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Earning 4% without taking on credit risk would in normal times sound like a great deal. But these are not normal times, and the rate of inflation is over twice that rate. The Fed has stepped back from the markets for Treasury securities and mortgage-backed securities as part of its QT, and it has raised its short-term policy rates to over 3%. Treasury yields are now 4% or higher for maturities of one year to five years.

And banks are now having to compete with that, and are now offering “brokered” CDs at rates above 4% across maturities of six months to five years. For yield investors and savers, if they take advantage of those rates, their money is getting wiped out by inflation only half as fast as it would be wiped out in their regular bank account. But if you have to borrow money, such as to buy a house, that’s now getting a lot more expensive.

The 6-month Treasury yield today inched up to 3.9% at the moment, the highest since November 2007, up from near 0% less than a year ago:

The 1-year Treasury yield rose to 4.14% at the moment, the highest since November 2007, up from near 0% less than a year ago:

The 2-year Treasury yield rose to 4.21% at the moment, the highest since September 2007, and up from 0.25% a year ago.

The two-year yield started rising at about this time last year, as it began pricing in the Fed’s “pivot.” By the end of 2021, it had risen to 0.73, when the Fed’s policy rates were still at near 0%. But the Fed had already started “tapering” its asset purchases and was talking about rate hikes in the future.

The 5-year Treasury yield nudged up to 4.0% at the moment, just barely there:

Buying Treasury securities is now easy. People can buy them through their broker in the secondary market or sometimes at auction. And people who open an account at Treasurydirect.gov can buy them directly at auction from the government.

And the yields that Treasury securities with maturities of up to five years are offering is what banks have to compete with if they want to attract new cash.

Banks have noticed that their customers are moving money out of their bank accounts into Treasury securities and Treasury money market funds because they get near 0% at the bank, and they get around 2% in a Treasury money market fund, and 4.14% on one-year Treasury securities.

So banks are starting to compete for deposits. And they’re doing it with “brokered” CDs, which are FDIC-insured CDs that banks don’t offer their existing customers (they still get near 0%), but offer to new customers through brokerage accounts where these CDs can be purchased like stocks.

Banks offer these CDs through brokers, and not to their own customers, because they don’t want to pay all their existing customers 4% interest on their deposits, but they only want to pay 4% on the new money that they attract, while they continue to pay their loyal customers near 0%.

For banks, brokered CDs are a form of “hot money” that comes and goes, unlike regular bank deposits, which tend to be stickier.

So I checked with my broker today. And this is what they offer in terms of brokered CDs. These are the highest bank interest rates I have seen since 2008:

Some CDs are “callable” and might offer a higher rate but with the risk of being “called” if interest rates drop. It’s good to check so that there are no surprises.

The average 30-year fixed mortgage rate jumped to 6.70% today, according to daily measure by Mortgage News Daily. This is the most immediate measure we have of the mortgage market.

The weekly measure by Freddie Mac, released on Thursday, and based on mortgage rates earlier in the week, jumped to 6.29%, the highest since November 2008.

But Freddie Mac’s weekly average was based on mortgage rates in effect before Wednesday afternoon — before the Fed announced a 75-basis-point rate hike and projections of an additional 125 basis points in rate hikes this year, which could bring its short-term policy rates to around 4.4% by the end of 2022.

For people who took out mortgages in the 1980s and early 1990s, something like a 6.7% rate might still seem fairly low, or incredibly low, given that inflation is over 8%, but home prices are now in the ionosphere, inflated by years of the Fed’s interest rate repression and QE, including the Fed’s purchases of mortgage-backed securities. And financing a home at those ionospheric prices today at 6.7% is an entirely different affair than financing a home in the 1990s at this type of interest rate.

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While I’m glad things are finally happening fast, I’m worried that something might break causing the Fed to reverse course. Rapidly declining bank deposits,rapidly spiking yields, if something big like corporate debt not being able to be rolled over, or repo financing drying up happens, the Fed may have to pause.

