Save US Federal Funds Rate

Fed went through a rate hike cycle from the end of 2015 to August 2019.

Save Federal Funds Rate vs. S&P 500

The chart shows that when the Fed enters a rate-rising cycle, the economy grows faster and the stock market can yield higher returns than the bond market.

Save US 10-year Bond Yield - 2-year Bond Yield

Long-term bond yield reflects inflation. Short-term bond yields are tools used to predict Fed's interest rate policy. Spread between the two represents four cycles of an economy.

1. Growth
Short--term yield rises as interest rates rise. Spread narrows.

2. Slow growth
Central bank raises interest rates faster and short-term yield exceeds long-term yield. Spread turns negative.

3. Recession
High interest rates lead to more defaults. Inflation caps consumption. Central bank lowers interest rate to stimulate the economy and short-term yield falls. Spread widens.

4. Recovery
Central bank continues easing. Spread remains wide and yield curve remains steep.

Save S&P 500 Volatility Index (VIX)

The Chicago Board Options Exchange S&P 500 Volatility Index SM (VIX1M) measures the market's expectation of 30-day volatility implicit in the prices of near-term S&P 500 Index options.

When VIX goes over 40, the market is irrationally panicky; when it goes below 15, the market is irrationally exuberant.

Save Investment-Grade Bonds Yield Rate

Investment-grade bonds are credible corporate or municipal bonds that are rated as investment-worthy by rating firms, and they present little default risk.

AAA is the highest rating, meaning it has zero risk and has the highest credibility. It also has the highest solvency and is free from any economic impact.
AA is the second highest bond rating and has little risk and high solvency.
A is still a high rating, however, it might be easily influenced by negative economic consequences.
BBB-grade bonds suffer from investment risks and is the lowest investment-worthy rating for investors.

Save Junk Bonds Yield Rate

Junk bonds have the lowest ratings, and they usually present huge default risks. When junk bonds yields climb up, it means investors are dubious about the issuer's ability to pay off.

Save Delinquency Rate on Loans

When mortgage and commercial mortgage delinquency rates are low, and personal credit delinquency rates are up, it means consumers are facing greater personal credit risks. (Since Fed raised interest rate in 2015, consumption debt and car loans delinquency rates are inching up.)

Save Trade Weighted US dollar Index

Trade Weighted US dollar Index is created by Fed using 26 different currencies.

Save Net Percentage of Domestic Banks Tightening Standards for Commercial and Industrial Loans to Firms

Fed surveys about 70 national banks and 20 foreign banks in the United States in order to better understand the demand changes in borrowing activities from companies to the banks. The survey includes updates of borrowing requirements and conditions, supply of lending and changes in demand.

Companies who report revenues over 50 million are categorized by Fed as large and middle-market firms. Fed conducts the survey every three months and receives 5 types of feedback from the banks: tightened considerably, tightened somewhat, remained basically unchanged, eased somewhat, and eased considerably.

Net percentage of domestic banks tightening standards for business loans = Percentage of banks tightening - Percentage of banks easing

When the economy is overheating, Fed usually accelerates rate hikes, resulting that banks are tightening loans. And when the economy reverses its movement, the banks are even more unwilling to give loans, causing net percentage of banks tightening to soar.

Critical point is zero.

Save Net Percentage of Domestic Banks Increasing Spreads of Loan Rates over Banks' Cost of Funds to Firms

Fed surveys about 70 national banks and 20 foreign banks to better understand the changes in supply and demand of business loans. The survey includes updates of borrowing requirements and conditions, supply of lending and changes in demand.

Companies who report revenues over 50 million are categorized by Fed as large and middle-market firms.
If the difference between the interest rate of business loans and the bank's costs of capital widens, it is considered as tightening. Fed conducts the survey every three months and receives 5 types of feedback from the banks: tightened considerably, tightened somewhat, remained basically unchanged, eased somewhat, and eased considerably.

Net percentage of domestic banks tightening spread between rates and costs = Percentage of banks widening spread - Percentage of banks narrowing spread

When the economy is overheating, Fed usually accelerates rate hikes, resulting that banks are tightening loans. When the economy reverses its movement, the banks are even more unwilling to give loans, causing net percentage of banks tightening to soar and spread to widen. And when the economy recovers, banks are to ease loans and narrow spread.

Critical point is zero.

Save US Net Percentage of Domestic Banks Reporting Stronger Demand for C&I Loans from Firms

Fed surveys about 70 national banks and 20 foreign banks to better understand the changes in demand of business loans. The survey includes updates of borrowing requirements and conditions, supply of lending and changes in demand.

Companies who report revenues over 50 million are categorized by Fed as large and middle-market firms.
If the difference between the interest rate of business loans and the bank's costs of capital widens, it is considered as tightening. Fed conducts the survey every three months and receives 5 types of feedback from the banks: substantially stronger, moderately stronger, about the same, moderately weaker, and substantially weaker.

