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[00:00:00] Welcome back to the What's Your 1 More. I'm your host, Quinton Harris. You are dialed in for episode 2 42. So in this episode, what a Difference a Week Makes. Last week I was over here talking about, hey, we're almost below 4% of the 10 year treasury times are good. And then just like that blink of an eye, we get flipped on a script that more in this episode at what Your One more,
Alright, so admittedly back to this episode, you know, last week I'm riding high. We're talking about, you know, a little bit of the, I told you sos, what was coming, kind of riding that victory lap and then in the blink of an eye, here we are one week later, literally one week later, we're up. 60, 70 basis points from that podcast on the 10 year treasury to where we are now.
And for those in our audience that have been listening, you know, that moves the needle dramatically for mortgage interest rates. and it's moving it in the wrong direction. And so what I wanted to tack on this episode is the R word, right? I. I think my producer put the title of this is the R word in real estate.
The R word right now is what's [00:01:00] looming and kind of driving fears in the market. Now, as we've discussed on this podcast, for many of episodes, investors don't like fear. They like continuity. They like constant, they like to know what's coming. Fear is not a good thing because fear can be driven by just, you know, complete irrational behavior, or it could be rational behavior.
But anyway, it still drives the market in the wrong direction. We've seen a little bit of that in the equities market. We've seen it kind of come back a little bit. We've also seen President Trump kind of get rid of a little bit of these gonz type tariffs that he and administration, you know, implemented and they're kind of peeling 'em back.
And every day we see a new peel back and every day that reins instills a little bit more confidence in the market that things are gonna be okay. and I think that, I think that what we're seeing is just this dramatic rush. To try to figure out the bottom of the market if you may. you know, I was always taught that trying to time the market, especially the bottom, is like trying to catch a fallen knife.
and that was an analogy that was always used, but I think there's investors that are doing that. I also think during the cliff that happened such a dramatic [00:02:00] cliff, there was substantial margin calls that were made on big hedge funds, which forced liquidations of treasuries. 'cause you gotta think about this when you have a margin call inside of the market.
What happens is that you have leveraged, if you may, the amount of money you have in the market. And so hedge funds do this from time to time. Borrow skin, just reg. Regular investors like myself do this. And the thing about margin is it can allow you to make a lot more profit, but when the market does what it did last week, at the beginning when that cliff happened, when you had three really bad days of losses, the margins are due back to the.
the guess you could say the lender, the creditor of choice that gave you that margin. And so when these margin calls happen, you have to liquidate assets to pay those margin calls. Well, some of the fastest, quickest ways to liquidate assets is probably going to be without a doubt. US treasuries, I.
Yes, you're gonna sell 'em at a loss more than likely, but you can liquidate 'em extremely quickly, and that's what margin calls require to be paid very fast. So you saw a liquidation of that happening, thus [00:03:00] adding more treasuries to the market. And we've talked about this, when there's more supply in the market and not enough demand, the price of that treasury is gonna go up.
That's what we're seeing happen. That's one explanation. I think the other explanation is that we've seen a lot of online chats and rumor mills, if you may, about China dumping their US treasuries as a retaliation, if you may, to the tariff rumors that are going on. I'm not so sure I buy into that theory.
I. You know, I agree with some of, with some of my colleagues on that and, some people that I, I turn to for, you know, just kind of brainstorming advice. And the reality is, and we talked about this a little bit, that if China was unloading those treasuries, they hold quite a few of 'em with really low yields.
They would be losing a lot of money selling those treasuries right now. And then the question would be is where are they going to put it? And so I think that kind of misnomer or maybe those rumor mills or those hot takes or those reels that you're seeing online. I don't think those are accurate.
I think there's a very much opinion. I don't see China unloading, their treasuries because you would see it in other signs, especially in their currency and how that would be,[00:04:00] quote unquote tanking as well. And that's not happening. So I don't think that's it. What I do think is it's a.
Very simple explanation to what's going on in a little bit with the treasury market right now. And just wanted to kind of take a minute. 'cause sometimes it's just a simple answer. There's really no complex answer to it. And sometimes, you know, that's not what we want to hear, but it's a reality.
And the reality is the US dollar is weakening in strength compared to other currencies around the world. I. Because of these tariffs and it's weakening substantially. And we're seeing that happen. And as the dollar weakens, so does the treasury, and there is a lot of thought process that the US debt is not as strong as it was even a week ago.
And so that US debt, when you buy a treasury, you're buying the debt of the United States 'cause of the debt org to you. When you buy that, there's a theology that's. That's more fact than theology is that when there's not an appetite for that purchase, for that debt instrument, if you may, and the dollar weakens well, you're going to see those levels of yield on the 10 year treasury go up.
'cause you're trying to [00:05:00] attract more buyers. And when the buyers leave the market and then when the buyers are not, buying at the abundant rate, they were, you continue to see the yield rise. And I think that's why we've seen, quite frankly, that's exactly why we've seen such a high rise and such a quick opportunity.
and one week on the 10 year treasury, thus impacting mortgage interest rates. You know, last time I was here recording an episode, we were offering government rates in the upper fives conventional in the low sixes. That has changed on a dime. You were back in the sevens on conventional at this point.