Otoh, I’m waiting with popcorn to see which hedge fund blows up on their interest rate swaps. Couldn’t happen to a nicer bunch of people. :)

Plenty of zombie companies are going bankrupt.

And that’s just the beginning.

The biggest thing that the Fed is in charge of has already broken: price stability (inflation).

It’s a HUGE problem, something enormous has broken and it cannot just be put back together with a little intervention. Anything else that breaks that the Fed could deal with is going to be a minor inconvenience by comparison.

I’d like to know if the Fed governors use crayons for their dots plots games.

FED broke all kinds of S$$$ goosing the market and housing market to the moon so it’s only fair they break S$$$ all the way down too.

As for banks still treating their existing customers like crap by still offering insulting level of interest rate, I say you have to be stupid not to just buy some T bills, even 4 weeks T bill would be multiple times better than .00005 interest rate in normal savings account.

Ibonds are another good investment option. Last I checked ibonds were paying almost 10% interest. The maximum you can invest is $10,000 per year.

My personal belief is that the Fed is acting tough only for the election cycle that ends in November. Keep the dirty rats on the ship.

In truth, the Fed has done very little compared with that they could do. They have barely started to liquidate the assets they added to the balance sheet since the pandemic. The rate at which they bought assets is NOT being mirrored by a rate at which they are selling them.

Even with this minor amount of selling bonds, the stock market and the bond markets are going crazy.

The truth is that our economy is very fragile and the extreme amount of bond purchases that have goosed all of the major economies have created a very fragile global economy, where there is the real possibilitie of a coordinated global meltdown of assets. Or it could reverse and have another global melt-up before a bigger melt-down.

My core point is that we have created an extremely volatile situation, because the foundational underpinnings of the financial markets is so distorted by MMT policies and massive government deficits and asset bubbles.

Home asset bubble will really start to melt over the coming 4-6 months. Look for a total decline of 20% in home values over this time (from now, not from the peak). And that is just the beginning. 2-3 years to bottom. Home prices down 50% or more from the peak.

Re “The truth is that our economy is very fragile”

Disagree. The economy is just people, working to survive and thrive as best they can, with the land, tools and equipment that they have available. That “real economy” is not fragile, it’s very nearly the strongest it’s ever been.

The financial system is fragile though, in a self-inflicted “we are greedy and stupid” way. To the extent that finances muck up the real economy, that’s a problem. But it’s a financial problem, not a “real economy” problem. Let the assets change owners and let’s get on with the business of humanity again.

i mostly agree. however, what i don’t see is the modern equivalent of victory gardens. people using their land, tools and equipment for their own benefit.

back then, people knew how to garden and tighten belts. it was part of their dna.

nowadays, not so much. there is a learning curve to growing your own food, and hoa’s and their ilk throw another wrench into that particular machine.

the pmc types that lose their jobs in the coming crisis are unprepared to do anything but fall back on “the system” which already is showing signs of not being up to the task. the rending of garments and gnashing of teeth will make the past several years of discontent look like a picnic.

PMC — Professional Managerial Class, like yuppies.

I think the other way around. They’ve gone slowly so far and will until the elections are over. Then speed up. The only chance they will get to increase the pressure is right after the elections. A year later and they will have pressure not to because there will be to much focus on the next elections.

*IF* they actually intend to bring housing prices down to affordability then they will have to act at that time. If they don’t there will be an enormous increase in the homeless population. A huge percentage of the homeless population becomes physiologically damaged from stress and humiliation. Mental illness and drug use are exacerbated. People that function fairly well become unstable and are no longer a viable part of the work force. Nor do they even make a functional army.

To let both the working class (in the traditional sense) and allow an increasing homeless population to fall into chaos would be incredibly expensive and utterly demoralizing. We’re not just talking excessive amounts spent on medical and welfare programs but also police services and security etc. both public and private

Not to mention pitchforks and targeted arson, vandalism etc.

Huh, I had the opposite opinion. That in part the Fed isn’t being tougher because of the coming election and a desire to minimize impacting the election. So I figure if inflation still runs hot at the end of the year get ready for them to crank harder.

