_{US NEWS}

Bessent says US housing market in 'recession' due to Federal Reserve interest rate policies

Treasury Secretary Scott Bessent warned that the U.S. housing market may already be in a recession due to high interest rates, even as the broader economy remains relatively stable. In a CNN interview, he said the Federal Reserve’s policies have created distributional problems, disproportionately hurting lower-income Americans who hold more debt than assets. Bessent urged the Fed to cut rates further, arguing that lower mortgage rates could end the housing downturn. While the Fed has reduced its benchmark rate twice this year, mortgage rates—driven by long-term bond yields—remain elevated. Recent data from Freddie Mac shows the average 30-year mortgage rate at 6.17%, the lowest in over a year, but home sales have stagnated around 4 million annually, compared to 5 million before the pandemic. Jessica Lautz of the National Association of Realtors noted that lower rates have improved affordability slightly, yet housing remains divided: wealthier buyers and cash purchasers continue to benefit from growing housing wealth, while first-time buyers face historic challenges, with their average age rising to 40. She described this as a “tale of two cities,” where the luxury housing market flourishes even as affordability worsens for everyday Americans. Read More.

_{WORLD NEWS}

US Federal Reserve pumps cash into Wall Street as banking system shows signs of stress

Analysts are warning that early signs of another global credit crunch are appearing as liquidity tightens in financial markets. The U.S. Federal Reserve recently injected $50.35 billion into the banking system through repurchase agreements (repos)—the largest use of its emergency lending facility since 2021. This move, described by some as a “canary in the coal mine,” suggests that banks are facing short-term funding stress similar to conditions that preceded the 2008 Global Financial Crisis (GFC).

The Fed’s intervention aimed to ease a “short-term” credit crunch, after U.S. financial institutions ran low on cash at the end of October. According to Henry Jennings of Marcus Today, the banking system’s “plumbing” was under pressure as money drained from the system, forcing the Fed to step in. The situation reflects the consequences of quantitative tightening (QT)—the process by which the Fed sells bonds or lets them mature to reduce liquidity—combined with heavy U.S. Treasury bond issuance to fund the federal deficit. Analysts believe this dual pressure has strained global money markets and may have prompted the Fed to end QT earlier than planned.

Financial experts, including RBA Governor Michele Bullock, maintain that the Fed’s actions are designed to prevent a broader credit crunch, though others caution that the need for intervention itself is troubling. Rising repo rates and the Secured Overnight Financing Rate (SOFR) indicate growing tension in short-term funding markets. Gerard Minack noted that “some people are now on high alert for signs of a material pickup in stress indicators,” even as broader markets remain complacent.

Adding to concern, the New York Federal Reserve, which acts as Wall Street’s banker, injected an additional $22 billion into the market days later, underscoring that the problem was not a one-off liquidity issue. Analysts warn that persistently rising funding rates—a sign of cash scarcity—could force banks to deleverage, potentially triggering wider instability. While ending QT may relieve some of the pressure, experts like Charlie Jamieson suggest that further policy intervention or even a return to quantitative easing (QE) may be necessary to restore balance. The developments have raised alarm among global central banks, including Australia’s Reserve Bank, which is closely watching for any signs that U.S. funding stress could spill over into international markets. Read More.