, “Members agreed that further increases in interest rates are likely to be needed over the months ahead”.Housing inertia temporary
Yet, the latest data shows that the household savings ratio has almost returned to its average historical level. We’ve been spending like it is 1999 and quickly burning through these buffers. Another wrinkle with the excess savings proposition is that most of this cash is held by folks over the age of 55 with very little debt.
The current inertia is likely to be temporary and superseded by another period of sustained weakness as the 115 basis points of rate increases that have yet to be felt by borrowers is slowly passed through, as future rate rises contribute to a further compression in purchasing power, and as this unprecedented tightening of monetary policy destroys demand and forces the unemployment rate much higher.
Since 2007, high-yield single “B” rated bonds in the US have paid about 3.5 percentage points in extra annual interest over their much safer and more liquid BBB rated alternatives to compensate for the far higher default risk on B rated debt.
Traders report that the riskier high-yield part of the bond market has been plagued by extreme illiquidity since 2021. If you look at the new issue, or primary, market, issuance volumes are sitting at about one-third of their normal levels.
cjoye
cjoye Great housing crash....what a croc of shit, so few properties for sale any decent properties are selling at same prices as 12 months ago, at least they are in bayside Melbourne.