Episode 558
Haunted Economy?
Guys, the scariest thing on TV right now isn't Freddy — it's inflation, energy prices, and that spooky 10-year Treasury yield. I’ll keep it quick: when the feds borrow, they sell Treasuries, the yield is the return investors get, and when yields climb, mortgage rates and other borrowing costs usually follow. That trickles into housing, business loans, prices, and even hiring — aka real-life jump-scares way worse than a mask. Bond prices fall when yields rise, so your mortgage could feel the bite even if you’ve never touched a T-bill. We joke about CNBC’s ticker and Jim Cramer, but seriously — whispering “your adjustable rate is resetting” will creep you out more than any horror marathon.
Takeaways:
- I say Halloween movies are tame compared to inflation, energy prices, and rising treasury yields.
- We learn that the 10-year Treasury yield helps set mortgage rates and other borrowing costs, so yeah, it matters.
- I joke that CNBC's red tickers and Jim Cramer are scarier than Freddy Krueger, but seriously, bond traders affect your mortgage.
- We explain simply: when existing bond prices drop, yields rise, which pushes mortgage rates up and pinches wallets.
- I warn: forget Freddy chasing you — hearing 'your adjustable rate mortgage is resetting' will haunt you more than horror flicks.
Transcript
Ed Taste Act.
Speaker A:And Halloween is just a couple of weeks away, a little over two weeks away.
Speaker A:Everyone getting ready for scary movies like Halloween, the Exorcist, A Nightmare on Elm Street.
Speaker A:But if you really want to scare yourself, forget the horror movies.
Speaker A:Just turn on news about the economy.
Speaker A:Because lately some of the scariest things on television are inflation reports and energy prices and something called treasury yields.
Speaker A:And if you don't know what those are, they're really important.
Speaker A:When the federal government borrows money, it sells treasury securities to investors.
Speaker A:The yield is basically the return that investors get for lending Uncle Sam that money.
Speaker A:And here's why you should care.
Speaker A:The 10 year treasury yield is one of the biggest benchmarks when it comes to mortgage rates and other borrowing costs.
Speaker A:And so when that yield goes up, it pushes mortgage rates higher.
Speaker A:Most often it also influences what businesses pay to borrow money, which can affect pricing and housing and hiring in the broader economy.
Speaker A:And.
Speaker A:And when the existing bond prices fall, their yields rise.
Speaker A:So you might be sitting at home thinking, I don't own any T bills, why should I care?
Speaker A:Because the treasury number on cnbc, for instance, can help determine how much it costs you to buy a home.
Speaker A:It's like discovering that your mortgage rate is being influenced by a bunch of bond traders in New York who you've known, never heard of, they've never seen your kitchen, but what they do makes your mortgage go up.
Speaker A:And that's on top of inflation.
Speaker A:That's already making groceries more expensive and energy prices making every trip to the gas station feel like a financial emergency.
Speaker A:So at this point, you don't really need Freddy Krueger chasing you down a dark hallway.
Speaker A:Just have somebody whisper, your adjustable rate mortgage is resetting.
Speaker B:Looking for the most spine tingling horror marathon on telev.
Speaker B:Terror awaits on CNBC with frightful features such as inflation reports, energy prices and treasury yields.
Speaker A:I don't even know what those are, but I just wet myself.
Speaker B:Don't look now, but there's a creepy crawl at the bottom of the screen.
Speaker B:It's CNBC's stock ticker.
Speaker A:It's all in red like BL.
Speaker B:If you thought Freddy Krueger was scary, wait until you see Jim Cramer.
Speaker B:Sell, sell, sell.
Speaker B:CNBC 24 hours a day.
Speaker B:It's a nightmare on Wall Street.
