What we’re reading (10/3)
“Wall Street Thinks America’s Homes Are Overvalued” (Wall Street Journal). “U.S. single-family properties are the only type of real estate that has increased in value since interest rates began to rise in March 2022. After a brief dip in the months after the Federal Reserve’s initial hikes, house prices resumed their climb. Residential property values reached a record in July, based on the latest numbers from the S&P CoreLogic Case-Shiller Home Price Index. Commercial real estate hasn’t fared as well, falling 16% in value since March last year, according to property research firm Green Street. Offices and malls face different pressures, but even U.S. apartment values are off more than 20% since last year’s peak.”
“How Treasury Market Upheaval Is Rippling Through Global Markets, In 4 Charts” (MarketWatch). “Signs of stress in the Treasury market abound. As prices across the bond-market have slumped, some long-dated Treasury securities have been trading below 50 cents on the dollar. Moreover, a popular exchange-traded fund tracking U.S. government debt that matures in 20 years or longer cemented its lowest close on Monday since 2007.”
“Dow Loses More Than 400 Points And Goes Negative For 2023 As Interest Rates Spike” (MarketWatch). “The 10-year Treasury yield touched 4.8%, reaching its highest level in 16 years. The benchmark yield has surged in the past month as the Federal Reserve pledged to keep interest rates at a higher level for longer. The 30-year Treasury yield hit 4.925%, also the highest since 2007. The average rate on a 30-year fixed mortgage neared 8%.”
“Amazon Used Secret ‘Project Nessie’ Algorithm To Raise Prices” (Wall Street Journal). “The algorithm helped Amazon improve its profit on items across shopping categories, and because of the power the company has in e-commerce, led competitors to raise their prices and charge customers more, according to people familiar with the allegations in the complaint. In instances where competitors didn’t raise their prices to Amazon’s level, the algorithm—which is no longer in use—automatically returned the item to its normal price point.”
“‘Dumb Money’ Exposes The Baffling Allure Of Bad Investment Advice” (New York Times). “Much as we enjoyed the movie, we are economists, not movie critics. And as practitioners of the dismal science, we worry that some viewers will continue to be inspired to copy the heroes’ investment strategies, which is about as smart as driving home at 100 miles per hour after seeing ‘The Fast and the Furious.’”