Just as I stand here today or sit here today to record this podcast, it's Saturday morning, April 12th, when the market's open, I. April 14th, it could change when this podcast releases, it could change. That's how volatile and how extreme, uh, swings we are seeing right now in the bond market. The mortgage interest rate market, the stock market, I mean all of them.
And that brings back that word, that R word I used to begin this show. the recessionary word. And a lot of people, a lot of very smart economists. People that I turn to for advice, I listen to for things. 'cause they're that good. They're all. They're all pointing towards this R [00:06:00] word, and I think that when you look at the recessions and you look at, fear.
Recessions definitely will drive, more fear. But the thing about recessions we've talked about over and again, is you usually are in one. Before you know it, you're usually coming out of it before it, you knew you were in one. And quite frankly, they're never declared until they're completely two. You have, you know, you are out of it 'cause it takes two negative GEP quarters as the definition to be deemed that.
But what I look at is, you know, when it comes to recessions, I'm gonna pull a graph up here and, if you're listening to this. Take a look at this on our YouTube channel at, what's your, one more with the number one, I look at real estate, right? We have a heavy emphasis on this show about real estate. And so I look at like, okay, you start hearing recessions, I start hearing customers say, Ooh, I don't know if I wanna buy right now.
I don't know if I want to, invest in something right now because it might not be the right time. So oftentimes from people that are, I guess you could say haters of the show or people that, you know, don't always agree with what we say and that's fine. But there's a lot of people that think I'm pushing for real estate on the show in the form of like, Hey, I wanna do the [00:07:00] loan, or I'm trying to sell you a piece of property.
Like, that's not the case. I've never lead generated through this podcast. It's an educational podcast. and that's the purpose of the podcast. So. For the record, like I'm not trying to convince you to buy a home so that I can have you do the loan with me or my company or with a real estate agent that I can make a referral to.
That's not the purpose of this, but this particular point I'm gonna talk about right now emphasizes I. Real estate and the power of real estate, especially coming out of recessions and going into recessions. And this graph here in our YouTube channel, What's Your 1 More, is straight from the Federal Reserve's, Fred Site, which is the site that keeps all the data for the Federal Reserve.
So it's a public site you can get to, but this graph shows you. The appreciation of real estate since 1970, all the way through to current date. And then there's these gray bars. So when you see these gray bars in here, like it's 74, 75, 80, you know, 83, 90 2001, 2010 obviously, and then a little bit in 2020 during the covid eras, those gray bars represent the recessions that our economy has been deemed by, [00:08:00] has been deemed as these were stationary periods, right?
And so, when you go through this. You'll see the blue trend line and that blue trend line is the appreciation rates of real estate. And on the left side, it shows you the actual level of appreciation. And then on the bottom are the years that are involved that we're talking about. And what I take away from this, and I bring this up quite a bit with people when I'm talking about real estate, is that every time you are coming out of a recession, you gain appreciation in real estate.
Meaning that real estate is the beneficiary of recessionary periods Now. I think if you are in the camp that, hey, we're currently in a recession and that we were in one last quarter because the GDP came out and it was negative and for Q1, which means, okay, well check, we're halfway there on one and now you're in Q2.
You could argue maybe we're in one right now. 'cause a lot of economists are saying, Hey, you're actually in that second quarter of one right now. If you know you're in one or you feel like you're in one and you're sitting on the sidelines and your objection is, I just, I'm, [00:09:00] I don't wanna buy property now because the rates are too high, or the prices are too high, or it just doesn't feel like the right time, you know, you know your budget better than me.
That's not what I'm here to debate. What I am saying is though, is if that you can afford the payment, and that's the key word here, and you have a stable job, and that job plans on, you know, increasing over time and that you plan on. You know, being there or being in that career field and working for some time, maybe you're gonna expand your family.
There's a lot of questions I could ask here, but the thing is, buying now, ultimately you are going to be the beneficiary of the rise in, in real estate prices 'cause that's what's going to happen. We've talked about other factors such as inventory being lower than it should, the demand being higher than it is.
It, there's a lot of things pointing towards that, and it's gonna continue to see more and more evidence as to why real estate is gonna be the beneficiary of this. Now, real estate interest rates are not the beneficiary of this right now. shockingly, you know, what happened from last week to this week.
I think if you're in the business or if you're a consumer, we're all sitting around [00:10:00] scratching our heads, like, how the hell did that happen? And, you know, that's kinda what I led with on this podcast is like sometimes it's just a simple explanation and, you know. What we anticipated and what we saw coming into last week was this risk trade.
You know, meaning that when the stock markets went down off a cliff as fast as they did, a lot of people retreated to a safe haven, which is, you know, getting, eliminating the risk from the stock market and put it into the US treasuries and we. Reaped the benefits of that because you had more buyers in the market, thus, therefore, the yield went down.
Well, now those buyers are not there right now. You know, one of the other things that's interesting is if you look at the price of gold right now, it's at an all time high. And it's going up at rapid rates. Rates that just have not been seen before. And that also could point to people go, Hey, I'm putting my money in a commodity over here that I believe in more than I do the US Treasury right now.
