Century Bond, Jobless Claims, Home Sales

Austria is issuing its 2nd 100-yr bond with a yield of 0.88%. Why would anyone want to put money away for 100 year for such paltry returns? One reason is capital appreciation if you believe rates will continue to go down. For example if the rate of that yield decreased to 0.44% theoretically you could sell your bonds and double your money.

Rates – stayed flat this week with a very minor improvement in pricing at week’s end. Rates are approximately 7/8% lower than this time last year.

Jobs – another 1.5 million people filed for unemployment for the first time last week. This level is 7X pre-covid levels and has held steady over the previous 3 weeks. The number of continuing claims also remained constant at nearly 20 million.

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Home Sales in May were down nearly 27% year over year. This represents contracts that were executed in March & April during the strictest lock down times (in many states Real Estate was not considered essential). Likely this number will bounce back in June in spite of limited supply.

Applications – after increasing for 10 weeks straight purchase applications are down 3% from the previous week. They are up 18% year-over-year.

Forbearance – Black Knight reports that the number of loans in forbearance rose 0.1% to 8.8% of all active mortgages. This was the first increase in the past 3 weeks.

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