Treasury Bills Offer Stock-Like 5% to Take Fed, Debt-Limit Risk

[barrett]

Schwab Bond Market Update for December 2024

"The market implied Fed funds rate for December 2025 has risen from sub 3% to the 3.75% to 4% area"

If we stick a landing at 4% or just below... that's not so bad for us savers. T-Bills will be there, and I'm guessing most high yield bank bank savings will probably be at 3.25%-3.5%. The reason given is:

"Inflation is proving to be somewhat sticky. Core PCE, which excludes volatile food and energy prices, has stalled at a slightly higher level partly due to persistently high housing costs. Expected proposals in Washington, such as **tax cuts, tariffs, and immigration changes, could all end up being inflationary**."

It will be interesting to see if and when the Fed stops talking about target inflation being 2%. My guess is that language just quietly goes away over the next year or so.

Side note... I had a brief conversation with a home builder in our area (CT) about a month ago and he said that he's able to get all the supplies he needs to keep building, but that prices have basically tripled on everything. He said that he can now only net about $50,000 on a $500,000 house, so that the risks he is taking on are too high and he's starting to sell off lots because he "can make more money selling lots than building houses."

Don't have a clue how a government brings down housing prices. I don't see that happening unless there is a supply glut and that is not goin to happen with tariffs driving up materials costs further. Or maybe mass deportation brings housing demand down?

I am holding a lot of treasuries and keeping the duration short... basically holding one year ladders across several accounts in anticipation of a big, beautiful inflation (people are saying this will be the best inflation in the history of this country. Let's make inflation great again).

Damn, the above is all stated with so much confidence that I may have a future as a pundit on CNBC or Bloomberg. Afro smiley??

[dualstow]

Afro smiley??

- - -
The most recent LeShow podcast episode by Harry Shearer — an unlistenable show. Why do I bother? — has a guest who talks about the basics of raising or lowering interest rates. Probably beneath most of you, but just in case… Or in case anyone wants to pick it apart.

Dr Stephanie Kelton at 20min20sec. Or, if a transcript pops up on your device like it did for my ipad, you can open the transcript and search for “Stephanie.”

Podcast Link

Her book is called ‘The Deficit Myth.’
https://www.goodreads.com/book/show/457 ... ficit-myth

[yankees60]

Schwab Bond Market Update for December 2024

"The market implied Fed funds rate for December 2025 has risen from sub 3% to the 3.75% to 4% area"

If we stick a landing at 4% or just below... that's not so bad for us savers. T-Bills will be there, and I'm guessing most high yield bank bank savings will probably be at 3.25%-3.5%. The reason given is:

"Inflation is proving to be somewhat sticky. Core PCE, which excludes volatile food and energy prices, has stalled at a slightly higher level partly due to persistently high housing costs. Expected proposals in Washington, such as **tax cuts, tariffs, and immigration changes, could all end up being inflationary**."

It will be interesting to see if and when the Fed stops talking about target inflation being 2%. My guess is that language just quietly goes away over the next year or so.

Side note... I had a brief conversation with a home builder in our area (CT) about a month ago and he said that he's able to get all the supplies he needs to keep building, but that prices have basically tripled on everything. He said that he can now only net about $50,000 on a $500,000 house, so that the risks he is taking on are too high and he's starting to sell off lots because he "can make more money selling lots than building houses."

Don't have a clue how a government brings down housing prices. I don't see that happening unless there is a supply glut and that is not goin to happen with tariffs driving up materials costs further. Or maybe mass deportation brings housing demand down?

I am holding a lot of treasuries and keeping the duration short... basically holding one year ladders across several accounts in anticipation of a big, beautiful inflation (people are saying this will be the best inflation in the history of this country. Let's make inflation great again).

Damn, the above is all stated with so much confidence that I may have a future as a pundit on CNBC or Bloomberg. Afro smiley??

" big, beautiful inflation (people are saying this will be the best inflation in the history of this country. Let's make inflation great again)."

!!!!!!!!!!!!!!!!!!!!!!!!!!

[yankees60]

Afro smiley??

- - -
The most recent LeShow podcast episode by Harry Shearer — an unlistenable show. Why do I bother? — has a guest who talks about the basics of raising or lowering interest rates. Probably beneath most of you, but just in case… Or in case anyone wants to pick it apart.

