Recession, Inverted Yield Curve and real estate continues to be strong
There have been 17 Inflation Periods since the 1970's when interest rates were increased by the FED. to combat inflation All but THREE led to a Recession. From a statistical and probabilities standpoint the bet is on RECESSION! That is a tough pill to swallow as we are just getting out of the Pandemic era, still facing continued reinfection by various variants of Covid. The FED is ramping up rate increases and the reduction of their $9 T bond portfolio. The first to go in the bond portfolio is the MBS, mortgage backed securities, sector. There are ample buyers in the banks. It appears their portfolio composition are light in this sector. At a present mortgage rate of 4.75% and the historic average maturity of a mortgage in the MBS portfolio is 7-10 years. To a bank, as an investor, 4.75% is far better than the 2.8% on present 10-year T-Bonds. That indicates that there will be a faster redemption within the bond portfolio. Further indicating that banks believe that home s