Good Wednesday AM and still the best day of the week,
Bonds are taking a beating this am as the economic data came in hotter than expected.
Retail sales jumped more than expected and between that and some rhetoric from central bankers saying cuts are less likely than the market expects are driving today’s reaction. Things were a lot worse earlier on and they have calmed a bit but we are still off 20bps in mortgages and the 10yr is back to 4.11%. A Federal Reserve rate cut in March has slipped to about a 65% chance, from 80% at the end of last week. Bond traders have started to pick up options to hedge against the prospect of a half-point March cut.
In a recent survey conducted by the real-estate listing site, 21% of homeowners said they were considering selling their homes sometime in the next three years. If those owners follow through, that could bring on a fresh wave of housing inventory, which is good news for buyers, who have been stymied by a shortage of available homes over the last few years. The survey also found that homeowners who have a mortgage rate below 5% are almost equally as likely to consider selling their home as homeowners with rates above 5%. That’s a promising sign homeowners are appearing less deterred by today’s cost of borrowing, with high mortgage rates discouraging many over the past year from listing their properties for sale.
The Bill Is Coming Due on a Record Amount of Commercial Real Estate Debt
The troubled commercial real estate market is bracing for a record amount of maturing loans, boosting the prospect of a surge in defaults as property owners are forced to refinance at higher rates. In 2023, $541 billion in debt backed by office buildings, hotels, apartments and other types of commercial real estate came due, the highest amount ever for a single year, according to the data firm Trepp. Commercial-debt maturities are expected to continue rising, compelling many borrowers to confront the higher rate environment—along with higher vacancies and weakening cash flows—which is depressing property values, Peter Grant reports.
Please remain safe and stay healthy, make today great!