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Jim Bianco Profile picture
@biancoresearch
Sep 27, 2022 • 8 tweets • 3 min read • Read on X
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1/7
Today's edition of all is not well in the bond market.

------

The Move (the "VIX of the bond market") closed today at 158.12. This is its second highest print in 13 years.

Since 2009, the only day higher was March 9, 2020, arguably the worst market day of the pandemic. Image
2/7
Every time the MOVE gets above 155, the Fed is having emergency meetings (to cut to 0% or print), bailouts are being constructed, and/or bond traders are running around with their hair on fire.

Given this, is it safe to assume all is well this time around?
3/7
Add to the mix that liquidity is worsening, as measured by Bloomberg.

This level of illiquidity occurs when the bond market is dysfunctional. Image
4/7
And BofA's Financial Stress Indicator is getting materially worse by the day.

Again, is/should this be a concern? Image
5/7
As noted above, in the past, when this was the backdrop, the Fed was cutting to zero and printing like mad.

Now, however, we have ongoing QT and the market STILL pricing in a 75 bps hike at the next FOMC meeting (Nov 2). Image
6/7
The bond market is very big, very opaque, and very complicated. This is why it blows up regularly (GFC 2008, repo 2019, COVID 2020, now???). What have been the warning signs trouble is brewing? The tweets above!

The bond market seems to see this, note the blue line! Image
7/7
So I ask again, is this tweet thread a bunch of things that are not concerning this time around? if so, why?

Or does this tweet thread tell us there are big problems under the surface?

Q: Is this why the S&P 500 has been in a relentless decline over the last few weeks?
EVERYONE, PLEASE DISREGARD MY TWEET THREAD ABOVE ABOUT CONCERNS IN THE BOND MARKET.

I JUST LEARNED THAT JANET YELLEN SPOKE EXACTLY ONE HOUR AGO, AND ALL IS WELL, NOTHING TO SEE HERE.

PLEASE CARRY ON

• • •

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More from @biancoresearch

Jim Bianco Profile picture
Sep 1
1/6
Recessions and financial crises can have a profound and lasting impact on an economy for years to come.

We had both in 2020. This changed the economy.

Change does not mean worse or dystopian. It means different. This economy differs from 2019 (pre-COVID).
🧵
2/6
Following every recession, the tenor of inflation shifts.

The current post-COVID recovery, as shown in blue, indicates inflation has reached a significantly higher level, with more volatility (wider standard deviation) than during the post-financial crisis period. Image
3/6
Something more may be at play, as larger trends in inflation seem to have shifted with the COVID pandemic. Image
Read 6 tweets
Jim Bianco Profile picture
Aug 31
1/8
In this post about rising inflation, some replies suggest that housing prices are falling, which will help hold down inflation.

The problem is that most metrics are saying home prices are booming to all-time highs. This is why we have an "affordability" crisis.

🧵
2/8
Case-Shiller National Home Price Index.

All-time high. Image
3/8
Median home price

Seasonally adjusted, all-time high Image
Read 8 tweets
Jim Bianco Profile picture
Aug 17
Home prices have been 🚀 for years.

The problem is not mortgage rates, it's inventory (not enough).

Cut rates and home sellers raise prices, and monthly payments remain unchanged. The affordability problem remains. Greedy boomer homeowners get richer.

How to fix affordability?

Reduce zoning and building regulations to increase inventory. The problem is that selfish boomer homeowners wield these laws to restrict supply and drive up the price of their homes.Image
The Atlanta Federal Reserve calculates a Housing Affordability Monitor.

The median income in the United States (blue) and the income needed to qualify for a mortgage (detailed below the chart). The bottom panel shows the difference.

At 58%, this means one needs 58% more than the median income ($ 83k) to qualify for a median mortgage ($ 130k).

This is a new record, even greater than the peak before the housing crash from 2007 to 2009.

Home prices are too high. Cutting mortgage rates will only incentivize home sellers to increase their asking prices, and the problem persists.

We need more supply, that is what the record "unaffordability" is saying..Image
A home is considered “affordable” if it costs less than 30% of a household’s income.

The following chart indicates that the average home in the United States now costs 47% of the median household’s monthly income.

An all-time record, surpassing the bubble peak in 2006 before the housing crash.Image
Read 4 tweets
Jim Bianco Profile picture
Jul 13
1/3
Powell may have given Trump an opening to remove him. Will Trump take it?

Or, does Trump want/need "Too Late" Powell to stay as Fed Chairman until May 2026 to use as a punching bag?

🧵
2/3
The OMB Director and Acting CFPB Director @russvought laid out the charges of lying to Congress and mismanaging the renovation of the Fed (Eccles) building.

Powell has until July 22 to respond.

3/3
While the betting market still has Powell getting fired at less than 50%, it is now trending higher.
--
The Federal Reserve Act says that a Fed Governor (including the Chair) may be removed “for cause by the President.”

However, “for cause” is not defined in the statute and has never been tested in court in this context.

I would argue "for cause" is not a disagreement over Monetary Policy ("too late" cutting rates), but can be lying to Congress and/or mismanaging the rules around renovating the Fed (Eccles) building?

Powell said this to the Senate Banking Committee on June 25, 2025, as part of the semiannual Monetary Policy Report to Congress.
---
"Generally, I would just say we do take seriously our responsibility as stewards of the public’s money. ... There’s no VIP dining room. There’s no new marble—we took down the old marble, we’re putting it back up. We’ll have to use new marble where some of the old marble broke. But there’s no special elevators; there’s just old elevators that have been there. There are no new water features. There’s no beehives, and there’s no roof terrace gardens."
---
Technically, Powell is correct because the renovation has not been completed. However, such details are outlined in some plans for the renovations.

Is this a big deal? No. However, if Trump is looking for ANY reason to remove Powell, this might be enough. And it might be enough "for cause" that the Supreme Court will uphold it.

Furthermore, no one in Congress wants to spend any political capital defending a $2.5 billion marble Washington, D.C. building with private elevators, beehives, and private roof terraces.
---
Bottom line, Powell may have given Trump an opening to remove him. Will Trump take it?

Or, does Trump want/need "Too Late" Powell to stay as Fed Chairman until May 2026 to use as a punching bag?Image
Read 4 tweets
Jim Bianco Profile picture
Jul 1
1/8
Yesterday, Jim appeared on Bloomberg TV, warning that if the Fed cuts rates and the market thinks this is wrong, 10-year yields could surge through 5%.

(Perspective ... 10-year yields were last above 5% in October 2023 and as high as 4.85% in January).

🧵
2/8
President Trump disagrees with this thinking and believes the federal funds rate should be 1% right now.

From a "truth" posted on June 30. Image
3/8
If (or should I say when) Trump gets a Fed Chair to make 1% happen, how will the 10-year react?

Reminder of what happened last year to long rates when the Fed cuts rates (peach arrow) and the market does not think it's a good idea (cyan arrow). Image
Read 8 tweets
Jim Bianco Profile picture
Jun 26
1/4
I would argue that if the Fed cuts rates and you assume mortgage rates follow the federal funds rate lower (they may NOT be the case), home prices would rise, putting the monthly payment right back at $2,860.

Short 🧵
2/4
This is my favorite metric of home prices because it adjusts for the size of the house.

Redfin downloads every multiple listing service (MLS) across the country to calculate their median.

Prices are at a new all-time high. Image
3/4
Redfin's measure is not a fluke, as the national Case-Shiller Home Price Index is also at an all-time high.

Home prices are booming, benefiting homeowners/sellers. Image
Read 7 tweets

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