What we’re reading (7/2)
“Markets Had A Terrible First Half Of 2022. It Can Get Worse.” (Wall Street Journal). “Almost any economic outcome is likely to prove a fresh surprise. If there’s a soft landing, stocks should do well as the recent recession panic reverses. If there’s a recession, there could easily be a big loss still to come, since only the drop of recent weeks appears to be related to recession risk.”
“Stocks And Bonds Hurt Alike Under Stagflation” (American Institute of Economic Research). “When bonds and stocks decline a lot and simultaneously it suggests inflation is rising rapidly even as the economy is stagnating or contracting (or will soon do so). For most economists today, that combination is near-impossible. Trained in Keynesian demand-side models – and taught to ignore or ridicule supply-side models – they deny that higher inflation is likely to accompany a weakening, let alone stagnating or contracting economy.”
“10-year Treasury Yield Falls To Lowest Level Since May” (CNBC). “U.S. Treasury yields fell Friday as recession fears and disappointing economic data left investors looking for safety. The yield on the benchmark 10-year Treasury note traded lower by 8 basis points at 2.889%, near its lowest level since late May. Meanwhile, the yield on the 30-year Treasury bond slid less than 1 basis point to 3.116%.”
“‘How Quickly The Tables Have Turned’: Falling Mortgage Rates Have Homebuyers So Emboldened They’re Asking Sellers For Cash” (MoneyWise). “The lower rate on a 30-year fixed mortgage is a relief for home shoppers who have been watching rates climb, but it’s also a sign that a recession could very well be around the corner as the market slows. Rates tend to mirror 10-year Treasury yields, which have fallen as investors seek safer, more stable assets in the face of higher inflation and slower economic growth.”
“Crypto’s Systemic Stress Test” (Axios). “Much of the current crypto winter is a function of two familiar markets phenomena — failed arbitrages and commingling of customer funds.”
