The strong treasury securities’ interest rate inversion indicates that the market believes “some time” is maybe a year.
6 month 4.82%
2 year 4.25%
5 year 3.74%
https://www.bloomberg.com/markets/rates-bonds/government-bonds/us
Edit. Current fed rate 4.25%
They’re not. “Climate-related risks”, including climate-driven policies, not “the climate”. They’re exploring how such a risk can be quantified. I dont want to see our banks just winging it on potentially catostrophic risks; give them some basic guidelines and standards that can still choose or choose not to follow. It’s about helping banks figure out how to not be adversely affected by ongoing climate policies (ie, the foolishness), as much as any alleged climate factors.
What the heck do some financial weenies at the federal reserve know about climate science? The Fed needs to stick to its mandate to control inflation without sticking their nose into other areas where they know nothing.
There are plenty of banks that already virtue signal by not making loans to fossil fuel companies. It’s clear the Fed wants to stop other banks that are willing to invest in lucrative fossil fuels from making loans.
The Fed is responsible for the annual stress tests that banks are subjected to. Part of their mandate is to ensure the viability and stability of the banking system, including the too-big-to-fail banks. Which involves considering all risk factors.
If I were lending billions of dollars, I’d give pause when it came to lending to fossile fuel companies too. Not because I was “virtue signaling”, but because I’d be trying to factor in the risk that such a business might be regulated into obscurity over the next decade. Ultimately, I doubt I would give that factor much weight, but it’s a factor none-the-less. And it’s what the Fed is trying to develop some ways to quantify.
It isnt about forcing “good” [sic] climate policy onto banks, it’s about helping banks factor in the risks of when someone does try to force “good” climate policy onto everyone.
This is a self-fulfilling prophecy. First one branch of the administrative state oversteps its mandate to claim to regulate carbon dioxide emissions. Then another branch says banks should not lend to fossil fuel businesses because they are likely to fail because of the government regulations.
The fact is that fossil fuel businesses are doing very well. In another thread showing stock prices over the past year some of the best performers were energy companies like XOM up 80%. CVX up 38% while The Standard & Poor’s 500 is down about 20%.
If fossil fuel companies fail because of government regulations then the economy and banks will have much bigger problems than weakness in the energy sector. The favored energy sources of the climatistas, solar and wind, are not ready to step in to replace fossil fuels. Forcing the society to try to use them exclusively will cause economic chaos.
Wowee! A government official who doesn’t want to expand his power. Hmm … is it possible he’s trying to look good from some other reason?
Today’s the day for Dec. 8:30am for CPI, 10am for Biden victory lap.
CPI for Dec, as expected. Dec monthly CPI was down a touch (6.5% is the annual ending Dec’22).
Note December “Core” CPI, ex food/energy, was +0.3% for Dec or 4% annualized, so it was another month saved by falling energy prices.
US Dec Consumer Prices Increase 6.5% From Year Earlier; Core CPI Up 5.7% Over Year
US Dec Consumer Prices -0.1%; Consensus -0.1%
US Dec CPI Ex-Food & Energy 0.3%; Consensus 0.3%
US Dec CPI Energy Prices -4.5%; Food Prices 0.3%
https://www.bls.gov/news.release/cpi.nr0.htm
U.S. SHORT-TERM INTEREST RATE FUTURES NOW UP ON THE DAY, TRADERS SEE QUARTER-POINT RATE HIKE IN FEB. AS OVERWHELMINGLY LIKELY
FUTURES TIED TO FED POLICY RATE IMPLY ABOUT A 100% CHANCE OF A QUARTER-POINT FED RATE HIKE IN FEB.
More Fed comments
Those comments sound taylor-made for a market where short term rates are close to 5% while longer term rates are barely crossing 4%.
Neel Kashkari, President of the Minneapolis Fed.
I commented that the financial markets didn’t seem to believe that the Fed would stay the course. The central bank, in its latest forecast, had projected that the Fed Funds Rate would increase to at least 5 percent and that there would be no rate cuts this year. But the markets were pricing in cuts starting in its second half. “I’ve spent enough time around Wall Street to know that they are culturally, institutionally, optimistic,” Kashkari replied. I said it seemed almost as if the markets were playing chicken with the Fed. Kashkari laughed. “They are going to lose the game of chicken, I can tell you that,” he said.
You’re exactly right. The 30 year went off at around 3.6%.
I’m betting against that … not playing chicken with the fed, but will be impressed at 4.5% and shocked at 4.75%.
The gray energy bars are all over the place. If you look at the price of the energy ETF, VDE, the stock market is not worried about oil price decreases.
Edit. Oil prices have actually been increasing slightly recently
Edit 2
Perhaps related, the price of gold has been up recently
Not sure whether this is the appropriate thread so please relocate as needed…
Wanted to know opinions regarding the potential default. Personally I don’t believe a default will happen but this is a political situation and anything can result from political maneuvers in Congress.
It depends on when we default. Just look at the numbers for the debt. It’s 121.5% of GDP. And that’s just the nominal debt. The total including unfunded debt is about three times larger.
Well, I realize that. I was thinking on the current potential issue of defaulting this year.
If you look at the national debt clock website I linked, US annual tax revenue is about $4600 billion while the interest on the national debt is about $500 billion. We can easily pay the interest from current tax revenue by prioritizing it. There’s no need to default even without increasing the debt limit. A default would be a deliberate choice by the regime.
We won’t default any time soon. As @onenote wrote, there is no necessity to default. In fact, I don’t think there will be the choice that was mentioned. The Republicans will not hold up against the barrage of stories of possible woe by federal employees, senior citizens, and everyone else that will die without the federal government.
I just wished the media accurately reported that it would be possible woe instead of guaranteed woe. 
ETA: These stories have been occurring any time a Republican talks about fiscal restraint within a couple of months of hitting the debt limit, since, at least 1994. It may have occurred during the Reagan years, but he deftly went over the media’s talking heads.