Dr Stephanie Kelton at 20min20sec. Or, if a transcript pops up on your device like it did for my ipad, you can open the transcript and search for “Stephanie.”

Podcast Link

Her book is called ‘The Deficit Myth.’
https://www.goodreads.com/book/show/457 ... ficit-myth

Thanks. Just bought a used copy of the book for less than $10 delivered.

[dualstow]

Oh man, *I* was going to buy that copy. Just kidding.

I’m still going through both positive and negative reviews, but I’ll probably end up getting it. We have been forewarned that it’s repetitive.

[yankees60]

Oh man, *I* was going to buy that copy. Just kidding.

I’m still going through both positive and negative reviews, but I’ll probably end up getting it. We have been forewarned that it’s repetitive.

Here is how a friend responded to me informing him about it:

"Mr. Book gave this an A+ in 2020.

It’s definitely eligible for a reread, so it can get a review and be promoted from presumptive Hall of Fame to Hall of Fame inductee and the audiobook is available."


VINNY again.

This friend reads about 800 books a year. He's recently started getting review copies. Since then, he's created his own web site of his book reviews, whether they be of these review copies or other books he's read.

Here it is: https://mrbooksbookreviews.com/

He's created a book Hall of Fame for those he deems to be exceptional.

He surprised me today when he told me he'd read that book as, in general, he has no interest in financial matters. Baseball / history / politics are his top interests.

[dualstow]

Regarding your last line ("surprised"), I think this book is for novices. A lot of people on this site are well-versed in Modern Monetary Theory (MMT) and probably have little use for it whether they are for or against MMT.
I haven't studied economics, so it looks like a good entry point for me even if I end up discarding some of the viewpoints in the future.

[yankees60]

Regarding your last line ("surprised"), I think this book is for novices. A lot of people on this site are well-versed in Modern Monetary Theory (MMT) and probably have little use for it whether they are for or against MMT.
I haven't studied economics, so it looks like a good entry point for me even if I end up discarding some of the viewpoints in the future.

His response to me after I expressed my "surprise" to him:

"This is national economic policy, as opposed to individual investing. "

[boglerdude]

MMT is a progressive political agenda. When conservatives say "we cant afford it" MMT says "but wait, in reality the banks are required to buy the bonds from the treasury. Then the Fed prints the money to buy them from the banks"

And people are surprised, because Wall st & Gov dont want this understood. Then the MMT celebs leave out the part about inflation.

[dualstow]

Well, there’s plenty of inflation talk in the podcast, but your first sentence rings true.

[boglerdude]

Not implying podcast and book dont have good info just fyi

Search Labs | AI Overview

Kelton is a leading proponent of modern monetary theory, which challenges the idea that governments should balance their budgets like households. She argues that governments can spend more and pay less attention to deficits.
Redefine how to use resources
Kelton believes that governments can use idle resources to improve the standard of living without causing inflation.
Provide public goods
Kelton believes that the state should play a central role in the economy by providing public goods like education and healthcare.
Fight inequality and climate change
Kelton argues that deficits can help fight problems like inequality and climate change.

[ochotona]

"Or maybe mass deportation brings housing demand down?"

There is some truth in that... people here illegally occupy apartments, so rents on low-end apartments will go down, which will have knock-on effects up the housing upgrade chain. But many (in my area of Texas, most if not all) work crews in construction are Hispanic, and some numbers of those workers are undocumented, so the cost of construction labor will go up, and construction timelines will be stretched out further, stressing out home builders more who have to service their loans.

AND... increased Federal bond issuance will compete for bond buyers, so mortgage rates won't go down. They've gone up during October, most of November, have come down a bit in the two weeks.

I don't think housing prices are coming down soon.

[dualstow]

Construction and the restaurant business are obviously going to be affected big-time.
Seems like a good time for Elon to sell us robots.

[Jack Jones]

basically holding one year ladders across several accounts in anticipation of a big, beautiful inflation (people are saying this will be the best inflation in the history of this country. Let's make inflation great again).

Damn, the above is all stated with so much confidence that I may have a future as a pundit on CNBC or Bloomberg. Afro smiley??

I had already decided your Trumpisms deserved an before I got to the end.

[Jack Jones]

Kelton has a documentary on MMT called Finding the Money. I’m undecided on it, and MMT in general. However, everyone should watch this clip from the documentary: