Historically, mortgages have cost around 1.75% more than the benchmark 10-year Treasury note. Today, that spread is around 3.00%. That’s huge and likely not going to last. Something’s going to give—or break.
It can’t be overstated how powerful ultra-low interest rates have been for asset prices and wealth accumulation over the past four decades—and the bubbles. But perhaps it is now time to think how unsustainable constant intervention and stimulus are, despite government’s good intentions.
The article discusses the recent collapse of Silicon Valley Bank (SVB), which was the 16th largest bank in the US with $200 billion in assets at its peak. Neil Rose provides five thoughts on the bank's collapse.
Investors have noticed the correction in stocks and a growing chance of recession. However, the real carnage has come from the bond market. Neil Rose and Arthur Mallet discuss the ramifications of an asset class that's not as safe as people think.
After nearly 40 years of benign inflation, markets have long since written off inflation as a material risk. In fact, policymakers have been so successful at suppressing inflation, many investors and almost all economists only worry about deflation.