Mortgage Rates, Earnings Estimates, Nbelievable

The Federal Reserve’s restrictive interest rate policy often shoulders the blame for higher mortgage rates but it’s not that simple. Lower mortgage rates will improve affordability at the margin, but the housing market has bigger problems. One of which is the continued deterioration of the labor market. Small-cap companies’ financial performance continues to disappoint but hope springs eternal. De-Japanification. Nbelievable.

1. If rate cuts increase growth and inflation expectations, mortgage rates may move higher:

2. The mortgage-treasury spread is still elevated, leaving room for mortgage rates to fall without a change in treasury rates:

3. New entrants to the housing market have dried up:

4. At current prices, it’s more attractive to rent than to buy:

5. It keeps getting harder to find a job if you don’t have one:

6. Analysts keep pushing their earnings growth expectations into the next year:

7. Japanese interest rates are surging as the country looks to close the door on its era of stagnation:

8. Be careful what you wish for: once the inflation genie is out of the bottle it can be difficult to put back in:

9. Despite our skepticism of the durability of the AI boom, there’s no doubt that Nvidia’s recent business performance has been one of the best stretches for a company in history:

Originally on posted at Algorithmic Investment Models on February 27.

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The federal funds rate is the interest rate at which banks lend money to each other overnight. A treasury yield is the interest rate the U.S. government pays on its debt, and the annual return that investors can expect from holding a U.S. government security. The U.S. Dollar Index is a geometrically-averaged calculation of six currencies weighted against the U.S. dollar. The Russell 2000 Index is a benchmark for U.S. small-cap stocks, measuring the performance of the 2,000 smallest companies in the broader Russell 3000 Index. The S&P 400 Index, also known as the S&P MidCap 400, measures the performance of 400 mid-sized U.S. companies and serves as a benchmark for the mid-cap segment of the market. The S&P 500 Index is a market-capitalization-weighted index of 500 leading publicly traded companies in the U.S. across various industries.

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