I watched one of the founders of long term capital management give his synopsis of the problem with his fund. He spoke as if the amount of risk they were taking was negligible when in reality it was through the roof. He blamed the banks for cutting credit when they needed it. He praised the fed for stepping in. No lessons learned it looks like

Mortgage rates have more than doubled within a year.

Which, when you do the math, means housing prices need to come down 30% to match the same “howmuchamonth” amount. Which were already stretched beyond sanity.

And, no, housing prices have not decreased 30%…yet.

And more to come as rates keep rising.

“The average 30-year fixed mortgage rate jumped to 6.70% today, according to daily measure by Mortgage News Daily.”

Those who have to “hit the bid” will begin to reveal the depth of the real estate market. And likely the sale prices might be “disguised” so as not to create a panic. There goes the neighborhood.

How would they disguise it?

Things like making the official sale price higher, but providing in the contract for cash-back to the buyer. Or having the seller pay points to buy down the mortgage rate. Or providing the home in a more-finished condition than normal. The homebuilders have a playbook.

Maybe one of our realtor readers can comment but I think this can easily mask 5-10% of the “actual” price. But when the offer is $300K on a house asking $600K, the gimmicks won’t work.

I bought my house less than 5 years ago. Current zestimate at current interest rates with same downpayment would be more than 3x my current payment.

Prices are going to come down, a lot.

It’s not just housing prices relative to mortgage rates that are unsustainable.

Housing prices seem unsustainable also when compared to rents, in many high-priced areas. In my area, houses are selling for $2M but can be rented for $40,000/year. Thus, the gross annual rent is only 2% of the purchase price.

Would you pay $2M for a home that provides rental income of 2%, before any maintenance and RE tax expense? Instead, why not buy a US Treasury that pays 4% (twice the return), with no effort, default risk, or price reduction risk whatsoever?

I wouldn’t, Bobber, but plenty of FOMO types have over the last year, especially along the coast.

Odds are those rentals for $40K a year paid nowhere near $2M for the property. To them, it’s probably a good return if they paid half or less for it and are holding the property to return to live in at some point in the future.

The $40K per year is better than leaving it empty as empty homes deteriorate far faster than one that is occupied.

Replying to El Katz: It does not matter how much they have paid. Bobber has raised good point.

Bottom-line is: Even with current rates, ( assuming rates wont go up anymore ), home prices have to go way down.

2-3% is pretty accurate across many markets if you take the value near the top of the housing bubble.

Another factor to consider is replacement cost. I think were seeing a decline in the market where many custom properties cannot be replaced after you factor in the cost of land, development and building fees.

During an inflationary crisis the new replacement cost continues to rise.

4-5% on bonds seems like a better return if real estate collapses, but it’s not risk free if the currency continues to loose its purchasing power.

I took out a 4 year fixed rate mtg on one of my properties just over year ago for 1.79% to finance a business expansion, the business has now recouped the principle. I’ll be looking for a 2 year bond very soon, I’m hoping the yield on the Canada 2 year reaches 5%.

So far the yields are climbing faster than what I’m loosing between my deposit rate and my mtg rate (dollar for dollar)

I bought my house about 39 months ago, going back another year or about 4 years, and Zillow says my house double in price. 4 Years. That’s outlandishly crazy. But, that’s the mentality that mortgage investors & the Fed are still fighting against. It may take until next spring before they are broad / national price declines across new & existing homes. We’re not there yet, but nearing 7% 30YFRM is certainly going to push the correction deeper towards a real housing recession.

I wish your treasury charts went back further than 2007 for a better historical perspective.

Brooks, there are several sites that allow you to make your own graphs interactively. Wolf does a great job of putting up the most important data, but when I want to explore further, I often go to

where, for instance, the 1-year Treasury bond yield is dataset “DGS1” (just type it into the search field). The basic data often goes back to the 1960s, sometimes further.

Every chart is a trade-off between the details in the current period and ancient history. I don’t want you to focus on what happened in 1980. You should have known this for decades. I want you to focus on what is happening NOW, and how that relates to things a reasonable time ago.

