The US yield curve is flashing warning signals. As the potential for deflation increases, smart traders/investors need to position themselves accordingly.
History shows our disposition towards herd behavior in markets, & the consequences which follow. Why do so many traders remain blind to the bandwagon effect?
Some ETFs are approaching key technical levels – pay attention to breakouts in the coming days which may signal more upside (at least in the short term).
Traders have a tendency to engage in herd behavior, or the bandwagon effect. This cognitive bias often comes with disastrous consequences.
To conclude our discussion on mortgage rates, house prices & epiphenomena, let’s consider the Fed’s role, or lack of one, in the housing market.
Higher rates have caused some parts of the US yield curve to invert – an ominous sign given high levels of inflation and geopolitical uncertainty.
The 1st Gulf War and its effect on oil prices is a good parallel to mistaking mortgage rates for house prices. While connected, they aren’t the same thing!
The fog of vol has markets suddenly looking bullish again. Are bulls really back, or is this just a bear market rally? Small caps might give us a clue.
Real estate is its own market, subject to its own forces of supply and demand. Thinking that interest rates are the only factor driving prices is too reductive!
High mortgage rates don’t necessarily lead to lower house prices because high rates themselves are indicative of a bull market in housing! Here’s why.