Market Commentary 9/10/21

We continue to remember the many souls who perished on 9/11. 

Wholesale inflation continues to run hot but an easing of month-over-month increases supports the idea that inflationary pressures may prove transitory. However, transitory remains a moving target on the inflation debate as all of us continue to witness ongoing rises in prices in wages and commodities. These price pressures are pinching the wallets of middle and lower-income wage earners in a way that we have not seen for a long time. While we think some parts of inflation will recede, that may not be true for inflation as a whole. There could be far-reaching negative implications for the economy if the Fed is wrong in its view on inflation.

Interest rates have risen but for the moment appear range-bound. The 10-year U.S. treasury has bounced around from the high 1.2s to mid 1.3s. Equities had a bad week with no huge down days, but it was a slow daily drawdown and poor overall breadth. 

The big question is what will propel equities higher or encourage people to buy real estate? Are low interest rates and the threat of inflation enough of a draw to lure in buyers at these prices? Caution seems warranted for now due to multiple factors: we’re heading into fall; Congress is working through the debt ceiling and trillion-dollar stimulus packages which will add to the national debt in a way few could have imagined a few years ago.

We are starting to see choppy income from self-employed borrowers as they attempt to refinance or buy homes. This is a direct result of the damage done by Covid. This is making underwriting loans more difficult. Thankfully, Insignia works with lending partners who are willing to read between the lines or make judgment calls based on information beyond one poor tax filing.