In the ancient history chart below, you cannot even see what is happening “now.” It’s just a straight line.

There are lots of readers and commenters here that weren’t even alive when this chart began.

I post these charts a lot. But ancient history never changes. Constantly throwing these ancient-history charts at people is BS. And I’m not going to do it. If you want to study ancient history, go back to college.

Occasionally, for your amusement, I include an ancient history chart, such as with the mortgage chart, but only once every now and then.

I also include ancient history charts if I want to show something like, “worst since” or “highest since,” and then I might take the chart back to the last time this occurred. This is the case with the current CPI charts, which go back to the 1980s for that reason.

As one who lived through “ancient history” I remember what was happening in the 1970s and 80s. Having become a stockbroker in 1982, I feel like I am living through a rerun of those events.

“Ancient history”, also known as reality vs post-1983 financially engineered “reality”.

We have reached the interest rate state where I am starting to wake up.

If I have an extra 50K in my savings account making 0.1% interest, should I:

1) Pay down my home loan (3.0%) by 50K to shorten my loan life and be more secure for retirement sooner? 2) Put the 50K in a 2 year Treasury at 4.21%? 3) Put the 50K in a 2 year CD at 4.2%.

Some things to note, it depend on you tax bracket and what state you live in for this decision.

1) For a 24% (or higher) Federal Tax bracket, a 4.2% rate would be equivalent to an effective 3.2% interest rate after taxes.

2) Some states have no state income tax and many states do not tax Treasury interest but they tax CD interest. Often 5+%. That would make the effective rate on CD’s at a 5% state tax rate be effectively 2.98%.

If you live in a state with no income tax and are in the 24% Federal tax bracket, you would effective make 3.2% in a 2 year CD or Treasury at 4.2%. Your mortgage is 3%, so do not pay off the mortgage and put the money in a Treasury or CD. Re-evaluate after 2 years.

If you live in a state that does not tax treasury bill interest, put the money in a Treasury and after tax, make 3.2%.

If you live in a state that taxes Treasuries and CD income and the tax rate is 5% or over, the effective CD/Treasury rate is less than 2.98%. Pay down the house or continue waiting until treasury rates go higher.

These are my thoughts as these rates start to wake me up.

Bob, First thing first. Are you working, and is your job secure? If you are “working” from home, and 50k is all you got in savings, then get 1-year CD, forget about tax brackets, and go back to office.

You can buy a 6 month CD paying 4.04% and think about what to do next Spring (rates may be higher). I just did the same today.

Good idea. Made 80-100% on puts in under 2 months. Was worried there for couple of weeks. Started too early, had to average down.

Interest on US government debt is completely nontaxable at the state level. Every state, every type of debt — Treasury bonds, savings bonds, TIPS including increases in principal.

I don’t think the states can tax Treasury bills or bonds. Isn’t there some kind of intergovernmental tax immunity?

Everyone should open a treasury direct account and buy i-bonds now paying 9.62 percent. Max amount is $10k a year. Do that before worrying about CD rates.

It’s a pain to open the account. You have to have the paper forms stamped by your bank and mailed in. Some banks don’t do that. I have a chase account and they were very helpful.

Another great benefit is treasury direct doesn’t have a FDIC insurnance limit to worry about. I’ve had a couple of banks go broke. This is likely to happen again if home prices fall enought to eat up people’s equity.

The good news is that once you have opened an account and have purchased the 9.6% i-Bonds, you will have a Treasury Direct Account to purchase other Treasuries that Wolf mentioned above.

I agree, i-bonds at 9.6% should be purchased first.

Wow, worried about FDIC insurance limit? For multiple banks? Let’s hope Educated but Broke Millenial does not read this. Also, max amount is 15K/year, if you play your cards right. We’ve been over this.

Treasury interest not taxable in any state for state income tax.

CD interest is taxable at your state income tax rate.

I’m going to purchase some short term treasuries.

