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📑 Research Notes for 2020-10-23
This week, we look at record low mortgage rates, the price of houses in the U.S., yields across asset classes, and why bonds are still an integral part of a diversified portfolio.
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Mortgage rates hit another record low this week.
The average U.S. mortgage rate for a 30-year fixed loan fell to 2.8% this week, another record low, Freddie Mac said in a report on Thursday. The rate fell one basis points from the week prior and is now six basis points lower than the original all-time low set in mid-September.
Charting 20 years of home price changes in every U.S. city.
At the turn of the century, the average U.S. home value was $126,000. Today, that figure is at a record high $259,000 – a 106% increase in just two decades. Of course, the path from A to B was anything but linear with a financial crisis, housing bubbles in major cities, and now COVID-19, which is drastically altering market dynamics. How has the housing market evolved, on a city-by-city basis?
Bond yields across asset classes.
You can probably earn a higher payout vs. what the usual suspects offer in government securities. But as with every other corner of portfolio design, higher yields come with higher risks and so mindlessly chasing bigger payouts will likely end in tears. At the other extreme, accepting near-zero yields on cash and equivalents is going too far. The challenge, of course, is balancing risk and reward.
Why own bonds when rates are so low?
(Of Dollars and Data)
With 10-Year U.S. Treasury Bonds currently yielding less than 1% annually, the question on so many investors’ minds is: Why should I own bonds at all?
Curated by Joseph Lu, CFA®
Joseph has over a decade of experience as an investment professional, primarily in quantitative analysis and portfolio management roles. He is the founder and managing director of Conscious Capital Advisors and a CFA® Charterholder. The CFA charter is a globally respected, graduate-level investment credential by the CFA Institute, a global association of more than 90,000 investment professionals working in over 133 countries.
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