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Mortgage rates will continue to fall in 2024, but more gradually than they have recently from 6.8% now to 6.25% by the end of the year

Expect a moderate pick-up in demand as easing interest rates improve affordability. Against that backdrop, expect existing home sales to remain subdued in 2024

Although the US 10-year Treasury yield has now dropped back to be in line with apartment yields, a further increase in NOI yields seems inevitable. Click here.

MRB: From soft landing to no landing

The recent dramatic easing in aggregate monetary conditions is more likely to result in a “no-landing” outcome (Than a soft landing) and a continuation of above-trend economic growth and sticky underlying inflation pressures

This will curtail the amount of rate cuts the Fed will be able to provide. Click here.

Carraighill: Global inflation and rates – markets overzealous on US/UK rate cuts with European peak more likely

The effect of falling M3 (3.3% YoY) is yet to dampen the rise in the velocity of money in the US. This indicates that the productivity of debt continues to increase.

The labour market continues its resilience. Unemployment held steady at 3.7 and Real GDP forecasts continue to improve.

We have begun to see the dissipation of the base effects from high commodity prices in winter 2022/2023. CPI ticked up to 3.4% in November, an increase of 30bps. 

The market has started to price a large ratecutting cycle. While base effects, a high fiscal deficit and a strong labour market persist, this seems aggressive. Click here.

Applied Global Macro Research: US Inflation: The Battle is Won – But is the War?

Core goods inflation is likely to pick up again in the coming year, as signs of modest increases in manufacturing price surveys and non-manufacturing price surveys are already emerging

Wage growth might pick up in 2024, which could result in underlying unit labor cost growth remaining in the 3-4% range. Click here.

Aletheia Capital: Global Industrial Production; Going nowhere fast

Global industrial production has been going nowhere fast for the last 15 months. This to change much over the next 6 months.

The goods side of the world economy remains fragile: neither recessionary nor poised for a rebound

There are risks in both directions: to the upside: an upswing in the semiconductor cycle; an end to destocking in Europe and a  resilient consumer in the US, and (possibly) more decisive stimulus in China

To the downside: masochistic monetary and fiscal policy in the US, Europe and China; an acceleration in job layoffs as firms invest in labour-substituting AI; or a severe deterioration in geopolitical conditions. Click here.