Economics Nerd Central/ The Global Inflation Thread

[Stacky]

View attachment 11461

 

[Hank Scorpio]

https://twitter.com/x/status/1636355790763171841

 

[How bad boy]

https://twitter.com/x/status/1636355790763171841

Who could possibly have predicted that rates would increase so much over the past year?

Hope folks took the advice last year and fixed mortgages.


The situation at Silicon Valley Bank is unlikely to be the end of that story.
There's $11 trillion of mortgage backed securities (MBS) in the US alone.

The European Systematic Risk Board reckons there's less than a trillion of equivalent securities in the EU.


So there is a chance that the EU avoids a major fall out at a financial system level from higher interest rates, but I really wouldn't rule it out. Don't know what the exposure of EU institutions are to the US MBS market. The last financial crisis was primarily driven by the US market.

Remember CDOs? Collateralised Debt Obligations?
Well a variant of that, the Collateralised Loan Obligation (CLO) is back:




It all looks and smells far too familiar. I think it's safe to say that on at least some fronts, this time it's different, but it's concerning when exactly the same sort of issues that caused the last crisis seem to be popping up again.

 

[Hank Scorpio]

https://twitter.com/x/status/1639203442068533249

 

[CaptainSensible]

Who could possibly have predicted that rates would increase so much over the past year?

Hope folks took the advice last year and fixed mortgages.


The situation at Silicon Valley Bank is unlikely to be the end of that story.
There's $11 trillion of mortgage backed securities (MBS) in the US alone.

The European Systematic Risk Board reckons there's less than a trillion of equivalent securities in the EU.
View attachment 19770

So there is a chance that the EU avoids a major fall out at a financial system level from higher interest rates, but I really wouldn't rule it out. Don't know what the exposure of EU institutions are to the US MBS market. The last financial crisis was primarily driven by the US market.

Remember CDOs? Collateralised Debt Obligations?
Well a variant of that, the Collateralised Loan Obligation (CLO) is back:
View attachment 19771



It all looks and smells far too familiar. I think it's safe to say that on at least some fronts, this time it's different, but it's concerning when exactly the same sort of issues that caused the last crisis seem to be popping up again.

The thing is, if you think there is a recession coming due to a banking crisis then you don't want to be on a fixed rate mortgage as interest rates will collapse, like in 2008.

 

[J.R.R. hartley]

Am I right in thinking that mortgage rates have been affected but savings rates don't seem to be?

 

[How bad boy]

The thing is, if you think there is a recession coming due to a banking crisis then you don't want to be on a fixed rate mortgage as interest rates will collapse, like in 2008.

That's only true if you don't have significant inflation at the same time. Last time out the central banks were able to print money without inflationary consequences.
This time, not so much, especially with the BoE

 

[How bad boy]

https://twitter.com/x/status/1653338561201209348

Inflation rate rose slightly in April, against expectations, likely more rate interest rises by the ECB on the way as a result, at least .25% on the rate this Thursday, possibly 0.5%, but makes it less likely they'll not raise any further.

 

[Stacky]

https://twitter.com/x/status/1653338561201209348

Inflation rate rose slightly in April, against expectations, likely more rate interest rises by the ECB on the way as a result, at least .25% on the rate this Thursday, possibly 0.5%, but makes it less likely they'll not raise any further.

Got a fix rate of 3.9% for the last remaining 2 years of my mortgage that just shot up to 4.45% the day after I got it.

 

[King Silkbeard]

Guys did you hear JP Morgan is to take over First Republic Bank in the US. This follows UBS taking over Credit Suisse and collapse of Silicon bank.