but since the Great Recession in 2008 they've been CPI +2%. CPI inflation is running 8.3% for April and 30-years are 5.6%-ish. The Fed is going to raise short term rates at least 1.25% btwn now and year end and probably more (although at least some of that is priced in).

The bet here is whether inflation will come down and how fast. CPI and 30 years have only ever been inverted like this twice-- once for a year in the late 70s early 80s and once for about two years in the mid 70s. Right now they've been inverted already for at least 8 months. That won't last forever. Something will give. My bet is (as the Fed raises short term rates and sells off assets to suck up cash) it will be mortgage rates.

If inflation stays high, you WILL see 30-years at least 2+ points higher. Even if it moderates to 5.5% (down from 8.3%) that is a 7.5% 30-year rate once it normalizes. The only thing that could stop that would be a big recession with lots of layoffs resulting in the Fed not needing/wanting to raise rates further. But banks aren't going to loan at a rate less than CPI very long.

Anyway, that's my prediction. I made it back when rates were 3% and I stick with it now.

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