Merrill Lynch is reportedly shutting down its wholesale mortgage unit First Franklin, according to a report by CNBC.
Although it’s unclear how many of the thousands who used to work there are still employed, the report said roughly 400 to 500 could lose their jobs.
First Franklin began as a retail brokerage in San Jose, California in 1981, transitioned to a mortgage lender in 1984, and was later sold to National City in 1999.
In 2003, the company began offering 100% loan-to-value single-lien mortgages and other higher-risk loan programs, reaching $29.6 billion in loan origination volume in 2005, and a year later Merrill Lynch picked it up for $1.3 billion.
However, Merrill acquired First Franklin in December 2006, just when serious problems in the mortgage market began to surface, leading to substantial losses at the brokerage house and the eventual ousting of its CEO Stan O’Neal.
Last September, First Franklin cut an unknown number of jobs so staffing levels would be in line with their volume of business.
Around that same time, there were scores of rumors that First Franklin was actually firing staff that failed to meet performance goals, despite dismal industry loan volume that would be dealt with more appropriately through layoffs.
It’s unclear what operating levels were like recently, but it’s doubtful that the closure will have a significant impact on the industry given separate accounts that claimed the company was running on a severely reduced staff.
After the crisis hit full swing, First Franklin reduced its subprime offerings, and began focusing on Alt-A, although they still had programs for Fico scores below 600.
There is no notice on the First Franklin website at this time, and Merrill Lynch declined to comment when reached by the press.
Check out the latest list of closed lenders, mortgage layoffs and mergers.
In the wake of the landmark Sitzer/Burnett commission lawsuit case, the real estate world is in turmoil. As industry players scramble to assess the fallout, there’s a silver lining for the astute – opportunity amidst chaos.
The savvy real estate agents and loan officers see this not a crisis but a golden opportunity. Now is the time to rise as an influencer, a trusted advisor and a beacon of stability in a sea of uncertainty. This is a call to arms for real estate agents and loan officers ready to seize the day.
The distraction advantage
Let’s cut to the chase: Your competitors are distracted. They’re caught in the headlights of change, poring over legal jargon, worrying about commission structures and losing sight of the prize – sales.
This is your moment. While they’re busy worrying, you should be busy working. The key is to stay laser-focused on what you do best: selling homes and providing stellar financial advice.
While your peers are entangled in adapting to changes, your clear focus and proactive approach puts you steps ahead. Your competitors’ distraction is your playground. In this environment, those who stay engaged in core sales activities, unswayed by the chaos, will not just survive but thrive.
The power of influence
In times like these, influence is your most potent weapon. It’s about being the voice that cuts through the noise, the trusted source of information when rumors and confusion are rampant. Personal branding isn’t just about recognition; it’s about establishing authority and trust. Your clients need a guide, and you are poised to be that guiding light.
Scripting the narrative
As you engage with clients, your message should be one of assurance and insight. You need to own the narrative with your clients. Here’s how:
For real estate agents:
Script: “While the industry is evolving, my commitment to finding your dream home remains steadfast. Let others focus on the noise; we’ll focus on your needs.”
Message: Project confidence and deep understanding of market changes. Show them that your expertise is their anchor in these turbulent times. That means you’d better do your homework!
For loan officers:
Script: “Market changes bring new opportunities. I’m here to offer you tailored, up-to- date financial advice. Let’s turn these changes into wealth!”
Message: Reinforce your role as a guide through uncertain financial landscapes. Highlight your adaptability and insight in finding optimal mortgage solutions, regardless of market fluctuations.
Presentation skills: A gateway to higher conversion rates
Presentation skills are another crucial element. Storytelling within sales presentations is proven to significantly improve conversion rates. A compelling narrative adds context to numbers, makes data relatable, and fosters deeper connections with clients.
Sales reps must balance stories with hard data to establish trust and enhance customer loyalty. Effective storytelling can also distinguish your brand, forming long-term partnerships and boosting customer retention.
Moreover, the caliber of a sales pitch is directly tied to the salesperson’s skills. Presentation analytics are invaluable in honing these skills. By analyzing factors like presentation duration and the time spent on specific sections, sales managers can identify strengths and weaknesses, enabling targeted coaching to improve performance.
This data-driven approach ensures that every team member can maximize their impact during sales pitches.
Comprehensive strategies for staying ahead and amplifying influence
Enhance client relationships: Trust is your currency. Forge stronger bonds through consistent, reliable communication and personalized service.
