Interest on massive US debt, which is at $35.3 Trillion, is running at $3 Billion per day

Interest-on-US-debt-chart

Important Takeaways:

  • With U.S. debt now at $35.3 trillion, the cost of paying the interest on all that borrowing has soared recently and now averages out to $3 billion a day, according to Apollo chief economist Torsten Sløk.
  • And that includes Saturdays and Sundays, he pointed out in a note on Tuesday.
  • The daily interest expense has doubled since 2020 and is up from $2 trillion about two years ago. That’s when the Federal Reserve began its campaign of aggressive rate hikes to rein in inflation.
  • In the process, that made servicing U.S. debt more costly as Treasury bonds paid out higher yields. But with the Fed now poised to start cutting rates later this month, the reverse can happen.
  • “If the Fed cuts interest rates by 1%-point and the entire yield curve declines by 1%-point, then daily interest expenses will decline from $3 billion per day to $2.5 billion per day,” Sløk estimated.
  • Meanwhile, the federal government closes out its fiscal year at the end of this month, and the year-to-date cost of paying interest on U.S. debt was already at $1 trillion months ago.

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Federal Reserve chair Jerome Powell said “The time has come for policy to adjust”

Federal-Reserve-chair-Jerome-Powell

Important Takeaways:

  • Federal Reserve chair Jerome Powell said Friday that the central bank is poised to cut interest rates, adding that policymakers do not want to see the job market cool any further.
  • In a much-anticipated speech in Jackson Hole, Wyoming, Powell said the Fed’s fight to reduce inflation has largely succeeded and it now is attuned to risks of a faltering job market — setting up a rate cut in mid-September.
  • The unemployment has now risen to 4.3%, up nearly a percentage point from recent lows, raising alarm bells about a weakening economy.
  • “We do not seek or welcome further cooling in labor market conditions,” he said, in a notable contrast with his tone over much of the last two years, when he described a cooling in the job market as needed in order to bring the economy into better balance.
  • Between the lines: “We will do everything we can to support a strong labor market as we make further progress toward price stability,” Powell said, suggesting the recent worsening of the job market — the unemployment rate has risen from 3.7% in January to 4.3% in July — has the Fed’s attention.

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Economic Downturn – Federal Reserve falling behind in its aim to lower interest rates

Federal-Interest-Rate-Chart

Important Takeaways:

  • As many as a million jobs could vanish from US jobs data in revised numbers released this week.
  • Jobs growth in the year through March was likely much lower than initially estimated, top bankers are warning.
  • This could refuel concerns that the US economy is not as robust as it has appeared, and that the Federal Reserve is falling behind in its aim to lower interest rates.
  • The government will release its first revisions of jobs growth data on Wednesday, and then the final numbers are due early next year.
  • Goldman Sachs economists expect jobs growth for the year will be at least 600,000 weaker than current estimates – and the decline could be as much as a million.
  • A downward revision of more than 501,000 would be the largest in 15 years, Bloomberg reported, and would suggest the labor market has been cooling for longer than was originally thought.
  • The unemployment rate also edged higher to 4.3 percent – the highest level since October 2021.

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Trust the experts they say: Feds are realizing they were wrong as millions of jobs vanish

Bloomberg-Labor-Stats-chart

Important Takeaways:

  • US job growth in the year through March was likely far less robust than initially estimated, which risks fueling concerns that the Federal Reserve is falling further behind the curve to lower interest rates.
  • Goldman Sachs Group Inc. and Wells Fargo & Co. economists expect the government’s preliminary benchmark revisions on Wednesday to show payrolls growth in the year through March was at least 600,000 weaker than currently estimated — about 50,000 a month.
  • While JPMorgan Chase & Co. forecasters see a decline of about 360,000, Goldman Sachs indicates it could be as large as a million.
  • There are a number of caveats in the preliminary figure, but a downward revision to employment of more than 501,000 would be the largest in 15 years and suggest the labor market has been cooling for longer — and perhaps more so — than originally thought. The final numbers are due early next year.
  • Once a year, the BLS benchmarks the March payrolls level to a more accurate but less timely data source called the Quarterly Census of Employment and Wages, which is based on state unemployment insurance tax records and covers nearly all US jobs. The release of the latest QCEW report in June already hinted at weaker payroll gains last year.

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Federal Reserve allegedly targeted by hacking group

Federal-Reserve-hacked

Important Takeaways:

  • The cybercrime group claims it grabbed ‘33 terabytes’ of data from the Fed.
  • In a post to the dark web this week, the criminal organization alleged that it had been in talks with the bank in order to secure a ransom in exchange for keeping the data private.
  • “33 terabytes of juicy banking information containing Americans’ banking secrets,” the group wrote. “You better hire another negotiator within 48 hours, and fire this clinical idiot who values Americans’ bank secrecy at $50,000.”
  • LockBit rose to prominence in 2019 by bringing in millions of dollars in ransom payments. And although the group’s online infrastructure was shuttered by the FBI and other law enforcement agencies in February, LockBit has managed to reemerge and continue its operations.
  • Cybersecurity experts, however, are skeptical of claims regarding the Federal Reserve and note that LockBit has not released any sample data.
  • The Daily Dot reached out to the Federal Reserve to confirm whether LockBit’s claims were true but did not receive a reply.

