Boockvar on Interest Rates, Iran, Yen
The following is from Peter Boockvar:
A few important things of note
To those who keep telling me that interest rates are just back to the long term normal, I agree but as it comes after 15 years of abnormal, therein lies the problem for those whose debt is coming due this year and next that was priced prior to 2022. The refi options are where the rate shock is. Just imagine the real estate operator who priced a 3% loan five years ago and is repricing at 8% this year, an ongoing adjustment seen over the past few years for those whose debt came due. We’ve of course seen the damage done to household mobility as many stick to their 3-4% mortgage rate and choose not to move. Or that SPAC and/or LBO in 2021 whose time has come to refi. Also, it is the rate of change and trajectory of the rate move that is the focus right now too, not the absolute level.
I guess not surprisingly at this point, still no progress on a deal with Iran. All ideas welcome on getting one. The move higher in oil prices has sent global bond yields up again. We remain bullish and long energy stocks, in E&P/refining, pipelines, drilling and services.
To the question on when the rise in rates and energy prices will matter for stocks, as seen again with the deteriorating market breadth, it’s already begun to have an impact. The only stick save at this point has been the AI trade.
Here’s an update on breadth, looking at both the cumulative advance/decline line and the % of NYSE stocks trading above its 200 day moving average (lowest since June 2025).
Cumulative A/D Line in white, SPX in orange
% of Stocks above its 200 day MA
A portion of the credit markets care now too, to highlight again the CCC high yield category that is now trading more than 1000 bps above Treasuries for the first time in 3 years with a yield to worst now at 15.1%.
CCC Spread
Resorting back to verbal FX intervention, Atsushi Mimura, Vice Minister for International Affairs in Japan is saying that with regards to the desire and recent actions to stem the decline in the yen, “Japan’s prime minister, finance minister and the US have sent a very clear message. Markets should take the message at face value.” This follows a phone call on Friday between Treasury Secretary Bessent and Japanese Finance Minister Satsuki Katayama both agreeing that the yen is undervalued relative to the US dollar. After Friday’s 1% decline, the yen is up .2% today.
Yen
Positions: None.
