Tuesday June 21 2016 Housing and Economic stories

TOP STORIES:

Foreign selling of U.S. Treasuries in April was most since 1978: data - (www.reuters.com) Foreign investors sold a record amount of U.S. Treasury bonds and notes for the month of April, according to U.S. Treasury Department data on Wednesday, as investors priced in a few more rate increases by the Federal Reserve this year. Foreigners sold $74.6 billion in U.S. Treasury debt in the month, after purchases of $23.6 billion in March. April's outflow was the largest since the U.S. Treasury Department started recording Treasury debt transactions in January 1978. Private offshore investors sold $59.1 billion in U.S. government bonds, while foreign official institutions, which include central banks, sold $12.3 billion.

Brexit darkens cloud hanging over European banks - (www.reuters.com) Euro zone bank stocks dipped to near four-year lows on Thursday as worry spread that a British exit from the European Union would worsen their already dim prospects. The share slide underscores the problems that could face all European lenders if Britain votes to leave the EU next week, a step that the Bank of England warned would harm not just the UK economy but also spill over globally. Europe's banks, still grappling with billions of euros of loans that may never be repaid as the region wallows in the doldrums and unemployment remains stubbornly high, are again in the front line of investor concerns.

How the Government Hides Inflation, as Housing Costs Soar - (www.wolfstreet.com) Why are rents rising sharply when incomes, especially for the lower 80%, have languished? It’s not like renters have more money to blow on rent and thus are driving up rents. On the contrary. Since the Fed began its ZIRP and QE programs with the express goal of inflating asset prices, stocks and bonds have soared, home prices have soared, commercial real estate has soared, including apartments. Nearly all asset prices have soared. According to the Green Street Commercial Property Price Index (CPPI), commercial real estate prices have more than doubledsince May 2009, when the Fed’s “wealth effect” started to kick in:

The Fed Is Learning Just How Hard the Exit From Easy Money Will Be - (www.nytimes.com) This is the buzz saw that Janet Yellen, the Federal Reserve chairwoman, walked into as she addressed the news media — and by extension, every trading floor on earth — Wednesday afternoon. The Fed’s official mission is to take care of the American economy, and the economy is doing pretty well. The unemployment rate is 4.7 percent, its lowest in nine years and around the level Federal Reserve officials think is sustainable in the long run. Wages are rising steadily. After a soft first quarter, economic growth is accelerating. For Ms. Yellen, a labor economist with decades of experience, it all points to a recipe for higher inflation, a single month of weak jobs data notwithstanding. Some of her colleagues would also emphasize that keeping rates too low could create imbalances in the economy and spur new financial crises.

Global Bonds Entering New Abnormal as Japan Leads Yield Meltdown - (www.bloomberg.com) Japanese, German and Swiss bond yields fell to records, as government debt around the world extended its best gains in two decades, with the prospect of Britain leaving the European Union boosting demand for havens. Federal Reserve Chair Janet Yellen fueled the rally by saying Wednesday slow productivity growth and aging societies may keep interest rates at depressed levels. Fewer Fed officials expect the central bank to raise interest rates more than once this year than they did three months ago, based on projections the central bank issued. The Bank of Japan said inflation in the nation may be zero or negative, while holding monetary policy unchanged.

OTHER STORIES:

Yen’s Jump to 20-Month High Spurs BOJ Easing Bets as Fed Holds - (www.bloomberg.com)
Dollar Extends Drop Ahead of BOJ as Japan Bonds Jump; Oil Sinks - (www.bloomberg.com)
Wary Fed Rethinks Pace of Hikes - (www.wsj.com)
Fed Skips June Increase as Six Officials See One 2016 Hike - (www.bloomberg.com)
Treasuries Surge as Fed Holds Rates Unchanged, Signals Slow Pace - (www.bloomberg.com)

Yellen: Brexit was a factor in decision, could have economic consequences for US - (www.cnbc.com)
The Fed’s New Dot Plot - (www.bloomberg.com)
Oil Caps Longest Losing Streak in Four Months - (www.bloomberg.com)