Omicron on the Rise

Omicron is on the rise, and the U.S.’s largest cities are getting slammed with it.

New York City just reported its highest-ever number of Covid-19 cases at more than 21,000. The rate of Covid-positive tests also doubled to about 8% in the city in just a matter of days. According to the CDC, 13% of all Covid cases reported last week were Omicron infections.

William Lee is the VP of Science at a population-genomics company and shared that “It’s growing so much faster as a proportion of cases than any of the previous variants of concern did.” Lee also guessed the Omicron would be the dominant U.S. variant within a week.

Covid-related hospitalizations have increased 4% this week, with deaths up 8% week-over-week. Broadway shows, professional sporting events, and other gatherings have been postponed in response. That’s concerning for the recovery narrative, which was strong until Omicron started its world tour. 😔

The good news? Preliminary data shows that hospitalized Covid patients have less severe symptoms, ventilator use has declined among hospitalized patients, and there are fewer people admitted to ICUs with severe symptoms. This data indicates that Omicron likely causes less severe infections than previous mutations. 

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The index dropped 5 points to 45 in September, with all three components declining. Current sales conditions slipped to 51, sales expectations in the next six months fell to 49, and buyer traffic dropped to 30.

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We’ve written extensively about the U.S. housing market’s troubles over the last eighteen months. But we saw a visual created by Michael McDonough and shared by Cullen Roche that really highlights just how rough things have gotten for homebuyers. 😬

Below is a chart that looks to track an “average” home purchase over the last 20+ years. It calculates the monthly mortgage payment using median existing home prices, assuming a 20% down payment and average 30-year mortgage rates.

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As discussed in our posts, a yield curve inversion is not a perfect indicator of a recession, but it has a pretty good track record. That’s because when short-term rates are above long-term rates, investors believe growth (i.e., inflation) will be higher in the short term than the longer term. As such, they demand a higher yield to hold short-term bonds than long-term ones.

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Global Yields Continue Their Ascent

Today’s big story is the U.S. 10-year yield closing at its highest since 2007. July’s Federal Open Market Committee (FOMC) Minutes showed that officials see ‘upside risks’ to inflation, causing an already weak bond market to continue falling. 📊

In the U.S., stronger-than-anticipated growth and a historically strong labor market have investors concerned that rates could need to stay higher for longer. As a result, most of the yield curve has been pressing to new highs, with big investors like Big Ackman betting against bonds. The recent uptick pushed 30-year U.S. mortgage rates to 7.16%, their highest since 2001. 📈

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