Educate yourself and clients: Stay abreast of mortgage and real estate industry changes and translate complex information into digestible, actionable advice for your clients.
Leverage social media: Regularly share insights and updates on social media to establish yourself as an industry thought leader.
Host informative sessions: Use webinars or community meetings to demonstrate your knowledge and reassure clients and prospects.
Network with purpose: Build relationships with like-minded professionals who see opportunity as they can support and enhance your influence.
Be visible and vocal: Use every platform available to you to share your perspective and insights, reinforcing your status as a go-to housing market expert.
Adapt to market needs: Be quick to adjust your strategies in response to market shifts, ensuring your services remain relevant and in demand.
Harness the influencer’s advantage
In these times of industry upheaval, your influence is your capital. Use it to build trust, provide clarity and lead with confidence. Those who do will emerge not just as survivors of change, but as architects of a new real estate era.
Rene Rodriguez is a best-selling author, keynote speaker, leadership advisor and transformational speaker coach.
According an SEC filing dated May 28, Bank of America originally offered Countrywide shareholders nearly $10 per share in its bid to takeover the nation’s top mortgage lender.
But after significant deterioration in the credit markets, namely involving a number of home equity loan securitizations, Bank of America reevaluated its position and came up with the current offer of about $6 per share.
Beginning in November 2007, Countrywide and Bank of America began merger talks after it became clear that additional capital raising and/or a private equity investment wouldn’t be enough to the keep the giant afloat.
At the time, Countrywide also began mitigating risk by eliminating the loan origination of subprime mortgages, increasing the origination of government-backed loans (FHA loans, VA loans), and reducing headcount.
During a meeting held on December 28, a Bank of America representative provided Countrywide representatives with a preliminary estimate for the proposed takeover, offering a 10 percent premium to the current Countrywide share price.
That implied an exchange ratio of 0.2353 shares of Bank of America common stock for each share of Countrywide stock, valuing the ailing mortgage lender at $9.96 per share.
But during that same meeting, Countrywide representatives fessed up about their home equity problems, prompting Bank of America to do their due diligence before moving forward.
Later in January, the groups met again, at which point Countrywide revealed that it would likely report a fourth quarter loss, and as a result, could face negative ratings action that would put further strain on the company.
Despite the bleak outlook, Bank of America agreed to push on in a call initiated by Countrywide representatives on January 8, offering an exchange ratio of 0.1822 of Bank of America stock for each share of the stressed lender’s.
Days later, the boards approved the merger and it was quickly announced to the public on January 11, just around the time when bankruptcy rumors were causing panic selling on Wall Street.
Check out the entire filing here if you want to hear more about the merger and the hundreds of pages of related detail.
Shares of Countrywide fell 13 cents, or 2.41%, to close at $5.26 on Friday.
A new “online study” from Carlisle & Gallagher Consulting Group released today revealed some interesting consumer sentiment regarding mortgages.
The point of the survey was to determine consumers’ views about the home mortgage application process, and if they’d consider alternatives to the traditional bank or lender route.
The results were somewhat strange.
Of the 618 U.S. consumers surveyed, 80% said they would consider taking out a mortgage from a “non-bank,” which isn’t the surprising part.
After all, these days the big banks are seeing increasing pressure from tech-happy startups and the like, many of which don’t charge fees, or at least make banking easier and related activities less painful.
A PayPal Mortgage?
But what was particularly interesting was that 48% of consumers said they would consider a mortgage from PayPal.
Last time I checked, PayPal was simply a company that allowed individuals to transfer money to friends and family or to pay for online purchases.
Businesses can also use PayPal for their merchant needs as an alternative to standard credit card processing hardware/software.
So where does the mortgage from PayPal come in? I’m not sure, but I guess the results suggest people like the company’s service, and perhaps ease of use, which would leave them open to a PayPal mortgage.
For the record, the biggest consumer gripes regarding mortgages included slow execution during the mortgage process, difficulty communicating with lenders, inability to track said mortgages, and untrustworthy advice.
How PayPal would tackle those issues is beyond me – no matter who’s doing your mortgage, it’s going to take a while these days thanks to the crazy demand and limited supply of mortgage originators.
Fewer Interested in a Walmart Mortgage
Then there’s mega-retailer Walmart, who was also included in the survey.
When asked the same question, only one in three consumers seemed enthused by the idea of picking up a mortgage at Walmart along with their milk, eggs, and big screen TV.
