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birb_cromble  3d ago (text post)   612 thread views

Qeekly Finance Thread - 2026-09-26

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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

The average 30-year fixed-rate mortgage hit 7.49% on Friday, leaving rates a bruising 30 basis points higher than where they started the week, according to Mortgage News Daily.

Rates remain some distance from late 2023's peak around 7.8%, but the latest rise is nonetheless jarring and could easily be enough to chill home sales ahead of the market's typical winter slowdown.

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 between 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.

We should probably be cutting rates instead of raising them.

Isn't that what Burns tried back in the 1970s? What do you think is different about the current era such that it would lead to a different outcome?

No one knows anything. It's worth a shot.

It goes without saying that the economy today is vastly different than the 1970s.

  1. Energy as a percent of the economy is much less
  2. The US is largely energy independent
  3. Unionization is way down (except for public sector parasites). Back in the 1970s, unions might negotiate a 5 year contract baking in 10% raises each year to compensate for anticipated inflation. This makes inflation extremely persistent

My point is that inflation is actually low enough (less than 3% core). In fact, many things are collapsing in price including rents. But inflation FEELS high to some people because of the cost of borrowing.

We could lower rates and make inflation feel lower, even if the headline number is higher.

As an aside: People have become absolutely untethered from reality on inflation. They'll say stupid shit "like, actually inflation is 10%" and point to eggs, gas, or whatever. Then when the price collapses they just ignore that. I think exposure to high income people via social media is driving status anxiety. Of course, if you want to win the retard vote, you can't actually say that so politicians talk about an "affordability crisis" or "K-shaped economy". When clued-in people point out that the numbers don't support these arguments, they'll just say the numbers are fake. Cursed discourse.

I am seeing no collapse in rents unless you mean a collapse in the rate of increase of rents.

People have become absolutely untethered from reality on inflation. They'll say stupid shit "like, actually inflation is 10%" and point to eggs, gas, or whatever. Then when the price collapses they just ignore that.

Relatable. Actual conversation:

This specific peanut butter just doubled in price. Are we supposed to believe inflation is less than that?

Inflation is about a basket of goods over a period of tome. Why would you just look at a single price change for a single peanut butter?

crickets

Years pass.

That specific peanut butter just got 20% cheaper. I guess we are now having 20% deflation?

It's still not back to the original price so it doesn't count.

But you looked at a single instantaneous price change and concluded yearly inflation must be way more than 4%. Why can't we look at this single instantaneous price change and conclude that it must actually be way less than 3%?

Well we're still not back to the original price so inflation must still be way higher than 3%.

There's no reason to use peanut butter when there's a series that goes back millenia using a perfectly uniform unchanging product.

Gold is inflated at a rate of 17% over the last 5 years, and at a rate of 11% over the last 25 years. Or rather, the USD has been debased at those rates. The gold is the same as it has always been.

Interesting. I'm seeing a drop from $4310 to $4135 over the weekend. I guess we had 25% deflation in three days and I didn't even notice!

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