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Recovery rates decline when the costs of capital stay higher for longer, see chart below. This dynamic argues for wider credit spreads when rates stay higher for longer.
Source: Moody’s Analytics, Apollo Chief Economist See important disclaimers at the bottom of the page.
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There are more real estate agents per 1,000 jobs in Florida, Texas, Colorado, and Arizona, see the first chart. With many homeowners locked into sub-4% mortgage rates, existing home sales are at the lowest level since 2010, and the number of home sales per real estate agent is at the lowest level in decades, see the second chart.
Source: BLS, Apollo Chief Economist. Note: Data for May 2022. 
Source: NAR, BLS, Haver Analytics, Apollo Chief Economist See important disclaimers at the bottom of the page.
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The hype around AI is starting to fade, see chart below.
Source: Bloomberg, Apollo Chief Economist See important disclaimers at the bottom of the page.
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Current drivers of credit demand are retail and pensions seeking higher all-in yields, and annuity sales driven by more baby boomers retiring and by a higher level of interest rates giving policyholders higher monthly payments, see chart below. For more, see also our latest credit market outlook here.
Source: Bloomberg, Apollo Chief Economist See important disclaimers at the bottom of the page.
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Earnings expectations have diverged for the S&P 7 and the S&P 493, see chart below.
Source: FactSet, Apollo Chief Economist See important disclaimers at the bottom of the page.
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Markets fluctuate between the “lagged effects of Fed hikes are slowing down consumers, firms, and bank lending,” and “the easing of financial conditions since the December Fed pivot has boosted growth, including January hiring,” see chart below.
The bottom line is that what currently looks like a soft landing is a fragile equilibrium, and there is still more than 50% chance we will end up in either a hard landing scenario where the Fed cuts faster than the market expects or a no landing scenario where the Fed has to raise rates again. It makes sense that rates volatility and swaption volatility are high relative to VIX.
Source: Apollo Chief Economist See important disclaimers at the bottom of the page.
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China began its one-child policy in 1980 and ended it in 2016. In 2021, it started its three-child policy, encouraging couples to have three children. The UN projects that China’s population will decline from 1.4 billion today to 800 million by the end of this century. China’s demographic headwinds have significant implications for growth, savings, and FX reserve accumulation and, therefore, Chinese appetite for buying US Treasuries.
Source: UN, National Bureau of Statistics of China, Apollo Chief Economist See important disclaimers at the bottom of the page.
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Our latest outlook for the housing market is available here, key charts below.
Source: Apollo Chief Economist 
Source: Haver Analytics, BLS, S&P, Apollo Chief Economist 
Source: Apartmentlist.com, Apollo Chief Economist 
Source: Realtor.com, Apollo Chief Economist 
Source: MBA, Bloomberg, Apollo Chief Economist (Note: It is 5-year ARM) 
Source: Census Bureau, FRED, Apollo Chief Economist See important disclaimers at the bottom of the page.
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Our updated banking sector chart book is available here, key charts below.
Source: S&P Capital IQ, Apollo Chief Economist 
Source: Federal Reserve Board, Haver Analytics, Apollo Chief Economist 
Source: FDIC, Apollo Chief Economist 
Source: FDIC, Apollo Chief Economist. (PDNA stands for Past Due and Non-Accrual rate defined as loans that are past due and are in non-accrual status.) 
Source: FRB, Haver Analytics, Apollo Chief Economist See important disclaimers at the bottom of the page.
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About 18% of China’s population is older than 60. Over the coming decades, that share will rise to 32%, higher than in the US, see chart below. Our latest outlook for China is available here.
Source: UN, Haver Analytics, Apollo Chief Economist See important disclaimers at the bottom of the page.
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