Net percentage of domestic banks reporting stronger demand for c&i loans from firms = Percentage of banks reporting stronger demand - Percentage of banks reporting weaker demand

When the economy is overheating, Fed usually accelerates rate hikes, resulting that banks are tightening loans and that companies are less willing to borrow because the costs to make loans are high. When the economy reverses its movement, the companies are even more unwilling to make loans, because there's no profitable investment target or production, causing net percentage of banks reporting stronger demand to drop. When the economy recovers, the demand for c&i loans recovers, too.

Critical point is zero.

Save Fed Total Assets / GDP

Before the Financial Crisis, Fed had a balance sheet of 850 to 900 billion. It later quadrupled after three rounds of quantitative easing during which it went up to 2.3 trillion after the first round, rose to 2.87 trillion after the second, and reached 4.5 trillion at last.

Fed's total assets accounted for roughly 8% of US GDP before Financial Crisis, soared to 15% at the end of 2008, and continued growing to a peak of 25% by the end of 2014. Since Fed ended the third round of quantitative easing in October 2014, it has been keeping its Treasury assets intact by reinvesting principal payments in Treasury securities and agency MBS.

Save Fed's Balance Sheet: Asset

Before Financial Crisis, 85% of Fed's total assets were US national debt. After Financial Crisis, Fed began buying agency mortgage-backed securities. Agency MBS account for roughly 40% now and national debt 55%.

Save Fed's Balance Sheet: Liability

Before Financial Crisis, 92% of Fed's total debt and capital were circulating currencies, only 2% was agency savings. After Financial Crisis, circulating currencies have slid down to roughly 34% of Fed's total liabilities, while excess reserve became the major liability, expanding to 53%.

Save Fed & ECB & BOJ M2 Supply

M2 includes M1, time deposit, and saving deposit. It reflects the market's total demand of funds and indicates future inflation.

M2 Comparison created by MM compares M2 stock of Fed, ECB, and BOJ and offers insight on the quantity of funds that are circulating in the market.

Save FedWatch: Probability of Rate Hike/Cut

FedWatch is a tool based on CME's 30-day Fed Funds Futures and used to predict the probability of Fed‘s interest rate move.

Save US Libor

LIBOR is the interest rate at which banks borrow from each other in the London market and is denominated in USD, EUR, GBP, JPY, and CHF. LIBOR has overnight, 1-week, 1-month, 2-month, 3-month, 6 month, and 1-year rates. Sixteen international banks in London will renew interest rates and eliminate the extremes everyday at 11am. The average rate will be LIBOR of the day.

LIBOR is a benchmark for derivatives with floating rates. Derivative products, such as government and corporate debt, collateral and student loans, credit card and interest rate swaps, are usually based on LIBOR. The short-term changes of LIBOR also reflect the demand and supply of a certain currency in the international banking system. For instance, during the US subprime mortgage crisis, LIBOR skyrocketed and created a huge gap between itself and US Federal fund rates, indicating a tight USD liquidity back then. It serves as a warning sign of market crisis.

Save 3-month Libor

LIBOR is an average interest rate between banks in London, determined by the market. It has 7 dues and 5 denominations. It indicates the level of liquidity among major financial institutes.

When LIBOR rises, liquidity is "tightening"; when LIBOR lowers, liquidity is "easing."

Save US & Germany 10-year Bond Yield Spread

US & Germany spread = US 10-year bond yield - Germany 10-year bond yield

The long-term yield reacts to the overall economic changes, and the spread reflects the difference of economic strength between US and Eurozone. When spread goes up, American economy is stronger, and vice versa.

Based on historical data, when US-Germany spread goes down, or even falls below zero, it is often accompanied with an economic crisis.

Save OFR Financial Stress Index

Financial Stress Index (FSI) is created by Office of Financial Research (OFR), using 33 financial variables out of five categories: credit, equity, funding, flight to safety, and volatility. It reflects the stress level the financial market goes through everyday.

When the index equals zero, the variables are at their long-run average. When the index is positive, financial risks are rising. When it's negative, the market is comparatively steady and safe.

Save US IOER minus EFFR

Before Financial Crisis broke out, Fed has used open market operation to control interest rates. BoA's excessive reserve was at a very low level of 267 billion. Fed provided BoA with reserve supply through practicing OMO to stabilize interest rates.

After the crisis, however, Fed conducted three rounds of quantitative easing and operation twist. BoA's reserve then shot up to 2.67 trillion in October 2014, causing demand for reserve to quiet down and Fed has no more room to use OMO again.

After 2008, IOER became the cap rate. In October 2008, Fed provided banks with reserve at Interest Rate on Excess Reserves (IOER), planned to set IOER the lowest cap rate and by doing so to ease demand for reserve. However, many federal lending institutions such as Fannie Mae and Freddie Mac and other government-sponsored enterprises were still lending money at rates lower than IOER, which instead became the highest cap rate, deviating from what Fed was trying to achieve. It left some room for lending/borrowing to take place at rates within IOER and Effective Fed Fund Rate (EFFR).

Save 2020 Fed Interest Rates Projection at Yearend

CME Group releases its daily projections of Fed's interest rates at the end of the year. It reveals the numbers of rate cuts in the year.

