子夜讀書心筆

寫日記的另一層妙用,就是一天辛苦下來,夜深人靜,借境調心,景與心會。有了這種時時靜悟的簡靜心態, 才有了對生活的敬重。
個人資料
不忘中囯 (熱門博主)
  • 博客訪問:
正文

財經觀察 2003 --- Market Overview: Capex Bonds Equities

(2009-04-27 00:06:35) 下一個
Market Overview: Capex Not Collapsing, Bond Yields Are Bouncing, Equities Still Cheap by Calafia Beach Pundit

Capex Not Collapsing

The most important thing about a growing list of things that have bounced from year-end lows (e.g., commodity prices, industrial metals prices, oil prices, retail sales, container shipments, home builders' stock prices (+75%), junk bonds, emerging market debt, Apple stock, and now capital goods orders) is that economic activity is not going down a black hole.

We are not caught up in a negative-feedback loop that will eventually turn into a depression. Even if all of these bounces only signify a stabilization of economic activity at a lower level, that is a far better outcome than what the market is expecting. Depression and deflation fears still rule the roost. The bullish green shoots are becoming so numerous that we have most likely seen the bottom in economic activity. Going forward the issue will be the degree to which the economy recovers—how fast and how durable will the coming business cycle expansion be?

Bouncing Bond Yields

Yields on 30-year T-bonds hit a new year-to-date high on Friday. At 3.88%, they are now 135 bps above their all-time lows of last December. Of all the things that are bouncing these days, rising yields on Treasury bonds are potentially the most significant. Investors drove yields down to incredibly low levels last December, when fear was at its peak and expectations of a global depression and deflation were rampant.

To be happy with a 2.5% 30-year Treasury bond, you would have to believe that a) the economy was in for a massive contraction, b) inflation was going to be negative for many years, and c) depression plus deflation would wipe out a huge percentage of the corporate bonds then in existence.

Well, now it's looking like depression and deflation are not so likely after all. Investors are now less eager on the margin to buy Treasuries, even though the Fed has promised to buy lots of them in order to keep yields low and thus help stabilize the housing market.

Rising 10-year yields haven't yet pushed mortgage rates up, but the spread between mortgage rates and 10-year Treasuries is unlikely to fall much more. Regardless, you can get 30-year fixed rate conforming loans for 4.8% now, and rates on 30-year jumbos have dropped to 6.2%, according BanxQuote. The spread between jumbo and conforming loans is still very high from an historical perspective, so it could fall a lot more. I don't think fixed rates on conforming loans are going to fall much more, if at all (this may be your last chance to lock in the lowest rates on conforming loans in your lifetime), but jumbo rates could still decline some more even if Treasury yields move higher.

Rising yields on Treasuries are unlikely to kill the housing market recovery anytime soon. Instead, they are an excellent sign that the outlook for the economy is improving. Green shoots are everywhere.

Equities Still Cheap


Equities are up almost 30% from their early-March lows, but the market is still extremely pessimistic. As this chart shows, the long-term trend rate of increase for S&P 500 index is roughly 8% per year. Relative to that trend, current prices are about as low today as they have been in the past 60 years.
[ 打印 ]
閱讀 ()評論 (0)
評論
目前還沒有任何評論
登錄後才可評論.