I’m working. My job is secure for the next 6 months. Why not make 3.9%-4.2% on my cash fund? I used 50K as an example. Any unused cash should go to a treasury. The emergency fund goes into a 3.9% 6 month treasury. The rest can be laddered into 1-2 years. It doesn’t make sense to pay down a 3% mortgage.

At least until 10 and 30 year treasuries rise above 7%.

“It doesn’t make sense to pay down a 3% mortgage”

Mathematically, you are probably correct. But, I hate debt. I view it like a plague that must be cured. I know I’m in the minority with this opinion, but I would focus on getting out of debt before anything else.

Peace of mind with a paid-for house is worth something.

Banks cannot take it away if it is paid-for. HOAs and the government still could take it away so you are never free.

Worth a thought: Money-market yields will catch up to current 6- to 12-month yields in just a few months. If the Fed keeps raising rates, it might work out better to stay in the money-market fund vs. a fixed-rate CD or Treasury.

P.S. For those trapped in a higher tax bracket, municipal bonds are often a better deal than either Treasuries or Bank CDs.

P.P.S. Please consider who you’re enabling with your lending. Treasuries are loans which enable(d) Congress to spend us into our current predicament. Bank CDs to huge banks enable Banksters and their shenanigans. Avoid those if you can, and lend to institutions worthy of your funds!

The last time around when Fed was raising some people managed to lock in 5-year 4% CDs from some online banks. Those lasted for maybe a two-week window. Best I got was 2-year 2.75%.

I bought a house in FL for $1.5mm two years ago. The same exact model house sold in my development for $3mm a few months ago. Another one is now listed at $2.6mm… The prices rose so fast, that it shouldn’t come as a surprise if these houses trade off 30% off the highs. That will just mean things will be more normalied.

That’s probably why many people aren’t securing their RE gains by selling. The gains came easy, so it’s OK if they evaporate quickly (from an emotional standpoint). Some may call it complacency.

Ha. Not wanting to be offensive but if you use the words, ‘model’ , ‘Florida’ , and ‘1.5 million’ all in the same few sentences…

I assure you, it is not worth 1.5 million. You may be able to convince someone from up north it is, but it isn’t.

So normalize just north of $2 Million is what you’re saying? Did similar models normalize above $250K in 2007?

What are your thoughts on TreasuryDirect? Do you think it hassle free enough to transfer money from a bank account to a treasury account, and then transfer the money back to my bank after the treasuries mature (compared to brokered CDs)?

We have three accounts. The money transfer is automatic (via ACH). You just log in, order the securities you want, choose the auction date by clicking on it, enter the dollar-amount you want, review, confirm, and you’re done.

When the security matures, the cash is sent back to your bank automatically. Same with interest payments.

The biggest hassle is logging in LOL

Wolf/anyone – how long do you think it takes recently to get the bank account added via form submission?

I set up 2 accounts last spring. It too just a few minutes per account to set things up online.

Might’ve been the usual couple of days to verify bank account info.

The only hassle is remembering to check in periodically to either roll things over or extract your matured funds. TreasuryDirect doesn’t pay any interest on cash balances, so you don’t want funds sitting idle in there.

@ws -they don’t allow anymore to add banking details online. You have to fill and mail a form. Not sure how it takes them to add the bank account once they have the form.

The economy was tipping over from already-bubbly levels in 2019 before the .gov types went full retard with lockdowns, stimmiez, QEs, ZIRPs, and MBS puchases. The coming crash, now from even higher levels, will be epic. Prepare yourselves accordingly.

1) Rent is rising. Cohabitation to avoid paying two landlords. Divorce rates will be down. 2) Higher interest rates are bad for buybacks, bonuses and executive perks, protect innovative small businesses from being swallowed by whales, on zero interest rates. SF will pay the price. 3) Mortgage rates are rising. Car loans % are popping. In NYC high end RE sales are down 50% and prices down 40%. 4) Savanna and Long Beach clogging are down to zero. Retail Inventories to Sales ratio is rising, but still very low. Is Macy’s doomed. M : SOT, Macy’s is shortening of the thrust for four months, since May, paying 4%.

