McKae Properties Real Estate Market Commentary

On a historical basis as the year end approaches there is a tendency to clean the books.  Inventory is marked down, offers are taken and unsold inventory is taken off the market to install once again the following year. The issues at present are inflation and the inability of the FED to get immediate satisfaction.  Or, at least, immediate satisfaction as the Media seems to want.  The FED on a historic basis takes time to wait to see how the populace reacts, how business reacts, how the investment community reacts.  Now add to the FED's actions the political action of deficit spending.  Spending to support allies at war, spending to support immigration issues both pro and con, spending to fund already in existence budget items.  Finally, we need to look at savings from the Pandemic years. In the past cycle of rising interest rates, we need to go back to the 70's.  Interest rose for the same reasons they are rising today...inflation.  Unfortunately; the increase in rates did not

 The last letter I detailed the yield curve, as seen below. TREASURYS TICKER   COMPANY   YIELD   CHANGE   US1M U.S. 1 Month Treasury 5.424 -0.004 US3M U.S. 3 Month Treasury 5.509 0.013 US6M U.S. 6 Month Treasury 5.564 0.006 US1Y U.S. 1 Year Treasury 5.39 0.029 US2Y U.S. 2 Year Treasury 5.016 0.032 US10Y U.S. 10 Year Treasury 4.616 -0.039 US30Y U.S. 30 Year Treasury 4.756 -0.072 Prior to the Hamas attack on Israel, the 10 and 30- year  bonds were on the verge of breaking 5%.  Monumental; in that, the break would mean bonds will be competition to any investment decision.  The Institutional Investor; which dominates our investment markets, can now look a long term treasury bonds to finance the actualarial  returns they are to provide to their clients.  The rise in interest rates is a major threat to growth stocks; such as technology, as the high return is more competitive to volatility and the lack of a current return in dividends.  Technology has had a great run in equity values and fed