Monday morning charts
3 for the road
1: Annual births in China are down about 40% from less than a decade ago. The aging Chinese population could cause the next few decades to look very different from the past.
The second chart below illustrates how China’s dependency ratio in 2050 will be equivalent to Japan’s ratio today. Will 2020-2050 in China be as stagnant as Japan was from 1990-2020?
2: Peak to trough returns for many asset classes have been abysmal. Most notable is the 52% decline in the 30 year US Treasury Bond. Wow!
With the Fed Funds rate much closer to its terminal value than its starting point, and with inflation and economic data starting to break down, duration is starting to look interesting again.
3: Toronto real estate prices have sharply corrected, but still remain well above pre-pandemic levels. Affordability tanked in 2022 and isn’t likely to improve unless prices continue to fall, rates drop or incomes rise. Which one of those do you think is most likely over the next several months?