SLOW MOTION TRAIN WRECK
“How did you go bankrupt”, Bill asked.
“Two ways”, Mike said.
“Gradually, then suddenly”.
This is a popular quote from the Hemingway novel, “The Sun Also Rises”.
It describes well, the slow-motion train wreck that is the US economy.
The US economy has had a tough year.
Each bear market rally in stocks has been followed by further declines.
To learn more about bear market rallies read my recent blog post on the topic HERE.
For most of the year the market was responding to inflation concerns, which led to one of the worst starts to a year in history for bonds, and the fastest increase in mortgage rates on record.
This resulted in the worst home affordability ever after real estate prices skyrocketed the last two-years resembling the bubble days of the early 2000’s.
Now, with the Fed shifting its rate policies to curb inflation the seeds appear to be planted for a major slowdown in housing … or possibly a bursting of the bubble and a housing crash.
With investors and the US economy taking hits at every turn, the slow-motion train wreck that has been the story of the first two-quarters could be getting worse.
The first two-quarters of GDP were both negative – this consecutive quarterly decline marks an “official recession” for anyone without an agenda or bias.
However, the economic contraction shows no signs of improving and as FUD (Fear, Uncertainty, Doubt) takes hold investors are shifting their strategies to “risk-off” in preparation of more hard times ahead.
In these moments, bonds outperform as capital seeks the safety of cash-flow.
If you are new here, then read some of my other posts (likes this one HERE) but Fed “rate hikes” do not directly cause mortgage rates to go higher, in fact the result once the Fed starts raising rates (tighter monetary policy) is LOWER mortgage rates.
This because mortgage rates are determined by the Mortgage Bond Market, not the Federal Reserve.
As I just explained, in times of uncertainty bonds outperform.
This means more buyers, which causes bond prices to rise.
Rates are inverse the price, so as more money pursues a limit supply of bonds, mortgage rates will decline rapidly.
While everyone else will be caught off guard mistakenly believing rates are going higher, we can help prepare you for this upcoming rate drop.
Because these opportunities can happen in a blink of an eye, contact me now so you are ready to secure a new record lower rate the instant they become available.
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