What we’re reading (9/16)
“US Yield Curve Set To Invert By Most In 40 Years, Allspring Says” (Bloomberg). “Two-year yields are likely to surge in the next six months, increasing the inversion with 10-year yields to at least 100 basis points, said Brian Jacobsen, senior investment strategist at the firm [Allspring Global Investments]. The yield gap at that part of the curve stood at minus 44 basis points on Friday, the deepest in a month, data compiled by Bloomberg show.”
“FedEx CEO Says He Expects The Economy To Enter A ‘Worldwide Recession’” (CNBC). “The chief executive, who assumed the position earlier this year, said that weakening global shipment volumes drove FedEx’s disappointing results. While the company anticipated demand to increase after factories shuttered in China due to Covid opened back up, it actually fell, he said.”
“Redfin Predicts Sharpest Turn In Housing Market Since 2008 Crash” (Fox New York). “‘Buyers just don't have the 40% extra money to put towards housing every month,’ [Daryl] Fairweather [Redfin Chief Economist] said. ‘A lot of homebuyers had to drop out and go to the rental market instead or choose not to buy that second home or investment property.’”
“As Mortgage Rates Top 6%, More Borrowers Choose Adjustable-Rate Loans” (Wall Street Journal). “The average rate on a 5/1 ARM, one of the most popular adjustable-rate loans, was 4.93% this week, more than a full percentage point lower than the 6.02% average rate for a 30-year-fixed loan, according to Freddie Mac. A 5/1 ARM has a lower fixed rate for the first five years and a variable rate, based on one of several market indexes, for each of the remaining years of the loan.”
“Spare The Bear: The Inflation Debate That Should Be Happening” (BlackRock). “[Central bankers] are mostly silent about the collateral damage. For hikes to reduce inflation, they need to hurt growth. There is no way around this. How much they will hurt needs to be part of the equation. We estimate it would require a deep recession in the U.S., with around as much as a 2% hit to growth in the U.S. and 3 million more unemployed, and an even deeper recession in Europe.”