Reverse Repo hitting highs as quarter end nears and as more folks move cash into higher yield money market funds 10 year at 3.68 and holding inverted yield curve . Will the 10 year hit 4 percent in next few weeks?

I’ve been waiting to purchase a house. And waiting. And waiting, saving, saving and saving.

I’d rather buy something priced correctly and owe the bank more than end up paying more for something I know good and well isn’t worth half of what I just bought with low interest rate.

If it takes an implosion then so be it. Last time real estate was even close to being priced correctly was probably 2010 or so.

Like our friend Mr. Frost is fond of saying, we’re all about to become poorer anyway. It’s time to rip some band aids off and expose this fraud of an economy. I can save faster than inflation… not much, but I can. Sorry, Coke & Pepsi- you just got dumped for store brand.

The banks won’t be able to separate new and existing customers for long. When the existing customers find out they’ve been duped at 0% while the newcomers are getting 4%, there’ll be major pressure to treat everyone the same — either 4% for all, or 0% for all. My guess is the banks will then play it safe and go 0% for all rather than shell out the profit-denting money.

GV: Do you really think the bulk of the American public is savvy enough to know about brokered CD’s? The banks don’t advertise it and neither do the brokerage houses. You’d have to read a financial site and then you’d have to have the time and funds to go set up a brokerage account to do so. Most people would rather eat glass.

I moved some money into a brokerage that I had a relationship with. The funds came from a credit union (who is so far behind the curve it’s ridiculous) and it took days for the funds to clear due to the scrutiny of large amounts of money moving around. I can only suspect that it’s the goobermint as the bank had more on deposit than the check I wrote and still wouldn’t clear it despite my being a customer since the 1980’s.

You need a better broker. I have fidelity and interactive brokers. The ECH transfers go thru same day if not started too late.

The worst case scenario might be that banks may not be able to service their deposits (liabilities) with any meaningful interest and cannot afford not to attract new deposits to support increasingly compromised assets on their books, but have to compete for dwindling cash supply with a market rate via CD’s.

The extent and volatility of downward price moves in Treasuries, Commodities, CRE and Stocks, juxtaposed with the Fed’s assurance of a correction in Housing could be generating a liquidity vortex.

Could the spread between the rates on Bank Deposits and CD’s develop into a leading indicator of market stress?

I opened a 401k Self-Directed Brokerage Account because my options were making 1%-2% on a Stable Fund or crashing on every other fund. Unfortunately I also found out about the 90-day Equity Wash Rule, so I get to enjoy those 90 days in a Bond Fund losing value until I can throw it all into CDs. Hoping things are better in 3 months on interest rates to make up for the losses I’m about to take.

This period is getting me off my ass and getting more involved in directing investments, although I’m the dumb money that Wall Street craves. My parents outsourced everything, even their parental responsibilities, so all I ever learned about was compound intetest in savings accounts, and we’ve seen how savers have panned out over the last 20 years.

am I the only one that makes the observation that the federal reserve is at war with the biden administration on this “inflation issue” ? two anecdotal examples – youg lady I know just purchased a home and was thrilled to be the beneficiary of a federal program that will provide the down payment – pay her closing costs and provide a $5000 grant for new items needed in her new home second example – young lady I know who works in the finance department of the city tells me very excitedly – ” we just received $59.000.000 more for covid relieve !

Let me know when I can buy a car, new or used, for a reasonable price.

When captive finance company’s subsidized interest rates hit 5 or 6% for top tier customers / 10% for the credit criminals and few qualify because they can’t roll over their negative equity into a new loan. 150% LTV won’t be that attractive to the finance companies.

That’s going to be the real litmus test. The negative equity has to go somewhere so either the customer eats it or he tosses the keys back and has a ding for 7 years – and no automobile mfr. captive (well, maybe Nissan and Chrysler Credit because they’re still in fog-a-mirror mode) will touch them.

When the job losses begin in earnest. People without jobs don’t need a car to get to work. Discount bonanza!