Still, that 33% or so was enough to get the media buzzing about a possible Walmart mortgage in the near future.
Even before this survey, there were plenty of rumors and rumblings of a Walmart mortgage, seeing that they already do just about everything else.
There’s already the Walmart MoneyCenter, which provides pretty much every financial tool you can think of, including bill pay, check cashing, money orders, credit cards, and so on.
Walmart even gives customers the option to purchase items online and pay with cash at a local store.
And I think that last service explains why Walmart won’t provide mortgages to its customers.
Many people that shop at Walmart don’t use credit, and instead rely on all types of other forms of payment such as the always-popular cash option, debit cards, and prepaid cards.
Are these the same consumers actively searching for mortgages, or are they perhaps more debt-averse?
If so, they surely wouldn’t want a mortgage, and would more likely choose to rent.
But Walmart could certainly still enter the game, or at the very least, partner with existing lenders and take a cut of the business, similar to what Costco has done.
The question is whether they’d want to sully their reputation in the process. It’s a tricky business to get in, as newcomers like Discover are probably learning rather quickly.
At the same time, they probably have enough influence to get more shoppers to take out mortgages and ultimately buy homes, which could increase sales of household items at Walmart.
So by now you’ve probably heard speculation that Indymac could be shutting down some of its operations today, or possibly even its doors.
While nothing has been confirmed as of yet, plenty of rumors are floating around regarding Indymac’s situation, and they aren’t good.
That said, the following is what I’ve heard, and while it makes sense, it hasn’t been corroborated as of yet, so take it with a grain of salt.
So apparently Indymac stop funding loans last Thursday, and a number of outstanding loans due to be funded had to be directed through other banks on their behalf.
A day earlier, Countrywide supposedly offered to buy a bundle of Indymac’s minor deficiencies loans, but because Bank of America had swallowed them up, they put the kibosh on that idea.
So now Indymac is stuck with the loans and no funding source, putting the Pasadena, CA-based mortgage lender in need of a possible rescue to stay afloat.
Additionally, I’ve been told that Indymac employees were advised to begin looking for other sources of employment because of the uncertainty surrounding the company’s future.
Of course, Indymac mentioned on their company blog last week that they were working with their regulators on a plan, and that details would emerge once it became fully developed, but things appear to have worsened since that communiqué.
In recent weeks, Indymac has seen its share price hit an all time low, falling as low as 56 cents last week after Senator Schumer put doubt in the minds of investors, leading to a run on the bank’s deposits.
Shares of Indymac were off 3 cents, or 4.48%, to 64 cents in midday trading on Wall Street, with many anxiously awaiting word regarding the company’s health.
More to come this afternoon, as Indymac is expected to make an announcement shortly.
Check out the latest list of closed lenders, mortgage layoffs and mergers.
Despite being in a quiet period, Indymac took the time to respond to a letter written by Senator Charles Schumer last week that stoked solvency concerns at the Pasadena, CA-based mortgage lender.
The letter, sent to the FDIC and the Office of Thrift Supervision, among other regulators, called for closer monitoring of the stressed lender, which Schumer felt could be a burden to both taxpayers and borrowers if it were to collapse.
Schumer noted that Indymac relied heavily upon advances from the Federal Home Loan Bank of San Francisco and brokered deposits to finance its “irresponsible growth” over the last couple years, stirring up bankruptcy rumors over the weekend.
But today, Indymac Communications Director Grove Nichols hit back on the company blog, claiming that the bank’s regulators were “actively involved” and “up-to-date” on the company’s position and working on a plan “to further improve the safety and soundness of Indymac.”
Additionally, he noted that the FHLB of San Francisco had positioned itself carefully in light of the ongoing mortgage crisis, increasing margin requirements on mortgage loans and related securities that it financed for all institutions, including Indymac.
And claimed that the brokered deposits in question actually helped Indymac improve liquidity, meet elevated margin requirements, pay off market funding sources, and bolster safety and soundness during the crisis.
Lastly, Nichols noted that as a result of Schumer’s letter, Indymac was hit with a high level of customer inquiries at its branches with regard to its stability, resulting in $100 million worth of withdrawals in just two days.
Later in the day, CEO Mike Perry told Bloomberg in a phone interview that Indymac was planning to scale back business activity, though no plans were fully developed or final as of yet.
He added that speculation involving the company’s plan to exit home lending was simply a rumor.
