Interest rates on the 10-year US Treasury bond, the main source of long-term interest rates in the world, have risen sharply: from 4.1% at the beginning of September to 4.5% at the end of last week and to 4.88% on 4 October.
The 10-year US Treasury bond is the origin of all long-term interest rates, including mortgages and corporate bonds, and a rise in the 10-year US Treasury bond rate leads to a rise in all long-term interest rates.
In the US, the commercial property market is on the verge of collapse, and on 3 October, the trend started towards default bankruptcy when WiWork failed to make interest payments on its bonds. Rising interest rates on US Treasuries could be the final blow and cause the US property market to collapse.
Interest rates on US Treasuries are heavily reversed between short-term and long-term bonds. The next-day FF rate is 5.5%, while the 10-year US Treasury bond was at 4% until this summer.
Long-term debt is higher risk and therefore naturally has higher interest rates, but this has been drastically reversed in the US over the past few years. The US Federal Reserve Bank (FRB) and the financial community have been pouring money into the market to keep interest rates on 10-year US Treasuries from rising.
The textbook explanation is that a reversal in long- and short-term interest rates is a ‘harbinger of a recession’, but in fact the real economy in the US is not a ‘harbinger’ but has long since entered a genuine and severe recession.
A recession should cause share prices to plummet, but the financial community has been injecting funds into index stocks in a focused manner to drive up share prices. The US Fed is continuing QT, and although the source of funds is decreasing, the efficiency of focused injections is probably being increased to keep share prices high.
The media and financial experts continue to propagate the lie that the US economy is doing well, hiding the window dressing of stock prices. They no longer talk about the fact that the reversal of long- and short-term interest rates is related to a ‘recession’.
For seven consecutive months this year, the US authorities have repeatedly revised the unemployment rate employment statistics downward months after their release. Each month, they initially announce in window dressing that the US economy is booming because unemployment is decreasing, but then revise the statistics downwards discreetly months later, successfully hiding the fact that the economy is actually in recession.
In the US, interest rates, stock prices and statistics are window-dressed. This state of affairs has been going on for years.
The US government boasts that ‘Bidenomics’ has succeeded and the economy is booming, but the lives of non-rich US citizens are deteriorating due to inflation and social collapse (the result of Democratic Party policies such as the Awakening movement and the incitement to leave illegal immigration influx), and many in the middle class have fallen into poverty. Small businesses in the US are going bankrupt at an increasing rate.
The US is in a mess, but people in Japan and other foreign countries are oblivious to it because of their disregard for the media. From the Corona to the economic situation to the confrontation with China and Russia, there is a huge ruse going on all over the US side to make people believe that the onstage ‘stirring up’ portrayed by the authorities and media authority sources is real.
Those who point out the existence of the lying ruse are either ignored or criticised as ‘false news transmitters’ or, in Anglo-Saxon countries, treated as criminals. Lies are facts and facts are lies. The world has become completely Orwellian 1984.
The leaders of non-US countries are aware of the self-destructive phoniness on the part of the US, but they keep quiet with a chuckle because leaving it alone will lead to the triumphant development of the non-US side (Xi Jinping says nothing, but Putin is amused by the suggestion).
(The Chinese economy as well as the US and Europe are deteriorating, but the CCP is deliberately bursting its real estate and other financial bubbles as a measure to leave its previous economic puppet to the US. After the upcoming burst of the bubble, China and the CCP will be strengthened but the US and Europe will be weakened).
The US has been successful in its window-dressing and distorting measures, but eventually the balance somewhere will collapse and fail. The current rise in interest rates on 10-year US Treasuries may be that balance collapse. If interest rates stop rising within a few days, the collapse will not proceed and the window-dressing balance will be regenerated.
But once life is prolonged, inflation in the US will continue for a long time to come. Interest rates will continue to rise repeatedly and long-term interest rates will continue to rise. The balance of interest rate window dressing will eventually break irreversibly and the dollar will lose its reserve currency status.
The US Fed says that interest rate hikes and QT will bring inflation under control, but it is dead wrong. The current inflation is caused by the supply side, such as the distribution network, and deterring currency issuance by raising interest rates and QT will have no effect.
We have known this since inflation started two years ago, but the Fed has continued to raise interest rates and QT endlessly, and as expected, it has been ineffective. Initially, Chairman Powell himself resisted the idea that raising interest rates would not work because the cause of inflation is on the supply side, but he was pressured from higher up to raise rates and is labelled a blunder.
This kind of ‘deliberate blunder’ is a ‘hidden multi-polar’ approach to the self-destruction of US hegemony, which is also common to the Iraq war and the global warming issue. Inflation will continue for a long time, the US Fed will be forced to keep raising interest rates in an abortive manner, and the dollar and US hegemony will self-destruct.
The gold market crashed ahead of a spike in interest rates on 10-year US Treasuries, which fell from $1950 to $1820 an ounce.
This is probably a precautionary measure to use margin trading to crash the gold market before a sharp rise in US Treasury rates and a sense of dollar collapse could cause gold bullion, the dollar’s ultimate rival, to soar.
If interest rates on US Treasuries continue to rise, at some point the rise in interest rates will develop into a credit crisis for the dollar, and the gold market will rebound. If interest rates stop rising before that point, the gold market will not rebound. The non-US side welcomes the cheaper price because it allows them to buy gold bullion.