And that's something else that's taken away. The buyers from the market. So I think as the buyers come back, one of the things we have to think about is who is the biggest buyer of US treasuries? And for some reason online, I see people say China has, China's the largest debt holder [00:11:00] of the United States.
That's not true. we've talked about that on the show before and you know, there's, part of me just wants to be like that. It's false. They're like the third or fourth. and you know, some people aren't worth trying to reason with, but they're not. So for the purpose of this show, I just want you to know they're not the largest holder.
So that's not a big deal. when people say that to me, it's like that you're wrong. It doesn't, that doesn't matter. They are a large holder, but not the largest. The largest is the Federal Reserve, you know? And what happens is they have been gone from. The buyer's market, if you may, doing their balance sheet runoff.
They've been gone for quite some time and they've admittedly said in their last meeting that they're coming back. I think the timing of this is pretty interesting too, because Scott Besson, the US Treasury Secretary has said his goal is to get the 10 year down to 3.85. We were almost there. Heck, we were.
We, we went below it. We were 3.83 at one point overnight. It dropped to that, and then we haven't touched that since, but we got there. How do we get back there is the question, right? And I think what has to happen is there has to be some sense of calm in the market. Now, [00:12:00] we've talked about that before.
There has to be some sort of sense of calm, reinstill,of trust that this is going to come back. And there has to be a reinst installment process of, Hey, listen, these tariffs aren't as bad as you think they are. We have to get to a point to where we can't just drop gonz tariffs on everyone and then peel 'em back like we're doing right now.
and I think that once that calmness sets in, that's gonna help. But the ultimate help is gonna be the biggest buyer coming back to the market. That's important because we've got a Federal Reserve meeting coming up. It's right around the corner and, you know. I'm not saying their hand is forced based on what's going on right now, but I'm saying it's real uncomfortable if you're the Federal Reserve and the only antidote you have to stimulate the economy is to lower interest rates.
Now may be the time to use that and if the administration has. The LY said we want housing to be better in many different facets. We want lower interest rates. We want people to be able to refinance. We want, we want lower home prices or more affordable home prices, lower cost to build.
Like [00:13:00] there's a lot of things they want and it's going to take a stimulant of some sort to make that happen because what we're dealing with right now is not a stimulant. it is anything but that. Right. We talked about that, how it's an economic. Warfare when you put tariffs out there like that and we're kind of feeling the impact of that in one week.
It's been a very big yo-yo of emotions and for people that have looked at their 401k, like, they've just, they feel like I'm not doing that anymore. Like, I can't emotionally go through that. I think that you're going to see the Federal Reserve at this point, that now the hand has been forced and I think it's gonna be a very obvious move they have to make here to help stimulate the economy and thus go in and buy some treasuries too.
Get that yield lower. I think that's going to help out a lot. And I also think the cutting of the rates simultaneously together will do that. But this spot we're sitting at right now as I record this show, I think it's something that none of us expected. And I think going back to the simplest explanation is the US dollar has gotten really weak over the last five business days.
And when that has happened, that has caused a tremendous amount of pressure on those 10 year treasuries. but this too shall pass. And the one thing the market has showed us is that it's very quick. To adapt and react just as fast as we saw [00:14:00] it go down. It shot right back up, and that was in five days.
All of that happened in five days. It could happen. I guess where I'm going with this is all of this could calm itself in another five days. We could be sitting right back here again next week and being like, ah, man, back to normal. That feels good, so don't get discouraged. I would definitely say, wait this out, and I would say, let's see what the next five days looks like.
But if you're a potential homeowner. Do not bind into the hype of recessionary terms and what that could mean and what that could impact and how negative that is. Because during these times are the times that you can take advantage of prices before they go up and they will go up. It's not just because of going up out of recessions, it's also going up because of the limited amount of inventory.
It's also going up because of the demand in the market. Like don't buy into these YouTube videos where people are talking about doom and gloom and prices going down. They've been doing that for eight years and they've been wrong all eight years. This isn't one of those things where it's like, Hey, I called it, I got it right.
It's just, it's flat out wrong and it's propaganda, so don't get caught up in that.
real estate agents, so this is where we have to be really sharp because the news, social media, friends and family, a [00:15:00] lot of people are going to go ahead and form the opinion before the buyer or seller even gets to us.
And it's not gonna be a good one this week. It's just not. And so we have to show people how the market adapts to these positions and how it's a great. Time to take advantage of that. Also, hit 'em with the facts about inventory demand, things that you know that are going on in your market here, and ease those fears with facts.
And if we can help with that as again, as I said earlier, go into our comment section on YouTube, drop a couple of things you'd like us to talk about. Let us know what we're doing good. Let us know what you wanna see us improve on. We do read that stuff. We do take it to heart and we do. Act on it. So guys, thanks again for everything.
If you like what you're hearing, please five star. Review this podcast on Apple or Spotify. Share it with a friend, share it with a colleagues, share it with the family members. Hell share it with anybody that wants to listen Guys, thanks for tuning in to the next episode.
We'll see you at what your one more. [00:16:00]
