Vital Statistics:
| Last | Change | |
| S&P futures | 3,941 | 40.25 |
| Oil (WTI) | 110.28 | 0.69 |
| 10 year government bond yield | 2.83% | |
| 30 year fixed rate mortgage | 5.40% |
Stocks are higher this morning after the Biden Administration floated the idea of eliminating some tariffs on overseas goods. Bonds and MBS are up small.
The upcoming week will be relatively data-light, however we will get new home sales and personal incomes / outlays. The personal incomes / outlays number will be watched closely because it contains the inflation number. Markets will be watching closely to see if we are getting some relief in the month-over-month numbers. The year-over-year inflation numbers will be bad, of course but markets are looking for an indication that inflation is on the decline.
Economic growth is accelerating, according to the Chicago Fed National Activity Index. This is a meta index of 85 individual economic numbers. It indicates whether the economy is growing above or below trend. The Atlanta Fed’s GDP Now index has been moving up during May, and is looking at something like 2.3% growth in the second quarter.
The latest concern in the business press is the possibility of a recession. This is due to the fact that the Fed has often overshot to slow the economy. This was particularly true in the 1970s (a similar environment to today). St. Louis Fed President James Bullard doesn’t see a recession this year or next, unless there is a “really large shock” to the economy. “Recessions would have to come because there’s some really large shock and I can’t rule out that there would be some really big shock. Maybe there would be, but I am not seeing it near-term.” Bullard said during an exclusive interview with FOX Business’ Edward Lawrence on “Cavuto: Coast to Coast” on Friday.
With rising interest rates, adjustable-rate mortgages aka ARMS are making a comeback. The share of ARMS came in at 10% last week, which was a tripling of the previous rate. ARMs allow borrowers to take a lower initial rate, however the rate can move upwards or downwards after a fixed period of time. Note that in the past most ARM loans had 1 year resets i.e. 5/1, 7/1 etc. Now most are based on SOFR, and they are resetting every 6 months. So you’ll hear 5/6, 7/6 etc. You can see in the chart below that ARMs are increasing but they are nowhere near where they were in the early 2000s.
Filed under: Economy |
All Things in Moderation 
Interesting description of the current New York City rental market:
https://www.curbed.com/2022/05/brooklyn-heights-rental-cucks.html
https://www.curbed.com/2022/05/renters-offering-landlords-higher-rent-in-bidding-war-craze.html
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First I’ve heard of these sorts of apps, but it looks like the same old financing plans just repackaged and now being marketed through TikTok.
“What’s the Deal With Affirm, AfterPay, Klarna, and QuadPay?
By Hilary Reid”
https://nymag.com/strategist/article/how-to-use-affirm-klarna-quadpay-afterpay.html
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Inflation is a debtor’s best friend. Euthanization of the rentier and all that.
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I used affirm to purchase a peloton bike.
but it was more of an installment plan — 0%. so rather than tying up all the $, spread it out. actually just paid it off yesterday to clear it off the books.
but i wouldnt use it if it had an interest rate
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Yeah, zero interest loans are they way to go when making some higher dollar purchases but I just either wouldn’t buy it or I’d buy it outright rather than pay an interest rate.
Interestingly I tried a Peloton for a month but didn’t really enjoy it that much. It didn’t stimulate me like being outdoors does and I wish it did as exercise in the summer in Houston is tough.
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