Rolled most of my Dec/Jan puts into March and June. Looks like it’s going to retest pandemic lows and may bounce temporarily. Junk bonds set new 52 week low, close to pandemic crash level. Many ‘blue chips’ are setting new 52-week lows daily. We had 3 (almost) 1000-point down days. Now need to see some circuit breakers.

Hike the rates some more!

Last year the FED and the BOC told us that inflation was transitory yet my grocery prices have doubled at No Frills the cheapest Loblaw store owned by the billionaire Weston conglomerate.

Some of the grocery inflation has nothing to do with interest rates. Crop losses, late planting due to rains, shortages/high cost of fertilizer, agricultural diesel costs, supply chain issues with repair parts for farm equipment (John Deere), bird flu, farmers culling herds because the cost to feed them is excessive…… then there’s the increased wages everyone applauded (gee, where did you think that was going to settle?), fuel costs for shippers, backups at the southern border and resultant waste (stuff rots in the heat)….. There’s also been several food processing plants that have sustained fire damage and closed over the past several months.

And if it weren’t for the billionaires owning grocery chains, where would you buy your food? Not too many truck patches during the winter and the bodega’s don’t have the infrastructure to serve mass quantities of customers.

1) The judge is in love with an old blue zone prof who close his eyes when he reach his anti Fed climax. 2) JP, thanks for keeping us alive, supporting our businesses, keeping our restaurants open. We bite the hand that loved us. 3) SPX, higher low, with a large buying tail. 4) DXY weekly, this week, Sept 19, a trigger. Higher stock markets might protect us from inflation. Many small co are paying more than 4% dividends, with low debt, and rising retained earnings.

Maybe somebody can help me understand this. Harry Dent says that the best place to be right now is in 20 and 30 year US bonds. Or the TLT.

I would think this would be the case if interest rates had already peaked and we knew that they would be falling. But wouldn’t buying those be premature at this point? He never explains his logic on this.

TLT year to date return is -26%. Could easily peel off another -25% reaching the 2006 low of 83. Buy when rates peak at the start of the next recession. Funds are dangerous….better to own the underlying asset which can be held to maturity (if the reaper doesn’t visit)

Yeah. He recommends ZROZ too. I never hear him explain it, nor can I figure out the reasoning on my own. He’s a genius or a flake. I dunno.

That was a great expression for home prices: “ionospheric” Nice. I feel so rich. But losing $70k in the stock market today somewhat dimishes that “rich” feeling. :-(

What a coincidence. I told my wife earlier that we *would* have lost 70k in the market this week… If we listened to our “advisor”.

So glad I put my money 403 in a safe 3% yield account at Voya

With mortgage rates between 6-7%, home prices near ridiculous all-time highs, and affordability half what it was a year ago, I’m surprised housing transactions are only 10-30% lower than prior year. Who is buying houses under these conditions, and how can they survive in this world without constant supervision and bailout support?!

What happened in the stock market today along with these rates will have a massive affect on the real estate market, even in my special, we’re different from everywhere else San Diego. Very little is going in a few days, most are sitting and dropping their prices a bunch. They painted themselves into a corner and now Powell has no choice but to do what he’s doing and we’re all gonna pay the price. The chickens have come home to roost.

not so fast … inventory is still extremely low (compared to 2018-19) … defaults are negligible … still plenty of liquidity for those that want to step up and buy something. i don’t disagree that the arrow is pointed down but the action is unfolding slowly. lot’s of people (still) have money. properties will continue to sell …

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It’s like a dam broke. And now higher interest rates and mortgage rates for much longer, with lower asset prices, as the Everything Bubble gets repriced.

The ridiculous price spikes now face Bank of Canada’s monster rate hikes, QT, and spiking mortgage rates.

“Housing market will have to go through a correction … to where people can afford housing again”: Powell

But these sales happened during the “Fed pivot” fantasy that pushed mortgage rates down to 5%. Now mortgage rates are near 6.5%.

Bank of Japan lets yen go to heck, trade deficit blows out, costs surge for manufacturers, prices surge for consumers.

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