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For the first time in 20 years, the consensus is now predicting that long rates will go down, see chart below.
Source: Bloomberg, Philadelphia Fed Survey of Professional Forecasters, Apollo Chief Economist See important disclaimers at the bottom of the page.
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Apollo Academy members are split on the outlook for the US economy in the next three quarters regarding the potential for a soft or a hard landing. But a combined majority believes that inflation will remain above the Fed’s 2.0% target through 2024, while a large majority predicts that interest rates—as measured by the 10-year Treasury yield—will be between 3.0% and 4.0% at the end of next year.
The results reflect the answers to three poll questions presented to Apollo Academy members participating in my live class on the mid-year outlook for the economy and capital markets on June 28, 2023. The accompanying charts below provide details.
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Source: Apollo Academy. Chart shows results of a poll taken during a live Apollo Academy class with Chief Economist Torsten Sløk on the outlook for the US economy and capital markets on June 28, 2023. Poll results reflect the votes of 433 participants. 
Source: Apollo Academy. Chart shows results of a poll taken during a live Apollo Academy class with Chief Economist Torsten Sløk on the outlook for the US economy and capital markets on June 28, 2023. Poll results reflect the votes of 476 participants. 
Source: Apollo Academy. Chart shows results of a poll taken during a live Apollo Academy class with Chief Economist Torsten Sløk on the outlook for the US economy and capital markets on June 28, 2023. Poll results reflect the votes of 482 participants. See important disclaimers at the bottom of the page.
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Weekly data for corporate bankruptcy filings has started to meaningfully deteriorate in recent weeks, see chart below. The faster speed of slowing in the weekly data is not consistent with the gradual rise in the monthly default rates seen in HY, IG, and loans.
Source: Bloomberg, Apollo Chief Economist. Note: Filings are for companies with more than $50 million in liabilities. For week ending June 21, 2023. See important disclaimers at the bottom of the page.
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The quality of auto loans and mortgages originated today is significantly higher than auto loans and mortgages originated before the GFC in 2006, see charts below.
Source: FRBNY Consumer Credit Panel, Equifax, Haver Analytics, Apollo Chief Economist 
Source: FRBNY Consumer Credit Panel, Equifax, Haver Analytics, Apollo Chief Economist See important disclaimers at the bottom of the page.
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The Fed’s monthly survey of households shows that consumers are not worried about losing their jobs, see chart below.
Source: FRBNY, Haver, Apollo Chief Economist See important disclaimers at the bottom of the page.
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Manhattan rents just reached a new record high at $4,360, and accelerating rent inflation is a problem for the Fed because housing has a weight of 40% in the CPI basket, see chart below.
Source: Elliman, Apollo Chief Economist See important disclaimers at the bottom of the page.
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Twenty-five percent of all US government debt outstanding has been added since the beginning of 2020. And with higher debt levels and higher interest rates, debt servicing costs have increased from $1 billion per day in 2020 to almost $2 billion per day in 2023, see charts below.
Source: Federal debt shown, Treasury, Haver, Apollo Chief Economist 
Source: CBO, Haver Analytics, Apollo Chief Economist. Note: Interest rate assumption by CBO: 2.1% in 2022 and 2.7% in 2023. Annual CBO data divided by 365. See important disclaimers at the bottom of the page.
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The Fed has calculated how much of inflation is driven by demand and how much inflation is driven by supply, and their latest estimates find that supply is becoming less important and demand inflation remains high and sticky, see chart below.
Specifically, the Fed, for each of the 124 product categories in the core PCE index, estimated price and quantity equations using a VAR with 12 lags. They looked at the signs of residuals to identify how big a share of categories of consumer spending experienced a combination of higher prices and higher quantities (demand shock) or higher prices and lower quantities (supply shock).
With inflation being driven by demand, more demand destruction is needed in the form of higher rates from the Fed.
Source: FRBSF, Apollo Chief Economist See important disclaimers at the bottom of the page.
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The monthly mortgage payment for a new average loan size has doubled to almost $3,000 since the beginning of last year, see chart below. As households continue to run down their excess savings, these higher mortgage payments will eventually begin to have a negative impact on the housing market and the consumer.
Source: Bloomberg L.P., Apollo Chief Economist. Note: Calculation of monthly payment using the 30-year average new purchase loan size and the 30-year effective rate. See important disclaimers at the bottom of the page.
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The share of job openings offering work from home is starting to flatten out across countries, see chart below. For more see here.
Source: WFH MAP, Apollo Chief Economist. Note: This includes share of new job vacancy postings which explicitly offer new hires the right to work one or more days per week from home or other remote location. This pools together both hybrid and fully remote offers. See important disclaimers at the bottom of the page.
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