Can You Take Me High Enough?
Those are lyrics from a song by the Damn Yankees, a group I know zero other songs from, but which makes me think about all the Yankees fans who are probably muttering about the Damn Yankees while their team is 11.5 games out of first place in the AL East.
Hey, at least they’re not the Mets who are 21 games out of first. But guess who’s IN first in the NL Central?? The Milwaukee Brewers. As a Wisconsin native, I take great pride in our small-market team showing up some of its big-market counterparts.
But this blog isn’t about baseball, nor the Damn Yankees. It’s about the inversion of the Treasury yield curve, when long-term bond yields fall below short-term bond yields, and its recent re-steepening. Can this re-steepening of the curve take us high enough to eliminate the inversion all-together?
Clearly the curve is still inverted (and thus, still sending troubling signals for the months ahead), but the move from -109 bps to -76 bps in roughly one month is notable — and tricky to read.
Typically, the re-steepening, or “un-inversion”, of the yield curve happens when 2-year yields fall faster than 10-year yields as the market prices in expected interest rate cuts by the Fed. Those cuts have historically been in response to weakening economic data or a negative shock of some sort. For example, in March of this year during the height of the regional bank distress, the yield curve re-steepened by 69 bps, with the 2-year falling 108 bps and the 10-year only falling 39 bps.
But that’s not what’s happening this time. There hasn’t been a negative shock and economic data has held up decently well, yet the curve has re-steepened. And it happened because 10-year yields rose while 2-year yields fell. Odd, what could that mean?
(Learn more at Home Affordability Calculator).
To Fly Me Over Yesterday
The 10-year portion of the yield curve is more representative of long-term growth and economic expectations, whereas the 2-year portion is more representative of Fed policy expectations.
If 10-year yields are rising, that would intuitively mean that the market expects stronger economic growth than before (which also suggests higher inflation than previously thought, but that’s a topic for a different column). Looking at the Atlanta Fed’s GDPNow Forecast, economic growth is, in fact, expected to be stronger compared to prior estimates.
A rise in 10-year yields makes sense when lined up with this view. The problem is that the curve is still inverted. In order for it to have a positive slope again 2-year yields will need to fall at some point, or 10-year yields will need to rise another 75 bps.
The next problem is that both of those possibilities could present trouble for stocks. If 2-year yields are falling on the expectation of Fed rate cuts, something likely got worse in the environment. Conversely, if 10-year yields are rising, growth expectations are likely rising, but so is the threat of higher and prolonged inflation.
In an ideal world, 10-year yields stay put and 2-year yields fall very gradually as the Fed normalizes policy. That’s also possible. The result is likely higher yields (and interest rates) than markets have been used to for the better part of a decade. Although this would be the best case scenario, IMO, it suggests current stock valuations are too high.
Yesterday’s Just a Memory
In any event, yesterday will truly be just a memory. Case in point, rates couldn’t stay low forever, and the yield curve will not stay inverted forever. The Fed can’t keep hiking forever, and inflation won’t stay high forever.
The looming uncertainty is how and why all of these circumstances change to become just memories. The possibilities that would inflict pain on markets outnumber those that markets could survive unharmed, explaining the remaining caution and nervousness. I don’t expect there to be a single judgment day, nor a single moment in time when it all becomes clear. But the period in which we should be able to judge which outcome is more likely is quickly approaching.
This article originally appeared on SoFi.com and was syndicated by MediaFeed.org.
Communication of SoFi Wealth LLC an SEC Registered Investment Adviser. Information about SoFi Wealth’s advisory operations, services, and fees is set forth in SoFi Wealth’s current Form ADV Part 2 (Brochure), a copy of which is available upon request and at adviserinfo. Liz Young is a Registered Representative of SoFi Securities and Investment Advisor Representative of SoFi Wealth. Her ADV 2B is available at sofi
Please understand that this information provided is general in nature and shouldn’t be construed as a recommendation or solicitation of any products offered by SoFi’s affiliates and subsidiaries. In addition, this information is by no means meant to provide investment or financial advice, nor is it intended to serve as the basis for any investment decision or recommendation to buy or sell any asset. Keep in mind that investing involves risk, and past performance of an asset never guarantees future results or returns. It’s important for investors to consider their specific financial needs, goals, and risk profile before making an investment decision.
No brands or products mentioned are affiliated with SoFi, nor do they endorse or sponsor this content.
Communication of SoFi Wealth LLC an SEC Registered Investment Advisor
SoFi isn’t recommending and is not affiliated with the brands or companies displayed. Brands displayed neither endorse or sponsor this article. Third party trademarks and service marks referenced are property of their respective owners.
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5 bedroom upgrades that could increase your home value
The amount of money you put into a bedroom remodel depends on what you’re trying to achieve. Do you simply want to change up your décor, including your bed, bedside tables, and desk? Or do you want to paint the room a different color and add some window treatments?
You may also be looking at more extensive changes, such as ripping up carpeting and putting in new flooring, installing new windows, or building custom cabinetry in your closet.
The good news is that most bedroom remodels are less costly than renovations that entail taking down walls, rewiring electrical systems, and installing pipes, though some bedroom remodels may call for these types of tasks.
With a bedroom remodel, you’re less likely to be doing major construction that requires hiring licensed professionals like a carpenter, plumber, or general contractor. And even if you have to rely on the services of a vendor, there are likely other aspects of the project you can tackle yourself.
Liudmila Chernetska/istockphoto
Decluttering is a tried-and-true way to visually open up a room. That means organizing books and magazines, laundry or piles of clothes, and furniture. Here are some other ways.
