A weekly thread to discuss financial matters - from personal all the way up to global.
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Notes -
My financial news feeds this week have been blowing up about the 10 year Treasury yield and the effect that it's having on mortgage rates
As somebody who's considering relocating, watching these movements has been a rollercoaster. Looking at housing prices vs rates, we're not seeing the usual negative correlation betw the two. Single family detached dwelling prices seem to be unusually sticky in the face of rate increases this year. It's reaching the point where I might legitimately be better off saving for a cash payment than trying to take on a mortgage.
The rates I understand, but I'm not 100% sure what's going on with prices. Is it simply that people who are sitting on 2% mortgages from several years ago aren't motivated sellers? It feels like there has to be more going on than that.
It's also been interesting watching my holdings in a state municipal bond fund get kicked in the balls. The average weighted duration for a bond in the fund is 8 years. I'd expect a 25bps increase in rates to drive a 2% drop in share value. I could understand a 4% drop, if the market was pricing in another 25bps home this year. However, it's down 9% on share value. The fund hasn't had any notable failures in their holdings, so I'm guessing the market at large is expecting 3 more 25bps hikes instead of one.
We have 3% inflation, full employment, and strong economic growth (5% according to GDPNow).
This is goldilocks. So why doesn't it feel like? Why is there a vibecession?
Interest rates going up 4% in a short period of time has got to be a big part of the reason. Sucks that you have to compete with a datacenter for your mortgage. We should probably be cutting rates instead of raising them.
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