Good Monday AM,

There is no data today and the week doesn’t really get started (regarding economic data) until Wednesday’s 10yr Treasury auction.

Thursday is CPI and Friday is PPI. Bonds are flattish on the day for now (actually have clawed back from an early hole). Being an optimist, I do think we could see some improvement later in the week if these reports come in subdued.

Dan Rawitch shared some interesting insight:

And we talk about these channels, they they’re real, you’re going to test the top and the bottom and it’s going to keep happening until you break out and you hope we don’t break out to the high side hopefully we can come back down test the low here of this channel which would also test this Fibonacci level so 3.90 would be really nice we’re quite away from that. First thing we got to do is close below 4.09, which we’re testing right now. It’s just been a real ugly run for bonds and the good economic news just keeps on coming. Except I think Friday’s jobs report was terrible, so that’s how you got back from 4.21 to 4.09 and you can see that MBS came all the way down and tested the bottom of support level, The news today was pretty much non-existent but Thursday is CPI and Friday is PPI. So two huge days although the market does not really seem to react favorably to these amazing inflation numbers we keep seeing. It’s a little bit crazy. I think the markets are at a point where they believe the Fed’s not going to ease, even if inflation’s gone at this point. That is the economy just keeps on cracking. So you need to keep playing defense, which is a story you’ve heard over and over and over. And we’ll have to take one day as it comes. But right now we’re definitely in a really ugly trend. And I don’t know yet if the balance that we’re seeing here from here is sustainable or not.

Not much else to share other than a warning sign flashing now in the apartment sector. Outstanding multifamily mortgages more than doubled over the past decade to about $2 trillion, according to the Mortgage Bankers Association. That is nearly twice the amount of office debt. $980.7 billion in multifamily debt is set to come due between 2023 and 2027. Rut Row, Unlike office buildings and malls, which have been hit hard by remote work and e-commerce, rental apartments have low vacancy rates. The apartment sector’s main problem isn’t a lack of demand—rents have soared since 2020—it is interest rates.

Please remain safe and stay healthy, make today great!