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Dow takes plunge by 524 points

Important Takeaways:

  • Inflation driven Dow plunge is worst in 11 months
  • U.S. stocks tumbled in a broad sell-off after a hotter-than-expected inflation report may jeopardize the Federal Reserve’s plan to cut interest rates.
  • The Dow Jones Industrial Average fell 524 points or 1.3%, trimming a deficit of over 700 points reached during the session. It was the worst trading day in 11 months.
  • The benchmark has erased almost half its gains for 2024 with the 10-year Treasury yield hitting 4.3%.

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Banking trouble as Treasury yields rise

Treasury-Building

Important Takeaways:

  • Banks are bracing for a recession as Treasury yields surge
  • Bank stocks might be on pace for yearly losses as sharply higher interest rates take a toll, but the industry’s reserves are at the highest level in three decades, according to DBRS Morningstar.
  • Bank shares have come under more selling pressure since the Federal Reserve in September signaled it could keep rates higher for longer than earlier anticipated. The tough talk has dampened the year’s rally in stocks and reignited a dramatic selloff in the roughly $25 trillion Treasury market.
  • “Right now, there is nothing standing in the way of higher Treasury yields,” Kathy Jones, chief fixed-income strategist at Schwab Center for Financial Research, told MarketWatch. “It’s fairly obvious it’s not good for banks. The rise in yields has just been relentless.”
  • Higher yields on newly issued Treasury bonds erode the value of portfolios that include lower coupon debt issued when rates were lower. Banks also tend to hold large exposure to commercial property loans that could be difficult to refinance if rates stay higher for longer.

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Layoffs hit the Federal Reserve in a rare reduction first time in a decade

Federal-Reserve-Building

Important Takeaways:

  • Fed is cutting staff after more than a decade of payroll growth
  • The U.S. Federal Reserve system is cutting about 300 people from its payroll this year, a small but rare reduction in headcount across an organization that has grown steadily since 2010 as its reach in the economy and regulatory agenda have expanded.
  • A Fed spokesperson said the cuts are focused on the staff of the U.S. central bank’s 12 regional reserve banks and mainly hit information technology jobs, including some no longer needed because of the spread of cloud-based computer software, and positions connected to the Fed’s various systems for processing payments, which are being consolidated.
  • The spokesperson, who would not speak for direct attribution, said the staff cuts represented a combination of attrition, including retirements, and layoffs.

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Mortgage rates stalling the housing market as the 30-year fixed rate sits above 7%

Advice for Home Buyers

Important Takeaways:

  • The 30-year fixed-rate mortgage averaged 7.19% in the week ending September 21, a tick up from 7.18% the week before, according to data from Freddie Mac released Thursday. A year ago, the 30-year fixed-rate was 6.29%.
  • “Mortgage rates continue to linger above 7% as the Federal Reserve paused their interest rate hikes,” Sam Khater, Freddie Mac’s chief economist, said. “Given these high rates, housing demand is cooling off and now homebuilders are feeling the effect,” he said. “Builder sentiment declined for the first time in several months and construction levels have dipped to a three-year low, which could have an impact on the already low housing supply,” Khater added.
  • The inventory of existing homes has also dramatically declined as homeowners who previously locked in lower rates are reluctant to sell and become homebuyers with current rates so high. The combination of low inventory and high costs has sent overall home sales 20% lower than last year, year to date.

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One hundred Nations push for Digital Currencies and twelve Central Banks already have pilot programs

Federal-Reserve-statue

Important Takeaways:

  • Trending Toward A Cashless Society: One Hundred Nations Now Exploring Central Bank Digital Currencies
  • The Bible tells us that when the antichrist comes on the scene, he’s going to gain a foothold of global power. The beginning strategy of his power grab will be to first gain control over the world economy. It’s a lot faster and easier to gain economic control with all the means that are available today than it is to achieve military and political power. Once you have that economic control, you control people’s lives, and you can then take them over politically and militarily as well.
  • Recently, a new entity was created called the FedNow Service. The FedNow Service is a portal created by the Federal Reserve, which permits financial institutions to exchange funds digitally in real-time.
  • CoinDesk published an article recently that reads, “Federal Reserve’s ‘FedNow’ Launch Triggers Fresh Speculation Over Digital Dollar,” subheading, “While FedNow is currently not tied to any initiative for a digital U.S. dollar or the crypto space in general, experts warn that the system might end up as a precursor to the infrastructure for a central bank digital currency.”
  • Dave Weisberger, CEO and co-founder of CoinRoutes, said this: “If FedNow does indeed become a programmable CBDC, then it could theoretically be used to block payments for items the government doesn’t favor or to cut out people from the financial system who are seen as threatening in some way to governing authorities, aka, political opponents.”
  • On March 9th, 2022, President Biden signed an executive order that put into motion the machinery and the mechanism to develop a CBDC. In preparation for the G20 Summit, the Bank of International Settlements published a report laying out the Central Bank’s efforts to prepare for a CBDC and all its benefits.
  • At the same time that FedNow was emerging, the World Economic Forum (WEF) published principles of central bank digital currency interoperability.
  • One hundred nations are now exploring CBDC. Twelve central banks have pilot programs for digital currencies, and the EU already has a “digital euro.”
  • The problem with CBDCs is that they are programmable, traceable, expirable, and controllable by the government. For example, if a person goes to a gas station and they have a central bank digital currency, it can be determined how much money they are allowed to spend on gasoline. That’s how they will control the environmental agenda that we see taking place.
  • The trend toward a cashless society, they say, is inexorable. All of this is a striking foreshadowing of what we read in Revelation 13. It’s just another flashing light that the coming of Christ is near.

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