A straw in the wind? A false flag? Or a harbinger?
Calculated Risk picks the indicators. These are Friday's numbers:
The three month LIBOR increased slightly to 2.16% from 2.15%. (October it was 4.81+)
The TED spread: 2.13. (slightly worse) (October it was 4.6+)
The A2P2 spread decreased to 4.16 from a record (for this cycle) 4.83
The two year swap spread from Bloomberg: 107.5, up slightly from 103.0 (October was 165+)
In addition, some ARM's have DOWNWARD interest adjustments.
...60% of ARMs are tied to a LIBOR index, about 25% to various treasuries, and the remaining 15% to the 11th District Cost of Funds Index
It appears ARMs tied to the COFI and treasuries will be non-bombs. The other 60% of loans tied to LIBOR might reset at a higher rate, although with the 3-month LIBOR down to 2.16% (it was 5.02% one year ago), even these 60% aren't bombs
Not exactly clear skies and fair winds, but compared to October's numbers (and the forecasts of cataclysmic ARM-reset rates) it's not horrific.
Add to that the rapid drop in gas (Paid $1.49 in KC yesterday) and the consumer has gotten a fair amount of price shock removed.
ReplyDeleteThe questions now are:
1. Will Congress keep their hands out of things so as not to do stupid things that take away disposable income i.e. gas tax increase
2. When will the MSM quit whining about "the second great depression?" Consumers will not spend until they think they will keep their jobs and have income...the direction of the economy will not change until the consumer does.