Key Points:
Rate Squeeze: Fed sits back → foreign buyers walk away → 30-year mortgage stuck at 6.58%.
One-Month Drop: Foreign central banks pulled $72 billion out of U.S. Treasuries in June, the biggest monthly drop in years, with China's holdings falling to their lowest level since September 2008.
Jackson Hole Watch: If Warsh signals no rate cuts Friday, the 30-year Treasury yield could hold above 5.31% (its highest since 2007) and keep mortgage rates elevated well into fall.
Flow Collapse: Net foreign inflows into U.S. Treasuries fell 88% month-over-month, from $56.6 billion in May to just $6.8 billion in June.
Kevin Warsh sat in front of reporters last month. He shrugged. "At some level we haven't done much in 42 days," he said. The markets, he added, had done the work for him.
I read that quote and thought of my friend Debbie. She's been waiting a year to refinance her house. Her rate is still 6.58%. And the man with the power to help her just said he's fine sitting back.
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Warsh is the new Fed chair. He got the job in May. He was a Fed governor once before, during the 2008 crash. Trump picked him this time around. He's a hawk. That means he's slow to cut rates.
He gives his big speech Friday at Jackson Hole. He told the press his notes are "a blank piece of paper right now."
Jackson Hole is where the Fed chair speaks each August. Every Wall Street desk stops to listen. One line from the chair can move markets. One line can move your mortgage. And this year, the chair says his page is blank.
I can't stop thinking about this. The Fed chair holds the most powerful job in money. He can push rates down. He can help Debbie refinance. He can help your son buy his first house.
He's choosing not to.
His logic goes like this. Long-term rates are already high. The bond market is doing the work. So why should the Fed step in?
That's a clean story for the men in the room. It's a cold one for the rest of us. Debbie doesn't care about bond math. She cares about her monthly bill.
Here's what worries me. While Warsh sits back, big players are moving. And they're moving fast.
In June, foreign central banks pulled $72 billion out of U.S. Treasuries. That's the biggest one-month drop in years. China cut $25.9 billion. Japan cut $26.4 billion. The U.K. cut $8.7 billion. Big countries. Big money. Walking away from our debt.
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China's holdings just hit their lowest level since September 2008. Think about that date. That was the month Lehman fell.
I don't think most people realize what this means. Foreign buyers keep our rates low. They have for years. When they show up, we don't have to pay them much. When they walk away, we have to pay them more.
That means higher yields on Treasuries. And higher Treasury yields mean higher mortgage rates. Higher car loans. Higher business loans. The whole chain goes up.
You feel it in the small things. The used truck your son wanted. The loan for your neighbor's landscape crew. The credit card offer that used to come at 12%. It's not just houses. It's every dollar we borrow to build a life.
The 30-year Treasury just hit 5.31%. That's the highest since 2007. The year before the last housing crash. The 30-year mortgage sits at 6.58%.
Five years ago, that same 30-year mortgage was near 3%. If you locked in then, you pay half of what a new buyer pays now. That gap is why nobody is selling. It's why homes sit on the market. It's why your daughter can't find a starter house in her price range.
I get it. Nobody knows what happens next. Warsh could surprise us Friday. Foreign buyers could come back. Markets shift fast.
But two things are true today. The man in charge is letting rates stay high. And the biggest buyers of our debt are quietly leaving the table.
Both forces push the same way. Up on Treasury yields. Up on your mortgage. Up on the loan for your shop.
Here's the number I keep coming back to. Net foreign money into our Treasuries dropped 88% in one month. From $56.6 billion in May to just $6.8 billion in June. Eighty-eight percent. Gone. In thirty days.
That's not a normal shift. That's a warning.
Warsh could change all of this Friday. He could hint at a rate cut. The market would jump. Rates could ease. Debbie could refinance her house.
Or he could stick with his shrug. A blank page. A quiet nod to the bond market. And another year of waiting for the rest of us to catch a break.
Friday will tell us which one.
I keep picturing that press conference. The shrug. The blank piece of paper. And somewhere in this country, a woman at her kitchen table, hitting refresh on the mortgage rates. Waiting for a break that isn't coming.
More on this tomorrow.
— American Ledger
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Reservation of the ticker symbol is not a guarantee that we will be listed on the NASDAQ. Listing on the NASDAQ is subject to approvals.
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