Market Insights

MACRO

03/03/22 08:49 AM EST

CHART OF THE DAY: Magnitude of Change vs Rates-Housing Correlation

Christian Drake

Below is a chart and brief excerpt from today's Early Look written by Macro analyst Christian Drake.

Housing = 1-factor model:

It’s always the same story. When rates aren’t moving they don’t really matter to housing. When they are moving they are all that matters with Housing devolving into a single-factor rates-centric model during periods of large-scale concentrated rate increases.
Alongside the +70bps increase in 10Y yields since early December, 10Y Yield-Housing Equity negative correlation has ramped back to prior peak levels.
In addition to the backup in TSY yields, mortgage financing has been further pressured by the increase in MBS Spreads.
Recall, this time last year, the continued decline in MBS Spreads helped drive 30Y FRM rates lower, supporting housing activity in the face of rising TSY Yields. Now, instead of dampening the flow-through impact of rising TSY yields, it is amplifying it (albeit modestly, so far).
So, we’ve effectively hit the critical rate increase threshold that has, historically, triggered marginal demand destruction and housing equity price correction.
Shallow Quad 4 environments have been historically favorable for housing as expectations for policy easing increase and long-end rates decline alongside flagging growth/inflation expectations.

05/01/24 10:10 AM EDT

WEBCAST | David Salem Discusses Risk Versus Reward with Ted Oakley

05/01/24 07:46 AM EDT

CHART OF THE DAY: Inflation Causing Breakdowns

04/30/24 03:31 PM EDT

Cartoon of the Day: Synonyms

04/30/24 12:39 PM EDT

REAL CONVERSATION | Steph Pomboy 1-on-1 with Keith McCullough

04/29/24 07:23 PM EDT

Cartoon of the Day: No End In Sight

04/29/24 10:19 AM EDT

Market Situation Report: Impending Quantitative Tightening Tapering

View More Macro Insights

Cartoon of the Day: Nothing New

EDUCATIONAL CONCEPT: THE TREASURY GENERAL ACCOUNT

McCullough: Cut the Losers, Ride Your Winners

McCullough: This Market Setup Is ‘Really Nasty’ $SPY $NVDA

Cartoon of the Day: Powell Gump

Market Insights

CHART OF THE DAY: Go Anywhere Outperforming the Market

Cartoon of the Day: Nothing New

CHART OF THE DAY: Go Anywhere Process Paying Off

Cartoon of the Day: Torched

EDUCATIONAL CONCEPT: THE TREASURY GENERAL ACCOUNT