Shares of Indymac closed the day down 19 cents, or 23.46%, to 62 cents, falling as low as 56 cents during the trading session Monday.
Oh, boy. While taking my daily scroll, I uncovered a thread asking, “Which celebrity looks like they smell bad?” Here are the top-voted responses.
1. Post Malone
“It’s 100% Post Malone,” suggested one. Another joked, “People wish he were Post Cologne.” A third shared, “He said in an interview, “I won’t wear any deodorant or anything, but I have a musk, and it’s just kind of, like, naturally enticing to females.”
2. Harvey Weinstein
“Harvey Weinstein, but he smells terrible, according to reports. Like rotten flesh and poopy,” alleged one. “He has Fournier’s gangrene.”
Another confirmed, “My stepdad died of that. And yes, he stank to high heaven in his last few months. It wasn’t his fault, and he was very hygienic. But when your colon is rotting, you stink—really awful way to go.”
3. Bam Margera
One person said, “Bam Margera,” before another confessed, “When I met him, he just reeked of alcohol. Like he bathed in whiskey.” A third stated, “I met him while working at a Walmart. I can confirm he had an odor, but he was still very nice to me.”
4. Jared Leto
Jared Leto looks like he uses his sweat as cologne,” one suggested. A second alleged, “I worked with Jared Leto on a film set > 10 years ago. I can tell you that he smells fine but was a HORRIBLE human.”
“He treated his a-istant (for the film) like trash, was an entitled queen overall, and got a security guy fired because that guy laughed as Leto tripped out of his trailer while drunk. I was a huge fan until then.”
5. Mickey Rourke
Someone volunteered, “Mickey Rourke. He was the first person I thought of when I saw this question.” Others discussed rumors of him smelling back in the 90s before one joked, “I a-umed he smelled like Abercrombie.”
6. Kid Rock
“Kid Rock. He looks like he smells like he just smoked McDonald’s,” said one. Another claimed, “I worked at a radio station, and Kid Rock came in for an interview. He smelled like a dumpster after a fire.”
Funny, he keeps saying he’s a man of the people; Kid Rock’s humble origin story took place on a luxurious estate in wealthy Macomb County, Michigan. Rock, whose real last name is ‘Ritchie,’ grew up the son of millionaire William ‘Bill’ Ritchie, who owned several lucrative car dealerships, and Susan Ritchie, who instilled in Rock ‘a spirit of philanthropy.”
“They raised Rock, who once claimed to be ‘straight out the trailer,’ on six well-groomed acres, where he could pick fresh apples from his family’s orchard.”
7. Brad Pitt
“My first thought when opening this post was that Brad Pitt always looks a little greasy… but I’m sure I’m just being ridiculous,” one confessed. Next, people reminisced about him reportedly having issues on the set of Interview With a Vampire with Tom Cruise.
However, one fan argued, “For what it’s worth, I was an extra on a movie and stood next to Brad Pitt for a few seconds, and the man smelled incredible – to the point that it’s still what I remember the most clearly years later. He was wearing some expensive-smelling cologne.”
8. Russell Brand
One user admitted, “Russell Brand LOOKS like he stinks, but I can vouch the man smells incredible.” Another added, “I hugged Russell Brand at one of his shows. He does NOT smell at all.” A third argued, “He looks like he smells like patchouli.”
9. Pete Davidson
One user voted “Pete Davidson.” “He smells like cigarettes and stale pizza. I’ve met him several times and been in his hotel rooms. I can say he is a VERY nice fellow. But he chain smokes like crazy,” a second suggested.
Finally, a third said, “I get that he looks that way, but he didn’t pull the women he did without smelling amazing. I will die on this hill.”
10. Johnny Depp
“Johnny Depp looks like he forgets his deodorant a lot,” suggested one. “First person I thought of, and I’m surprised I had to scroll this far down to find it. All those scarves keeping the wine sweat insulated? No way he doesn’t smell,” answered another.
25 Extraordinary Sequels and Remakes That Outshine the Originals
Every once in a while, a movie sequel or remake surpa-es the original film. After polling the internet, “Name a single movie where the sequel or remake was better than the original?” Here are the top-voted responses.
25 Extraordinary Sequels and Remakes That Outshine the Originals
These 7 Celebrities are Genuinely Good People
We’ve all heard the famous adage that “no publicity is bad publicity,” and while it tends to be accurate, there are certainly exceptions. But what about those few stars who stay out of the limelight and get along without a hint of trouble?
