Okay, so I know the financial markets aren’t worried–today–about the real economy.
But the real economy will count someday and need to be figured into stock prices for things like banks (and who knows what else.).
And right now we’re getting disturbing signs from the debt markets. Again.
The delinquency rate for mortgage securities backed by retail real estate was 14.3% in October, up from 4.6% in October 2019. Delinquencies for mortgage securities backed by lodging properties were 19.4%, up from 1.5% in October 2019.
One reason to watch this part of the debt market very carefully is that, you’ll remember from the sub-prime mortgage crisis, it’s very hard to tel who in the financial world owns these mortgage-backed securities. They’re bundled up and sold off to? Â Well,, somebody owns them. For the sake of the stability of the financial system as a whole, we just have to hope that nobody with shaking capitalization went whole hog into the sector.
