Tag: george yacik

A Tale of Two Realities

Posted on by George Yacik

George Yacik - INO.com Contributor - Fed & Interest Rates


You may not have noticed it, but there is an enormous gulf between what many Americans are being told is happening in the world around us and how the financial markets are reacting – or, more accurately, not reacting – to it. It’s as if there are two completely different realities going on. Which reality you subscribe to will likely dictate your investment choices, including how you feel about which direction the bond market is headed.

In one reality – and it’s the one that gets the most coverage in the general media – is that the world is basically coming to an end. The most powerful nation on earth is being run for the past two weeks or so – although it seems like a lot longer – by an ignoramus who is moving our country and the entire world headlong into disaster. Continue reading "A Tale of Two Realities" →

Did The Markets Overreact - Again - To Yellen's Remarks?

Posted on by George Yacik

George Yacik - INO.com Contributor - Fed & Interest Rates


You may not have noticed it, but before last Wednesday the bond market had been in kind of a mini-rally for the previous month. On Tuesday, the benchmark 10-year Treasury note fell to 2.32%, its lowest level since the end of November. That was down from 2.60% in mid-December, which also happened to be its highest mark since 2014.

But by the end of the week the yield on the 10-year had jumped back up to 2.47%, up 15 basis points in just three days. What happened to put the brakes so suddenly on this rally? Why, Janet Yellen spoke, and when Janet Yellen speaks – well, you know the rest.

But did anyone really listen? Continue reading "Did The Markets Overreact - Again - To Yellen's Remarks?" →

Are You Ready For The Next Mortgage Crisis?

Posted on by George Yacik

George Yacik - INO.com Contributor - Fed & Interest Rates


As an avid observer of the U.S. residential mortgage scene, I couldn’t help but take a keen interest in one of the lead articles in the Wall Street Journal on Thursday. The article was headlined, “The Mortgage Market’s $1 Trillion Pocket of Worry.”

According to the article, bonds backed by “certain risky single-family mortgages topped $1 trillion for the first time in November.” I wasn’t sure what “certain risky” mortgages they were talking about, so I read on. It turns out they are mortgages insured by the Federal Housing Administration (i.e., taxpayers) which, as the Journal noted, “typically go to borrowers with small down payments and lower credit scores.”

While I certainly know what FHA mortgages are, who they go to, and that their market share has been growing sharply since the mortgage meltdown eight years ago, the Journal article was useful in telling a wider audience about yet another government financial crisis in the making. But the article largely skated over another fairly important aspect of the story. Continue reading "Are You Ready For The Next Mortgage Crisis?" →

Here's Another Fine Mess Obama Will Dump On Trump

Posted on by George Yacik

George Yacik - INO.com Contributor - Fed & Interest Rates


When the financial and general press get around to giving the departing Obama Administration – now just days away from happening – all the credit for the booming economy to be inherited by Donald Trump, let’s hope they don’t neglect to mention some of the messes Obama has left for the next president to clean up. Besides opening up the jails and Guantanamo, Obama will be leaving Trump with a bunch of other fiascos he created that will take years to fix and billions of taxpayer dollars to remedy.
And no, I’m not talking about Obamacare or the federal debt.

I’m referring to the burgeoning student loan crisis that has yet to reach the implosion point but that will likely happen sooner rather than later. And since it hasn’t yet reached the flash point at which time it must be addressed, that means the bubble will continue to grow until it eventually splatters onto other seemingly unrelated areas, spreading the mess farther and wider beyond anyone’s current expectations.

I call your attention to the Consumer Financial Protection Bureau’s most recent report on student loans. Continue reading "Here's Another Fine Mess Obama Will Dump On Trump" →

Here's What To Expect In 2017

Posted on by George Yacik

George Yacik - INO.com Contributor - Fed & Interest Rates


It’s more or less obligatory at this time of year for financial columnists and bloggers to present their predictions for the coming year. Not wanting to be left out, here are mine, for what they’re worth:

Interest rates will moderate and rise gradually – repeat, gradually – throughout the year, not spiking sharply as they did in the second half of 2016. The yield on the 10-year Treasury note, now at about 2.50%, will end 2017 at about 3.0%, although it may rise as high as 3.5% sometime during the year before settling back down again.

U.S. stocks will rise about 5% for the year. Sorry, folks, the easy money was already made in 2016. But that’s better than long-term bonds, which will either lose money or just about break even (see the previous paragraph).

The Federal Reserve will now put into action the policy it promised back at the end of 2015, namely raising short-term interest rates 25 basis points per quarter – not three as it indicated in its December post-meeting announcement. The Fed will be far less restrained in making monetary policy decisions in 2017. No more erring on the side of caution under Trump... Continue reading "Here's What To Expect In 2017" →