Painting
House-paint companies boomed during the pandemic, ARTnews pointed out. Gray — all 50 shades — were out. Warm tones and deeply saturated color were in.
Some of the major brands and independent companies offer online color consultations. And then, if you feel up to the task, you can avoid hiring a painter by painting your walls yourself.
You’ll want to take stock of the current trim and match a color to it. You’ll also want to consider how the room changes color depending on the time of day. Sometimes a room that looks white in the evening can take on a yellowish tint during the light of day.
You’ll want to make sure you have all the equipment you need to get the work done efficiently and well. This includes paintbrushes, a paint roller and pan, rags, sandpaper, and drop cloths.
The great thing about paint is, if you feel you’ve done a poor job in spots, you can always paint over it. (Learn more at Home Affordability Calculator).
aydinmutlu/istockphoto
What you do with your floors is going to depend largely on personal taste. Your choices include wall-to-wall carpeting, wood or wood-engineered flooring with or without area rugs, and tile or ceramic flooring, which works best in humid climates.
You’ll want to think about how your flooring will complement the rest of the room, including furniture. You’ll also want to take your comfort into consideration. Carpeting, for example, muffles sound, while wood flooring does not.
Some people don’t like walking barefoot on anything besides carpet, for example, while others prefer the look of bare floors.
Cost may also come into play here as wood flooring is generally more expensive than carpeting, topping at $14 per square foot. Carpeting typically runs upward of $11 a square foot, HomeAdvisor notes.
Manuta/istockphoto
While some homeowners may want to keep the bedroom furniture they’re currently using, others choose to sell or donate what they have and start over.
If you’re in the latter group, you’ll want to consider the paint and flooring you’ve chosen when looking for a new bed and headboard, bedside tables, desk, and dresser.
Looking online for bedroom remodel ideas can be a low-cost way to design your bedroom décor, with many blogs and websites linking to online retailers for easy purchase.
Social media sites like Houzz and Pinterest have scores of photos and boards delineated by room, color, and style to help you brainstorm.
If your budget allows, this might be an area to bring in the help of an interior designer. An interior designer may be able to see things you don’t, such as whether you need a large desk for working from home, a bench at the end of the bed for sitting, or a changing table if you plan to grow your family in the near future.
Joe Hendrickson/istockphoto
While bedroom remodels are typically less wide-ranging than those of a kitchen or bathroom remodel, you may opt for larger changes that can drive up your cost.
These include altering the function and structural design of a room, which may require the use of a professional.
Structural Changes
If you own a home or are looking to buy, the lack of an ensuite bathroom might be a big deal. Maybe you’d like to be able to pad into the bathroom in the middle of the night without tiptoeing through the hallway.
Depending on the layout of the bedroom and the rooms near it, this may necessitate turning a closet into a bathroom or building a door through a wall that conjoins your bedroom with that hallway bathroom.
Either way, you’re probably looking at hiring a plumber, carpenter, electrician, and contractor. While this type of remodeling affords you more options than sticking with your current footprint, it comes with added costs to be aware of.
skynesher/istockphoto
Adding recessed lights requires the work of a licensed electrician, who may have to work around obstacles like heating ducts, and will charge for both installing and wiring each light.
Ceiling fans, while pretty and useful, will likely also require hiring a professional installer to burrow through your ceiling, connect to electricity, and complete the necessary patchwork afterward.
ablokhin/istockphoto
Having a budget and payment plan is key, no matter the size of your bedroom remodel. Some changes are so small that homeowners can pay upfront.
Those with more extensive remodels might use a home equity loan or home improvement loan. (Learn more at Personal Loan Calculator)
SARINYAPINNGAM/istockphoto
A bedroom remodel can be a fun project from start to finish. After all, we spend a lot of time in our personal spaces, so it’s an opportunity to renovate a room to your exact specifications.
A home improvement loan could be just the ticket for a bedroom remodel.
Or if you’re a house hunter and have your eye on a home with bedrooms that could use some invigoration, know that SoFi offers home loans and mortgage refinancing.
This article originally appeared on Sofi.com and was syndicated by MediaFeed.org.
Please understand that this information provided is general in nature and shouldn’t be construed as a recommendation or solicitation of any products offered by SoFi’s affiliates and subsidiaries. In addition, this information is by no means meant to provide investment or financial advice, nor is it intended to serve as the basis for any investment decision or recommendation to buy or sell any asset. Keep in mind that investing involves risk, and past performance of an asset never guarantees future results or returns. It’s important for investors to consider their specific financial needs, goals, and risk profile before making an investment decision.
The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. These links are provided for informational purposes and should not be viewed as an endorsement. No brands or products mentioned are affiliated with SoFi, nor do they endorse or sponsor this content.
Communication of SoFi Wealth LLC an SEC Registered Investment Advisor
SoFi isn’t recommending and is not affiliated with the brands or companies displayed. Brands displayed neither endorse or sponsor this article. Third party trademarks and service marks referenced are property of their respective owners.
Communication of SoFi Wealth LLC an SEC Registered Investment Adviser. Information about SoFi Wealth’s advisory operations, services, and fees is set forth in SoFi Wealth’s current Form ADV Part 2 (Brochure), a copy of which is available upon request and here. Liz Young is a Registered Representative of SoFi Securities and Investment Advisor Representative of SoFi Wealth. Her ADV 2B is available here
Victoriia Kovalchuk/istockphoto
CreativaStudio/istockphoto
Featured Image Credit: Nattakorn Maneerat/istockphoto.
