Rethinking Economic Principles, Rates Flat, Appreciation

  1. Going below the ‘natural rate’ of unemployment could spark an inflationary escalator. even Fed Chair Powell has commented on how the relationship between unemployment & inflation has been zero.
  2. Globalization is good for everyone – except our blue collar workers.
  3. Large budget deficits cause the government and private sector to compete over selling bonds driving interest rates up – a surplus of capital flow from foreign investors into our treasury bonds has destabilized this theory.
  4. Higher minimum wages hurts workers – over the past 20-30 years empirical data has shown that while some people do get hurt by minimum wage increase, the # of beneficiaries far outweigh the# of folks that get injured.
10 Year US Treasury Note

Rates – Mortgage rates and the 10 Year US treasury yield moved sideways this week trading in a narrow range for the past 7 days.

Jobs – the number of people filing for unemployment dropped again this week coming in 13,000 lower (better) than expectations. Employers are holding on to their workers.

Appreciation – the price of single-family homes with conforming loans increased 5% over the last 12 months and 0.1% from April to May.

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