Inflation And Insolvency Causing Interest Rates To Rise

2025-01-20 13:35:00 ET

Summary

• Inflation remains an issue due to the $2.3 trillion of excess reserves poured out of the RRP facility and into the economy over the past three years.
• Inflation fears are fresh in the minds of the bond vigilantes, causing bond yields to rise.
• Therefore, any further increase in deficit spending that is monetized by central banks only serves to validate the insolvency and intractable inflation concerns - sending borrowing costs even higher.

US corporations’ hiring plans last year totaled 769,953 workers, the fewest since 2015, according to the labor research firm Challenger, Grey, and Christmas. Private sector data shows that the need to hire new employees for all of last year was the lowest in nearly a decade. The ADP report showed that there were just 122k jobs created in December. We also have the private data from the Institute of Supply Management. The ISM manufacturing survey showed the employment subcomponent was 45.3, which means employment is in contraction, and contracting faster. Also, the ISM service sector survey showed that job growth was barely in expansion territory at 51.4....

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