Tag: Geroge Yacik

Will The 10-year Treasury Crack 3% This Week?

Posted on by George Yacik

George Yacik - INO.com Contributor - Fed & Interest Rates - 10-year Treasury


In case you hadn’t noticed, the yield on the benchmark 10-year U.S. Treasury note is this close to hitting the psychologically important 3% level. Is this the sign of still higher rates to come, or another buying opportunity, meaning rates are going to fall back again?

While most of the market seemed not to notice, seeing as it was fixated on corporate earnings and what’s going on in the tech sector, the yield on the T-note surged by 14 basis points last week to close Friday at 2.96%. That’s up nearly 25 bps since the beginning of this month and 55 bps year to date. It’s also the highest level since the beginning of 2014.

If you recall, we got close to hitting 3% two months ago, when the yield spiked to 2.95% on February 21, surging 25 bps in just two weeks before retreating quickly back to about 2.80% by the end of the month. The note then traded in a fairly narrow band between 2.80% and 2.90% over the next month before dropping sharply to 2.73% at the end of March and early April, after which it surged to Friday’s level.

Are we going to repeat the pattern of late February, meaning that this represents a buying opportuning in the Treasury market, or is this the signal that we are going to finally blow past 3% following February’s false start? Continue reading "Will The 10-year Treasury Crack 3% This Week?" →

Inflation - Getting Back To Normal

Posted on by George Yacik

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


So now, suddenly, out of nowhere, inflation has reared its ugly head, and the financial markets are starting to believe it.

On Wednesday the Labor Department reported that the consumer price index rose a higher than expected 0.5% in January, 2.1% compared to the year-earlier period. The all-important core rate, which excludes food and energy prices, rose 0.3% for the month, 1.8% versus a year ago. While not exactly hitting the Federal Reserve’s revered 2.0% annual inflation target, it was apparently close enough to create more jitters in the bond market, with the yield on the U.S. Treasury’s benchmark 10-year note immediately climbing seven basis points to 2.91%, its highest level in more than four years.

The very next day, Labor reported that the core producer price index rose 0.4% for the month and 2.2% year-on-year, which pushed up the yield on the 10-year another basis point, to 2.92%.

I’m not exactly sure why this recent surge in inflation should come as such a big surprise to anyone, but it surely has, witness the tremendous amount of volatility in the financial markets in just the past two weeks. The tipping point seems to have been the release of the January jobs report, the highlight of which wasn’t the change in nonfarm payrolls and the unemployment rate, which they usually are, but the 0.3% (2.9% annualized) growth in wages, which was the strongest year-over-year gain since June 2009.

That seemed to finally catch everyone’s attention that yes, contrary to what the Fed has been telling us for the past four years, inflation really does exist. Now we have more verification. And it’s probably only going to exacerbate.

And who do we have to thank for this new-found inflation? Continue reading "Inflation - Getting Back To Normal" →

Higher Bond Yields In 2018?

Posted on by George Yacik

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


As a homeowner in a high-tax Blue state, I’m not sure I have a whole lot to be personally happy about in the Trump tax reform bill. My state’s government, which is already teetering financially, isn’t likely to reduce its own taxes to compensate for the cap on deducting state and local taxes. Nevertheless, I’m happy that the measure passed.

For one thing, it’s heartening to see the Republicans stand fast for a change and actually follow through on something their constituents have demanded and expected from them, rather than caving in the face of criticism from their liberal opponents in Congress and the press. I’m also getting a lot of enjoyment listening to the breathless hyperbole by Nancy “Armageddon” Pelosi, Chuck “Fake Tears” Schumer and the gang denouncing the bill, plus the stories by their allies in the press about the “victims” of tax reform, neglecting to mention the “victims” at AT&T, Wells Fargo and all who are being given immediate raises as a result of the measure.

Not a whole lot has been written or said about one of the more likely consequences of the package, and that’s that interest rates are going to move higher in 2018.

Already, in just a few days leading up to the passage of the bill, the yield on the 10-year Treasury note jumped 15 basis points to 2.50%, its highest level since last March and just 10 or so bps below its high for the year. It’s likely to rise further in 2018. Here’s why. Continue reading "Higher Bond Yields In 2018?" →

Trump: Bad Bankers Beware

Posted on by George Yacik

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


So now President Trump has thrown himself into the discussion about Wells Fargo. Maybe now the bank will get the justice it deserves. And maybe now the message about Trump’s intentions about financial regulation will become less fake.

First a little background. Three months ago Federal Reserve Chair Janet Yellen made some pretty startling comments for a Fed chief, publicly criticizing Wells’ behavior toward its customers as “egregious and unacceptable.”

She was talking, of course, about the bank’s years-long practice of signing up its customers for checking accounts, savings accounts, credit cards and other products without asking their permission or even telling them. But since then there have been reports and admissions by the bank of several other excesses, such as charging auto loan customers for insurance they didn’t ask for, dunning mortgage customers for interest rate-lock extension fees when the bank itself caused the delays, overcharging military veterans on mortgage refinance loans, and allegedly closing customers’ accounts without telling them why it did so.

You would think that the Fed – which regulates Wells and other big banks – would have come down on the bank by now. Yet nothing’s happened since Yellen made those comments.

Then last week the president injected himself into the fray. Continue reading "Trump: Bad Bankers Beware" →

Will The Fed Drop The Hammer On Wells Fargo?

Posted on by George Yacik

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


A few weeks ago Federal Reserve Chair Janet Yellen made some short – but very direct – comments about one of the big banks under the Fed’s oversight.

“Let me say that I consider the behavior of Wells Fargo toward its customers to have been egregious and unacceptable,” she said at her press conference following the Fed’s September monetary policy meeting. “We take our supervision responsibilities of the company very seriously. And we are attempting to understand what the root causes of those problems are and to address them.”

Now, for a person one of whose job requirements is to always speak cryptically, vague and ambiguously in public – Fedspeak, in other words – to call out one of the largest banks in the country and call its behavior “egregious and unacceptable” is pretty startling. That’s why I believe a major fine – at least $1 billion – against the Wells Fargo & Company (NYSE:WFC) by the Fed is coming.

Not only would it be justified, but certainly not out of line given past Fed penalties against other banks that committed far less “egregious” misdeeds. The fact that all of Wells’s transgressions were highly publicized and committed against consumers – millions of them – makes it even more imperative that the Fed let Wells have it between the eyes.

Let’s look at some recent big fines imposed by the Fed against the banks it regulates: Continue reading "Will The Fed Drop The Hammer On Wells Fargo?" →