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> But if 10y treasury rises to even 3.5-4%, all asset valuations will implode As of February, 2022 the 10y has been rising at 0.1% _per week_, so 4% in the nex

> But if 10y treasury rises to even 3.5-4%, all asset valuations will implode As of February, 2022 the 10y has been rising at 0.1% _per week_, so 4% in the next 3 years seems pretty optimistic.

adam_arthur 5y ago
I expect it to hit 3% within a month or two, along with 5-6% mortgage rates. Buying a house now has more risk than anytime since the mid 2000s. Though many would surely dispute. Don't need to get into all the stats, but the interpretation of the stats being used to drive the FOMO narrative is a result of stats crime and misunderstanding There comes a level with long bonds where indebted companies start to fail, and it's not very high. This will cap the 10y from going too excessively high, as bond traders are pretty smart and will buy when they think we're near the cap. Personally I think zombie companies should be allowed to fail. Kinda like forest management for the economy. It's the better alternative to carrying non viable businesses into perpetuity. The Fed has erred on the side of bailing out speculators far too heavily... creates big moral hazard
- boringg 5y ago
  Very Schumpeter of you. I don't know how many people are in favor of zombie companies being kept alive...
  - bitcoin_anon 5y ago
    The owners and employees of said companies, generally.
  - adam_arthur 5y ago
    Did you not pay attention to the Fed's policy moves over the past 2 years? Which were clearly far in excess of what was necessary, once the acute crisis passed. They didn't even blink as housing rallied at the fastest pace in history as they continued to buy MBS month after month, artificially pushing mortgage rates lower. Hard to argue they cared at all about overdoing it, or distorting unviable companies towards profitability. This kind of policy approach steals wealth from future generations to pay the present. It's basic math. Personally, I prefer policy makers that optimize for the long run, even when it makes the present a bit more challenging
- paulpauper 5y ago
  >I expect it to hit 3% within a month or two, along with 5-6% mortgage rates. never gonna happen. I would say there are greater odds of the stock market making new lows this year than that happening >Buying a house now has more risk than anytime since the mid 2000s. Though many would surely dispute. Don't need to get into all the stats, but the interpretation of the stats being used to drive the FOMO narrative is a result of stats crime and misunderstanding People say this all the time yet real estate keeps doing well. > The Fed has erred on the side of bailing out speculators far too heavily... creates big moral hazard Still I'd rather not be fighting the fed. Stocks and real estate prices will likely go much higher.
  - adam_arthur 5y ago
    Mortgage rates are already over 5% for many, and the avg is around 4.8%. This is today, not in the future, if you haven't been paying attention. And the 10y is far below where it will likely settle. So 5-5.5% mortgage is pretty much a given within the next few months barring a sudden collapse in inflation Buying a house is fighting the fed now. They are trying to quell inflation and will very likely start selling MBS into the market next month to push mortgages rates even higher. Don't fight the fed works both ways. And don't even look at the inflation adjusted home price chart... Hint, they are far above the 2000s peak
    - jjoonathan 5y ago
      > Buying a house is fighting the fed now. Doesn't a tightening environment drive down prices (favoring the buyer today) and open the prospect of refinancing next time the fed chickens out (favoring the buyer tomorrow)? "Oh, high prices, I have just the cure: debt!" is usually a sales gimmick, not something that favors the buyer. What am I missing?
      - adam_arthur 5y ago
        The best time to buy is after transitioning from tightening to easing generally. It's true that price will move inversely to rate (all else equal), but price effect lags the rate change. If rates stay at 5% or above we can expect prices to likely start to slowly decline in many areas. It took 5 years for prices to bottom in the 2000s. Housing is a slow moving market

> But if 10y treasury rises to even 3.5-4%, all asset valuations will implode As of February, 2022 the 10y has been rising at 0.1% _per week_, so 4% in the next 3 years seems pretty optimistic.

adam_arthur 5y ago

I expect it to hit 3% within a month or two, along with 5-6% mortgage rates. Buying a house now has more risk than anytime since the mid 2000s. Though many would surely dispute. Don't need to get into all the stats, but the interpretation of the stats being used to drive the FOMO narrative is a result of stats crime and misunderstanding There comes a level with long bonds where indebted companies start to fail, and it's not very high. This will cap the 10y from going too excessively high, as bond traders are pretty smart and will buy when they think we're near the cap. Personally I think zombie companies should be allowed to fail. Kinda like forest management for the economy. It's the better alternative to carrying non viable businesses into perpetuity. The Fed has erred on the side of bailing out speculators far too heavily... creates big moral hazard

boringg 5y ago
Very Schumpeter of you. I don't know how many people are in favor of zombie companies being kept alive...
- bitcoin_anon 5y ago
  The owners and employees of said companies, generally.
- adam_arthur 5y ago
  Did you not pay attention to the Fed's policy moves over the past 2 years? Which were clearly far in excess of what was necessary, once the acute crisis passed. They didn't even blink as housing rallied at the fastest pace in history as they continued to buy MBS month after month, artificially pushing mortgage rates lower. Hard to argue they cared at all about overdoing it, or distorting unviable companies towards profitability. This kind of policy approach steals wealth from future generations to pay the present. It's basic math. Personally, I prefer policy makers that optimize for the long run, even when it makes the present a bit more challenging
paulpauper 5y ago
>I expect it to hit 3% within a month or two, along with 5-6% mortgage rates. never gonna happen. I would say there are greater odds of the stock market making new lows this year than that happening >Buying a house now has more risk than anytime since the mid 2000s. Though many would surely dispute. Don't need to get into all the stats, but the interpretation of the stats being used to drive the FOMO narrative is a result of stats crime and misunderstanding People say this all the time yet real estate keeps doing well. > The Fed has erred on the side of bailing out speculators far too heavily... creates big moral hazard Still I'd rather not be fighting the fed. Stocks and real estate prices will likely go much higher.
- adam_arthur 5y ago
  Mortgage rates are already over 5% for many, and the avg is around 4.8%. This is today, not in the future, if you haven't been paying attention. And the 10y is far below where it will likely settle. So 5-5.5% mortgage is pretty much a given within the next few months barring a sudden collapse in inflation Buying a house is fighting the fed now. They are trying to quell inflation and will very likely start selling MBS into the market next month to push mortgages rates even higher. Don't fight the fed works both ways. And don't even look at the inflation adjusted home price chart... Hint, they are far above the 2000s peak
  - jjoonathan 5y ago
    > Buying a house is fighting the fed now. Doesn't a tightening environment drive down prices (favoring the buyer today) and open the prospect of refinancing next time the fed chickens out (favoring the buyer tomorrow)? "Oh, high prices, I have just the cure: debt!" is usually a sales gimmick, not something that favors the buyer. What am I missing?
    - adam_arthur 5y ago
      The best time to buy is after transitioning from tightening to easing generally. It's true that price will move inversely to rate (all else equal), but price effect lags the rate change. If rates stay at 5% or above we can expect prices to likely start to slowly decline in many areas. It took 5 years for prices to bottom in the 2000s. Housing is a slow moving market