MONEY MASTER

Key Takeaway: Japanese and Chinese investors sold a combined $113.2 billion in US Treasuries during Q3 2024, signaling concerns over inflationary policies and geopolitical risks tied to President-elect Donald Trump's impending administration. Ahead of the US presidential election, Japanese investors sold a record $61.9 billion , while Chinese funds offloaded $51.3 billion of US government debt, according to US Treasury data. The moves came as Treasury yields peaked in September and concerns grew over Trump’s low-tax, high-tariff policies , which are expected to fuel inflation and higher yields . Key Drivers Behind the Sell-Off Pre-Election Uncertainty: Both countries reacted defensively to election risks, with Japan’s sales driven by fears of a Trump win and China responding to geopolitical tensions . Yield Concerns: Treasuries dropped 4% since mid-September due to expectations of higher US yields under Trump’s fiscal policies. Currency Interventions: Japan’s sales were par...

Following Donald Trump's presidential election win, US mortgage rates have continued their upward trend. The contract rate for a 30-year fixed mortgage increased by five basis points to 6.86% in the week ending Nov. 8, marking the highest level since July. Over the past six weeks, rates have risen by 72 basis points, the most significant surge in two years. This rise in mortgage rates aligns with the movement of Treasury yields, which have been influenced by investor expectations of higher inflation and budget deficits under the new administration. Consequently, the Federal Reserve may adopt a cautious approach to interest rate cuts in the near future. The Mortgage Bankers Association (MBA) reported a decline in refinancing applications for the seventh consecutive week, the longest streak since April 2022. However, applications for home purchases saw a slight uptick. The MBA's weekly survey, encompassing over 75% of all US retail residential mortgage applications, reflects thes...

With President-elect Donald Trump pledging to eliminate federal income taxes and further reduce corporate taxes, a longstanding tax break on municipal bonds may be at risk. As Republicans near control of both the White House and Congress, lawmakers may seek alternative revenue sources to offset the significant costs of these tax cuts, and the muni bond tax exemption, worth around $40 billion annually, could be an option. The municipal bond exemption , established in 1913, allows investors to avoid taxes on interest from bonds used by local governments to fund infrastructure, like bridges and roads. This feature has been critical for public finance, lowering borrowing costs for municipalities. If removed, state and local governments might face higher borrowing costs , potentially reducing infrastructure projects and placing more financial pressure on taxpayers. Despite bipartisan support for the exemption, some analysts predict select sectors, like education, could see restrictions ...