According to a recent study, the average total household debt in America is just over $132,500, broken down as per the chart below...
... and thanks to the Fed's recent and ongoing rate increases, the repayment of said debt will become increasingly more difficult. So difficult, in fact, that most Americans will be saddled with a sizable chunk of it at the time of their death.
Actually, most already are.
Moments ago the Fed released the first phase of its annual stress test which, once again, found that all thirty-four of the US largest banks "passed", exceeding minimum projected capital and leverage ratios under severely adverse scenarios, based on their projected ability to withstand economic shocks, which as Bloomberg notes, shows that "firms are getting the hang of the once-dreaded reviews." The result marks the third straight year all firms cleared the minimum requirements in the exams’ first phase, begging the question just how "stressful" this test truly is.
Wherever one looks there are disconnects... between bonds and stocks, between risk and uncertainty, between hope and reality. But, as former fund manager Richard Breslow notes, most critically, there is a divergence between data and Fed actions, and this time is different as central banks appear to have shifted into 'whatever it takes' to tighten policy from emergency levels mode.
As Bloomberg's Richard Breslow writes,
Authored by Lance Roberts via RealInvestmentAdvice.com,
In their policy announcement last week, the members of the FOMC claimed:
“Information received since the Federal Open Market Committee met in May indicates that the labor market has continued to strengthen and that economic activity has been rising moderately so far this year.”
Discussing the market's ongoing reaction to the schizophrenic split between the hawkish Fed and a market which now sees a 50% lower terminal Fed Funds rate than the FOMC, yesterday Jeff Gundlach said that the flattening yield curve could become a concern for US economic growth when two and three-year notes yield about the same.
"Lower CPI in the next couple of months will be a cold bucket of water for the Fed tightening dreams," Gundlach said. "Commodities are super weak, with the dollar down year-to-date, no less."