Treasuries are being killed again, with the 10yr +12bps to a staggering 2.46%. The ancillary side effects of that is all commercial paper, IG and junk, are also getting flayed. But most importantly — mortgage rates are fucking soaring.
30yr mortgage rates pic.twitter.com/LdHgj0huCk
— The_Real_Fly (@The_Real_Fly) March 24, 2022
The higher it goes, alongside the increase in home values due to labor and materials inflation, the more fucked the American consumer is trying to buy a home. In normal circumstances the home values would correct lower due to a decrease in affordability. However, thanks to inflation and the “replacement cost” way up in housing — prices are stubbornly high — ergo STAGFLATION.
Junk Bonds
None of this bodes well for the economy, nor does America having to replace Russia in supplying Europe with natural gas. Because of this — OUR COST TO HEAT OUR HOMES IS SOARING, as NG crests and flexes above $5.50 now.
There is a tipping point in all this but we don’t know it yet. When we cross it and demand destruction is apparent, prices will collapse and the inflation story will abate. Until then, the best way to hedge your expenses is to make some coin long the commodity complex.
As for me, I sold everything but my 10% TZA hedge this morning, locking in a +235bps gain.
NOTE: We are doing a stock trading contest inside Stocklabs for April. You can try us out for free (7 days) by signing up here. Trialers WILL NOT, however, get to compete. The contest and $1,000 prize for first place are for members only.
If you enjoy the content at iBankCoin, please follow us on Twitter
Feeling grateful to be a geriatric millennial who bought a home 2 years ago. 2.75% jumbo. My equity has tripled since then. Gen Zers are the ones actually screwed if you look out 10 years
10 year at 2.46% is not “staggering”
Powell isn’t quite Volker and certainly the Fed lost all credibility.
Pretty good for a jumbo…. although I feel any debt is a death sentence on your life. Just because it’s the norm doesn’t mean it’s smart to jump off that bridge too.