AgentIndustry News

Too little equity, stagnant prices bring trouble

Future-Proof: Navigate Threats, Seize Opportunities at ICNY 2018 | Jan 22-26 at the Marriott Marquis, Times Square, New York

Mortgages are nearing 6 percent for the first time since last Thanksgiving, pulled down by a general flight to high-quality assets (yes, U.S. agency-guaranteed "A" mortgage paper is still high quality). The 10-year T-note at 4.5 percent has again priced in a Fed easing by summer (wrong several times in '06, might at last have it right). For cause of the global stock-market ker-plunk, we have all sorts of offerings. The most entertaining is the "Tales From the Crypt" version, blaming former Federal Reserve Chair Alan Greenspan's mention of end-of-cycle recession possibilities. Any minute we'll get Vincent Price on subprime, and Edgar Allen Poe on inflation. Stick with the basics: last year marked one of the longest periods of record-low volatility and equally low premia for risk ever measured. Such episodes always end badly. Catalysts are almost irrelevant: a retired Chairman, a mortgage-induced meltdown in the black-box bond market, an end approaching for free-lunch yen borrowing, we...