Good morning on this best day of the week, Wednesday,
The bond rally continues.
From a pure technical point of view, the ten-year is poised to drop down and test 3.88% (bringing us back to October 7th). This is a first level Fibonacci correction (I love getting to say Fibonacci). Mortgage bonds are retracing back to October 12th and look to have more room to run. Why? Well, the Fed and now the Treasury, have been leaking their thoughts on future rate hikes and how to address the Treasury market illiquidity. The Treasury department may have to (which means they will or potentially already are) back to buying bonds.
I think at next week’s FOMC meeting, we have a good chance to hear a small pivot from the Fed that the pace of rate hikes will slow or pause. With that, bonds will rally, and the dollar will slide (it is already off 1.5% from earlier this week). Here is the thing though, the next two days are the biggest news days of the quarter. The news is big enough to easily derail this bond rally if GDP or the PCE prices come in hot and keep in mind the PCE report is largely for the same time frame that the last CPI reading covered. CPI came in hotter than expected. Because there is no way to know those numbers in advance and given the extreme bearish nature of the bond market, I would not risk floating on the news.
Of the 896 regional U.S. housing markets included in the Zillow Home Value Index, 121 saw a home price decline between May and September. Of those, 19 markets saw home price declines of over 5%, according to Fortune’s analysis.
Here’s how they rank:
- San Jose, California: -10.59%.
- Austin, Texas: -8.23%.
- San Francisco: -7.88%.
- Santa Cruz, California: -7.51%.
- Boulder, Colorado: -7.46%.
- Kalispell, Montana: -6.98%.
- Salt Lake City: -6.75%.
- Phoenix: -6.60%.
- Los Angeles: -6.52%.
- Boise: -6.35%.
- Grants Pass, Oregon: -6.13%.
- San Diego: -6.13%.
- Reno, Nevada: -6.12%.
- Breckenridge, Colorado: -6.04%.
- Sevierville, Tennessee: -5.92%.
- Bend, Oregon: -5.75%.
- Sacramento, California: -5.59%.
- Carson City, Nevada: -5.30%.
- Fernley, Nevada: -5.23%.
Apartment demand in the third quarter was the lowest since 2009, while the apartment-vacancy rate rose to 5.5%, up from 5.1% the quarter prior, data from RealPage and CoStar show. A September UBS survey found that 18% of U.S. adults surveyed said they had lived rent-free with other people during the past six months, up from 11% at the same time one year ago. That was the highest share of adults living rent-free with friends and family since UBS began asking the question in 2015.
Please remain safe and stay healthy, make today great!