These 7 Celebrities are Genuinely Good People
Have you ever known someone and thought you liked them—until you learned about their hobbies? Then you get to know them and then you’re like, “Wow, red flag.” Well, you’re not alone.
These 10 Activities Are an Immediate Red Flag
15 Cover Songs that are Better than the Original
Sometimes, a cover of a song ends up doing far better than the original. Some covers are so good that we didn’t even realize the cover version wasn’t actually the original.
15 Cover Songs that are Better than the Original
These 11 Movies Are So Bad You’ll Wish You Could Unsee Them
The movies we love best are a combination of excellent characters, plots, stories and cinematography. But if these factors can make great movies, they can also make terrible movies—the ones that make people cringe, the ones we swear they’ll never watch again.
These 11 Movies Are So Bad You’ll Wish You Could Unsee Them
“The consensus among the Executive Committee is we need to rebuild trust with staff and members with meaningful change. We are bringing in third party experts to carefully and comprehensively look at what we’re doing now for what works, what needs to be changed and what is missing. We also will support and empower staff in their similar efforts. The Executive Committee agreed we have a shared purpose and are united in support of our staff and that includes Bob,” she concluded.
Ahead of Thursday’s executive committee meeting, rumors were swirling that Goldberg and other executives could find themselves out of a job, but that is clearly not the direction NAR has decided to take, despite many members calling for the resignation of Goldberg on message boards and social media.
On Monday, prior to Parcell’s resignation, a Change.org petition was started calling for his dismissal. By Wednesday, this effort had morphed into the NAR Accountability Project. One of the first demands of the project was that Goldberg and others within NAR’s executive committee retire early. Goldberg is currently set to retire at the end of 2024, closing out his 30-year career at the trade group.
A rough week for NAR
It has been a rough week for the 1.5 million member trade organization. In the Times exposé, published last Saturday, Parcell, who had served as NAR president since November 2022, was called out for alleged sexual harassment by 16 of the more than two dozen current and former NAR employees interviewed by the Times. Parcell ultimately resigned from his position Monday evening.
Parcell has defended himself over the allegations in the NYT story. “I am deeply troubled by those looking to tarnish my character and mischaracterize my well-intended actions,” Parcell wrote in a letter to NAR’s Executive Committee and Board of Directors, first published by RISMedia. “This resignation signifies that I will put the organization’s needs first to move forward above my own personal needs to stay in this position.”
Parcell also wrote that the allegations were false, and claimed he was the victim of character assassination.
In the Times investigation, three women described a pattern of inappropriate behavior by Parcell, who runs the Kenny Parcell Team at Equity Realty in Spanish Forks, Utah.
One woman reported that Parcell placed his hands down his pants in front of her, while another woman said that she received unsolicited lewd photos and texts from him, including a picture of his crotch. Parcell denied that he had done anything inappropriate, saying the picture in question was of a promotional belt buckle and he was asking for input on the design.
A third woman, Janelle Brevard, who filed a lawsuit in the summer, disclosed a consensual relationship with Parcell that lasted months and ended with the NAR president allegedly retaliating against her.
Brevard settled a lawsuit with NAR that included a $107,000 severance payment and a nondisclosure agreement, the Times reported. According to Bruce Fox, a lawyer who began representing Brevard in August, his client decided to settle the case after “feeling intimidated by such a powerful adversary.”
Another woman, Amy Swida, a director of business meetings and events at the organization, filed an internal complaint of sexual harassment or gender discrimination by Parcell. Swida alleged that he was cruel and condescending to her after she became pregnant. She worried about being cut off from future opportunities.
“I’m scared every day coming to work,” she told the Times. NAR said Swida’s complaint was documented, and she was promoted several months later. Parcell also denied any wrongdoing.
“There is the sexual harassment, and then woven into it, this culture of fear,” Stephanie Quinn, the organization’s former director of business meetings and events told the Times. “His behavior is predatory.”
In a statement on Tuesday, Kasper said that it was important to NAR that they “take this moment to learn and focus on building a culture of camaraderie where we can do the good work we are all so passionate about.”
“This is a really hard time for our association. But I know this is an opportunity to really listen and grow together,” Kasper added. “As your president, I take the responsibility of rebuilding very seriously. Know I’m here for you, as is the entire leadership team, and we will get through this together.”
How would you feel if one spooky night you discovered your new home also housed a family of evil spirits or long dead ghosts?
