Good Thursday AM,

Bonds are off to a better start today. Some weaker economic data (higher unemployment claims, weaker manufacturing data) along with military escalations on the Ukraine border. The 10-yr is finally back below 2% (1.98% to be exact) but that is a win regardless. The Fed meets in less than 30 days and while last week markets had odds at 90% for the Fed to raise 50bps, the odds have now dropped to 30% with 6 hikes instead of 7 now expected. I still don’t see more than 4, but we will see. The spread between the 2-yr note and the 10-yr note is 40bps. If the Fed raises rates as quickly as markets expect, the will raise the short end (2-yr notes) and have minimal effect on the longer bonds (10-yr). If this curve becomes inverted (2-yr yields higher than 10-yr yields), well that becomes a pretty good predictor of a recession (maybe 17 out of the last 17 times) so no, I don’t think the Fed takes us there. We will see…

In case you were thinking of moving to an upscale neighborhood, Zillow identified Indian Creek, Florida, an exclusive 300-acre island in Miami’s Biscayne Bay, as the most expensive U.S. city in 2021, where a typical home value was roughly $28.3 million.

Please remain safe and healthy.