0.00% to 0.25% means Fed cut rates by 150 bps
0.25% to 0.50% means Fed cut rates by 125 bps
0.50% to 0.75% means Fed cut rates by 100 bps
0.75% to 1.00% means Fed cut rates by 75 bps
1.00% to 1.25% means Fed cut rates by 50 bps
1.25% to 1.50% means Fed cut rates by 25 bps
1.50% to 1.75% means Fed kept rates unchanged

Save US Net Percentage of Domestic Banks Tightening Standards for consumer loans

Fed surveys about 70 national banks and 20 foreign banks in United Staes in order to better understand the demand changes in consumer lending activities. The survey includes updates of borrowing requirements and conditions, supply of lending and changes in demand.

Consumer loans include installment loan, credit card, mortgage, and car loan. Fed conducts the survey every three months. There are 5 types of feedback: tightened considerably, tightened somewhat, remained basically unchanged, eased somewhat, and eased considerably; or substantially stronger, moderately stronger, about the same, moderately weaker, and substantially weaker.

Net percentage of domestic banks tightening standards for consumer loans = percentage of banks tightening - percentage of banks easing

Percentage of net demand of consumer loan = percentage of increasing demand - percentage of decreasing demand

When the lending activities are easing and demand is growing, it isa good time to invest the stock market. But when demand is reducing, the economy might be somewhat weak. Investing stock market might not be the best choice.

Critical point is zero.

Save US Net Percentage of Domestic Banks Tightening Standards on Consumer Loans, Credit Cards

Fed surveys about 70 national banks and 20 foreign banks in United Staes in order to better understand the demand changes in consumer lending activities. The survey includes updates of borrowing requirements and conditions, supply of lending and changes in demand.

Consumer loans include installment loan, credit card, mortgage, and car loan. Fed conducts the survey every three months. There are 5 types of feedback: tightened considerably, tightened somewhat, remained basically unchanged, eased somewhat, and eased considerably; or substantially stronger, moderately stronger, about the same, moderately weaker, and substantially weaker.

Net percentage of domestic banks tightening standards for consumer loans = percentage of banks tightening - percentage of banks easing

Percentage of net demand of consumer loan = percentage of increasing demand - percentage of decreasing demand

When the lending activities are easing and demand is growing, it isa good time to invest the stock market. But when demand is reducing, the economy might be somewhat weak. Investing stock market might not be the best choice.

Critical point is zero.

Save US Net Percentage of Domestic Banks Demand for Auto Loans

Fed surveys about 70 national banks and 20 foreign banks in United Staes in order to better understand the demand changes in consumer lending activities. The survey includes updates of borrowing requirements and conditions, supply of lending and changes in demand.

Consumer loans include installment loan, credit card, mortgage, and car loan. Fed conducts the survey every three months. There are 5 types of feedback: tightened considerably, tightened somewhat, remained basically unchanged, eased somewhat, and eased considerably; or substantially stronger, moderately stronger, about the same, moderately weaker, and substantially weaker.

Net percentage of domestic banks tightening standards for consumer loans = percentage of banks tightening - percentage of banks easing

Percentage of net demand of consumer loan = percentage of increasing demand - percentage of decreasing demand

When the lending activities are easing and demand is growing, it is a good time to invest the stock market. But when demand is reducing, the economy might be somewhat weak. Investing stock market might not be the best choice.

Critical point is zero.

Save US Federal Fund Interest Rate

Banks can borrow at Secured Overnight Financing Rate (SOFR) with Treasuries as collateral or at Effective Federal Funds Rate (EFFR) without collaterals. Both rates are indicative of the tightness of the cash flow in the market. When they reach/surpass target rate, it means the cash flow is tight and Fed might implement loose monetary policy.

Save US Central Bank Liquidity Swaps

Save US Liquidity and Credit Facilities: Loans: Primary Credit

窗口貼現為央行提供給商業銀行的資金渠道，簡單來說就是央行借錢給銀行，可滿足銀行短期的流動性。商業銀行用短期的國庫券、政府債券、商業貸款和銀行承兌票據等短期高質量的票據到央行進行貼現，以緩解其短期的流動性。

通常在景氣出現衰退、美元流動性出現問題時，央行的窗口貼現餘額（金額）就會增加，反映商業銀行有短期資金需求。

Save US 2020 Presidential Election: National Polls

The yellow bars are the gap between Biden and Trump's poll result. The higher the yellow bar reaches, the more favored Biden is.

General Election is on November 3rd, 2020. Everyone gets a vote. On December 14th, electoral colleges will cast their vote to the state's preferred candidate.

Source: www.realclearpolitics.com

Save Total Market Value of US Stocks / Fed M2 Money Supply

The total market value of US stocks had tripled during the Net Bubble, suggesting there had been too much money in the stock market. Since Fed began easing in 2008, however, M2 increased, and the result declined.

Save US Number of Bankruptcy Filings

Companies, including corporation, sole proprietorship, or partnership, in the US can file for Chapter 11 for bankruptcy protection to reorganize their business if they are in a difficult financial situation. Chapter 11 ensures the debtor in possession can continue to operate and reorganize at the same time.

Filings for Chapter 11 increase when the economy is overheating or recessing.