Even if you don’t believe in haunted houses, there are plenty of people out there who do—or who just want to hedge their bets. But could a history of haunted happenings really hurt the value of your home when it came time to sell?
The numbers don’t lie
Of course, how your property is received all depends on its particular brand of spooky.
A couple of studies in recent years confirm that a reputation for hauntedness has an impact on values. A realtor.com survey found that only about about one-quarter of buyers are open to buying a haunted home, especially if they get a discount, while 38 percent would not consider a haunted home purchase.
Another study by Redfin found that homes located close to cemeteries take longer to sell, but that the wait might just be worth it, since they tend to sell for prices higher than identical homes located in the same city but at a greater distance from a cemetery.
According to a study by two business professors at Wright University, though, houses where murder or suicide have occurred can take 50% longer to sell and at an average of 2.4 percent less than comparable homes.
The rules of buying and selling haunted real estate
Rumors of ghosts raise the question of disclosure.
Most states require sellers to fill out a standard form, revealing what they know about the property’s physical condition. Although the wording may vary state to state, most real estate laws require sellers to disclose “material facts” such as structural concerns, the age of the roof and shingles, leaks in the foundation and walls, existing mold and mildew, and total square footage.
In a 1991 New York case, though, a buyer sued the seller and the seller’s realtor for failure to disclose the house’s ghostly reputation.
Before putting the house up for sale, the seller wrote about her bumps in the night for the local paper and Readers’ Digest, but the buyers were unaware of the home’s reputation. Although the court did not rule nondisclosure of the house’s reputation as fraudulent, it did allow the buyer to back out of his contract and get his down payment back.
So what does this mean for you?
You are not likely to see a “haunted” box ready to be checked off on any state’s disclosure form, but in many areas, sellers are required to obligated to disclose things that affect a house’s marketability. Thus, even if not required by state law, it is a good idea to inform prospective buyers about rumors or reports and what exactly you have observed, without drawing conclusions.
The new week begins with bond yields at the highest levels since 2007 in what has been a broadly linear uptrend since late July. Up until that point, rates had been holding in a narrow range for months more than 50bps below current levels. If the Fed was/is “data dependent,” and if the most recent NFP/CPI reports were arguably bond-friendly, why has the trend been so unfriendly?
Data has indeed mattered, but the bond market’s strategic shift has mattered more. In early July, markets returned from the Independence Day holiday to find a hawkish Fed Minutes release on Wednesday and a glut of unfriendly data on Thursday (including that ADP that came in at 497k). This culminated in the first of two “apprehensive and defensive” sell-offs highlighted in the chart below.
In both cases, the selling pressure was driven by data and the Fed in the run up to NFP. In both cases NFP helped calm the bond market’s nerves with CPI solidifying the friendly bounce in the following week. In the most recent example, the post-CPI resolve lasted only a few hours before bonds were blasting back toward the previous week’s highs. At the time, losses were exacerbated by Treasury supply concerns and foreign central bank selling in China/Japan.
Fed policy is hurting long-term rates due to the yield curve. Short-term rates are now high enough to hold mostly flat. Until now, stronger data was able to do more to push Fed rate expectations (and 2yr Treasury yields) rapidly higher. Higher rate expectations + the reality of tighter policy were like offsetting penalties for longer-term rates, thus allowing them to remain in a range. But with the Fed shifting gears on short-term rates, bond market influences have a more direct impact on longer-term rates–all at a time when supply is increasing, foreign governments are selling, and the Fed is saying it’s fine cutting short-term rates in the future while continuing to shrink the balance sheet.
To all of the above, add the fact that other economic data suggests the economy continues to chug along. Some of the data suggests things are quite a bit stronger than expected. The balance of all the available econ data adds general pressure (i.e. it supports the strategic shift to higher rates).
Last but not least, there is buzz around the topic of the “neutral rate” or “R-Star” moving higher (the imaginary level of the Fed Funds Rate that keeps inflation and growth in a balanced homeostasis). Some of the proponents of said buzz think Powell will discuss this Friday in Jackson Hole. While a discussion wouldn’t be a surprise, it would be a surprise if Powell were to say something about it moving higher. If anything, there’s an opportunity for Powell to put some of the rumors to bed by reiterating recent Fed communications regarding the absence of any change in the R-Star outlook. At the very least, that would let us know how much this sentiment has affected the uptrend in yields recently.