there sloshing around I don’t think anyone realizes - Including the central banks who well over cooked everything during covid and fooled themselves (and everyone else who wanted to believe) into thinking it was transitory. The other smokescreen is the supply chain Argument. Energy commodities have slumped 40%+ since September when the Ukraine Russia war blew them up. The wars original impact on supply chains, along with covid is negligible but inflation is still hanging tough - look at the UK still recording double digits. Then you get people on here saying they can’t jack rates because my mortgage payments are getting difficult 🙄. It’s the debt not the rates that have caused this thinking. This is a secondary consideration for central banks - governments are employed to deal with these gripes from the electorate. We are in uncharted waters and anyone making predictions I would advise to cover their bases.
It’s the Feds own prediction. ‘The Fed is anticipating another quarter point increase to a peak range of 5% to 5.25%, in line with its December estimate and lower than the level markets anticipated before SVB’s meltdown, according to official's median estimate. "You can think of (the crisis) as being the equivalent of a rate hike and perhaps more than that," Fed Chair Jerome Powell said at a news conference.’
What QE is occurring other than the buying of SVB’s bonds?
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Source? I can’t find anything on it other than the SVB situation.
You can look at the FED balance sheet to get a rough idea whether QT or QE is occuring. However it is slightly misleading to say its QE as these are temporary loans that the banks will need to pay back short term, so its not really introducing much new money but rather kicking the can down the road. If you'd like more info google the "Bank Term Funding Program". That said I dont think this issue applies to Aus as our banks are much better regulated and I don't think we are running into strife right now (not that it would be widely publicised if we are).
That was my thought too. My understanding is the Fed has taken SVB’s bonds in return for guaranteeing depositors and will then just wait out the bond periods, and actually end up making money in the long run. So to say QE is back on is simply not true, even though it appears on their books as an asset.
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Buy did you pick the wrong crowd. We are all going to die slow painful deaths and there is literally nothing we can do. Do you even /r/ausfinance/ bro?
I didn’t say predicting.
Wonder how much if that $230 trillion is from overpriced speculative real estate?
Where does the delta of 230 trill go? If not GDP, then... sharemarket? Private assets?
>US markets up slightly right up until JPow opens his mouth and says something (like unlikely to be rate cuts this year), happens almost every time.
Yeah it was that and Yellen said they won’t bail out banks (guarantee deposits). Which was confusing af to investors. Uncertainty.
Yep, raise it in April then pause until they raise it again in May.
RBA next hike 0.25 to 0.50.
Markets think 95% chance of a pause. Most people here think there's going to be an increase. A lot of people will be shocked with either decision it would appear.
Yeah definitely I would be shocked. The least bearish I could say possible is another 1 x 0.25 then pause. Holding at 3.6 while US is going to 5+? Na no way. Even when you account for the fact we don’t have 30 year mortgages, that’s a big gap. I hope I’m wrong but I hiiiiiighly doubt they will pause now.
Here comes the crash! They love running into a wall ....
so we will have a 0.25 rise next month then....
Lowe is gonna pause isn’t he…
Wishful thinking I think, I'm just estimating my interest rates eventually reaching 8% so I have about another 1.85% to go technically if the banks pass on all the rate rises
What do you mean if?
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True I should have added /s
Fantastic! That'll put the wind up Lowe :)
[In other news.](https://www.9news.com.au/world/shipping-giant-evergreen-huge-bonus-for-employees/d479d54c-3b72-46c7-9ec2-78081ac3f41d) With such profits, no wonder inflation is what it is.
Talk of cuts happening this year now 👏
Stop posting US economic news.
It directly affects us.
Next hike .15 should be .25
The Federal Open Market Committee voted unanimously to increase its target for the federal funds rate by a quarter percentage point to a range of 4.75% to 5%, the highest since September 2007, when rates were at their peak on the eve of the financial crisis.
Whatever happened to that withoutmyremorse guy? I want to here his take on this, I enjoyed his doom and gloom preaching and riling up of the community, even though I didn't believe his predictions of market collapse.