Morning Report: Janet Yellen thinks inflation may have peaked

Vital Statistics:

S&P futures4,247-20.25
Oil (WTI)97.31-4.79
10 year government bond yield 2.82%
30 year fixed rate mortgage 5.41%

Stocks are lower this morning after Chinese stocks were down 5% in the overnight session. Bonds and MBS are up.

The upcoming week is full of data, with home price indices on Tuesday, GDP on Thursday, and personal incomes / spending on Friday. There is no Fed-speak as we are in the quiet period ahead of the May FOMC meeting next week.

The Fed Funds futures are locked in on a 50 basis point hike next week:

Mortgage delinquencies hit a record low in March, according to Black Knight Financial. The national delinquency rate fell to 2.84%, which beat the previous record of 3.22% in early 2020. A strong employment market, combined with continued student loan deferrals, along with super-low interest rates have helped borrowers keep their heads above water.

The Chicago Fed National Activity Index dropped in March as employment-related indicators made less of a positive impact. Overall, the economy is still growing well above the historical trend, and is territory usually reserved for economic booms.

Despite the rise in home prices, noted that median listing prices are falling in a few MSAs, particularly in the Rust Belt. “Many of the metro areas seeing median list price declines have seen an [influx] of smaller homes come to market, which carry lower price tags,” says George Ratiu, manager of economic research for “At the same time, several of the cities have unemployment rates, which, while still historically low, are above the national level. [This indicates] that buyers may face steeper affordability challenges from rising mortgage rates.”

It is important to note that is using a median listing price, which is different than the repeat-sales price that home price indices like Case-Shiller or Clear Capital use. So this isn’t really indicative that home prices, which have been rising at a double digit pace have suddenly hit the wall and are beginning to decline.’s observations reflect a change in product mix. That said, affordability has taken a big hit over the past year as higher mortgage rates and more expensive housing are conspiring to make life difficult for the first time homebuyer.

Janet Yellen says that inflation may have peaked, and she doesn’t see a recession. Investors are beginning to buy Treasuries, as they bet the sell-off has gone too far, too fast and the economy is poised to slow. “We have been incrementally adding longer-duration bonds into our portfolios in anticipation of market participants pricing in slower growth moving forward,” said Gavin Stephens, director of portfolio management at Goelzer Investment Management.

It looks like Twitter and Musk are about to agree to a friendly deal at his original bid of $54.20 per share. It doesn’t contain a no-shop provision, so a process has yet to be run.

20 Responses

  1. It would take a heart of stone not to laugh.


  2. This is good:

    “The Babylon Bee Stands In Solidarity With Its Fellow Canceled Satire Outlet CNN+”


  3. Scott, this reminds me of the debates you used to get into over whether or not you could weigh in on “women’s issues”:

    “Update: Men Allowed To Have Opinions On Abortion Now That Men Can Get Pregnant”


  4. They really are making it easy for him:

    “Gov. Ron DeSantis of Florida has spoken more generally about social-emotional learning as a distraction, in his view, from math itself.

    “Math is about getting the right answer,” he said at a Monday news conference, adding, “It’s not about how you feel about the problem.””


    • They are. I’ve heard a lot of National Review conservatives complain that his revocation of Disney’s special district is this terrible idea but I’m not sold on it. Also comparing it to cities keeping Chick-fil-a and Amazon out or the Masterpiece Bakery lawsuit and I’m not seeing it. This is a state saying it doesn’t want to give a corporation special treatment unavailable to most people. It’s ending an agreement. Like ending a contract. Because they’ve decided they no longer want to be seen handing you out special favors given some of your positions … particularly on issues not relevant to your business.

      Ultimately I think it’s a positive just because woke corporations should get the idea that they can’t just do whatever they want and everybody will just meekly bend the knee.

      Ideally I would not advise this sort of behavior but at some point you can’t let the other side do shit with impunity and never do anything in response.


      • “Also comparing it to cities keeping Chick-fil-a and Amazon out or the Masterpiece Bakery lawsuit and I’m not seeing it.”

        The Chick-Fil-A comparison is the most on point, in that they were giving out concessions at an airport and they denied them because of their support of traditional Christian charities.


        • I can see that. Still not at the level of being granted your own independent city-state. I don’t really see why any political ideology should see that as something that must be preserved and kept in perpetuity.

          Not that I care much either way. It just doesn’t seem like some huge violation of conservative principles that requires so much rending of garments on the right. But ultimately I agree with the Charlie Cook argument that Florida had won on the bill—which is the important point. Not engaging in a culture war against women corporations.

          But I don’t mind it and think it might be a good thing ultimately—Musk and Twitter and Disney losing its independent city-state in the middle of Florida might suggest to some wine corporations that they should just start keeping their political opinions in their pants.


  5. Someone should apply this logic to the implementation of Queer Theory in public schools:

    “Even when that coercion is “subtle and indirect,” it “can be as real as any overt compulsion,” especially for students. Teenagers are uniquely “susceptible to pressure from their peers towards conformity,” and state officials “may no more use social pressure to enforce orthodoxy than it may use more direct means.”


Be kind, show respect, and all will be right with the world.

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