A little data today which showed existing home sales are at the lowest point since 2010… yes, 2010.
The Bank of Canada dropped their lending rate by 50bps to 3.75%. How nice would it be to be in Canada? But here in the US bonds continue to sell off and rates leak higher. The 10-yr note is at 4.24% and if you are looking for the next line of support, it will be at 4.30%. If we can somehow trade down to below 4.20%, that opens us up for a channel to 4.10%.
I would not bet on that last part yet, although that market has not been this oversold since August of 2023, and when it did hit this level of oversold, it abruptly went the other way. It’s difficult to understand how we have seen this rapid increase in rates based on data and Fed expectations, as neither would have caused it. It must something more and I am thinking, and close to sharing, it is tied to the expectation of a Trump win (and potentially a Republican congress).
Tomorrow and Friday are bigger data days so we will see how rates fare.
The WSJ shared that Americans are sitting on more than $35 trillion in home equity after a 75% surge since early 2020 thanks to booming home prices. It could be somewhat of a double-edged sword though as homeowners often get itchy fingers to tap the equity like a personal ATM, and a rush to do so could pose an inflation risk for the Federal Reserve considering the massive pileup in value. But many homeowners today are reluctant to use it as a source of cash.
Calmer heads…
A recession isn’t in the cards regardless of who wins the election, according to the boss of one of the world’s biggest asset managers. The economy’s “pretty strong” and both candidates “keep mentioning a lot of stimulative policies,” Blackstone CEO Steve Schwarzman said. Over at Bank of America, chief executive Brian Moynihan also expects “no landing,” and urged Federal Reserve policymakers to avoid going too fast or slow with interest rate cuts.
And what we have all been waiting for…
The IRS has set its guidelines and tax brackets for 2025. A quick recap is the IRS raised the income thresholds for each federal income tax bracket, which applies to tax year 2025 for returns filed in 2026. The top rate of 37% applies to individuals with taxable income above $626,350 and married couples filing jointly earning $751,600 or more. Capital gains tax brackets were also boosted, which apply to assets owned for more than one year. Meanwhile, the standard deduction will rise to $15,000 for single filers and $30,000 for married couples filing jointly starting in 2025. Estate and gift tax exemptions, tax-free transfers during life and at death, were also hiked to $13.99 million per person in 2025, up from $13.61 million in 2024.
Stay safe and make today great!
