Ten-year interest rates exceeded 4.8% in the United States on Tuesday, October 3, a record not seen since August 2007. Wall Street investors are now wondering whether the 5% mark will be crossed. here at the end of the month. This is already the case for two-year rates, which are at 5.15%. The thirty-year mortgage rate has exceeded 7.7%, a record since 2000, which makes the purchase of housing considerably more expensive.
Six months after the bankruptcy of several regional banks, poorly protected against rising rates and poorly monitored by the Fed, the American central bank, the phenomenon could plunge the United States into a financial and real estate crisis.
This surge in rates was fueled by the publication, on Tuesday morning, of job offers, which jumped at the end of August to 9.6 million, compared to 8.9 million at the end of July. Better than expected, this statistic indicates a job market that is still too tight, which risks fueling inflation. This trend, if confirmed by the September employment figure, expected Friday October 6, should confirm the Fed in its intention to raise its short-term rates before the end of the year – they are now understood between 5.25% and 5.5% – and, above all, to maintain the cost of money at a high level throughout 2024.
Loss of credibility of the federal state
If inflation has fallen from a high of 9.1% at an annual rate in June 2022 to 3.7% in August 2023, a rebound is likely. The obsession of the Fed, which wants to return to 2% inflation, is to avoid the mistakes of the 1970s and 1980s, when it released monetary pressure too early, letting the general rise in prices slip away. The context encourages distrust. The strike by auto union workers at General Motors, Ford and Stellantis, which has the support of politicians and US presidential candidates Joe Biden and Donald Trump, will lead to wage increases of more than 25% over four years . After the Hollywood screenwriters’ strike, Netflix will increase the price of its subscriptions.
A barrel of Texan oil is hovering around 90 dollars (86 euros), compared to 70 dollars at the start of the summer, and should fuel inflationary pressures. The price of a gallon of gasoline averages $3.80, compared to just over $3.50 three months ago. Decoupling from China and deglobalization are increasing costs, while America is engaged in a process of repatriating the means of production.
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