Logan Mohtashami on Omicron and pending home sales

Today’s HousingWire Daily continues the Rundown miniseries, hosted by HousingWire’s Editor-in-Chief Sarah Wheeler and Lead Analyst Logan Mohtashami. In this episode, Mohtashami discusses how the new COVID variant, Omicron, will impact inflation and whether or not it will send mortgage rates lower.

Mohtashami also discusses his HW+ article that examines the latest pending home sales report that shows a big beat of estimates. According to him, we can officially label the 2021 housing crash bears as even worse than the 2020 housing crash bears.

Here is a small preview of the interview, which has been lightly edited for length and clarity:

Sarah Wheeler: You wrote a story about how the rise of the Omicron variant might affect the Fed raising rates, and this morning, Fed Chair Powell testified about it as well. How is this variant impacting what Powell has to say?

Logan Mohtashami: I have this philosophy when we’re working from a zero-interest rate policy that if we want to authentically guess when the first rate hike is going to happen, the two-year yield is going to be above 0.56%. Before the new variant news came out, we were trading well above 60. Things looked OK there, then boom, that news came out and it dragged the two-year yield all the way down to about 42 basis points. Until recently, Powell basically said, the word transitory is dead, as he intended to be very mindful of inflation. This shot the two-year yield up to 54 basis points, but you can see the bond market is a little bit more volatile on the short end. When the two-year yield is above 50, we’re finally in the era where we can actually talk about the first-rate hike, as we can see some volatility. However, currently, we’re still in bed and don’t really want to get up just yet phase, even with what Powell said, we’re nowhere close to where we were on Friday. The other thing is the 10-year yield and mortgage rates. The 10-year yields have not been able to come close to retesting the highs of this year, or even come close to the peak level of 1.94%, which is a critical level.

HousingWire Daily examines the most compelling articles reported across HW Media. Each afternoon, we provide our listeners with a deeper look into the stories coming across our newsroom that are helping Move Markets Forward, produced by Alcynna Lloyd and Elissa Branch.

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