Construction costs are currently skyrocketing

Then I would probably just bring it up there very neutrally. That you are worried about mold in the basement with the open window and the pipe and what could be done about it. From your story, I suspect he will find a solution. (Either seal something himself, or the pipe will first be removed and only put back on days when it is needed)

Yes, that was my plan too. I will probably see him at the end of the week and would bring it up then. But it might be obsolete. The plasterers told me yesterday that they apparently have orders to be completely finished by the end of the month. I asked them about the drying times. The "boss guy" said it's not ideal, but the back of the house has been drying for a while now, so they will start the second coat there as well. I asked what could happen if it doesn’t dry long enough. He said in the worst case there could be cracks. But we get a mesh (reinforcement?) in between, which should prevent that, so it wouldn’t be too serious. I will ask the construction manager about it. But I can’t imagine he would order/approve it if he expected problems. He does many things extra in the construction process that he technically doesn’t have to according to the contract, but he does them because, as he says himself, he has to stand behind it and doesn’t want any trouble later. He always says casually, "I’d rather be invited for a beer later when I meet the people again."

Interesting news, however, come from the financial world... initial experts are no longer expecting interest rate hikes, also due to the looming war in the Middle East, on the contrary, they are even anticipating an interest rate reversal by the ECB, meaning lower interest rates again.

Yes and no. I just returned from relatively intense investment meetings at Paradeplatz. The analyst consensus at the moment is rather a reduction of key interest rates at the end of next year, by no later than 2Q25. So a postponement due to inflation holding on a bit more stubbornly than expected/ hoped for. No central banker wants to go down in the history books as the one who failed to keep inflation under control. This means that, as a tendency, it is more likely they will overshoot slightly than reduce too early.

Basically, it takes about 12-18 months for an interest rate increase to impact the real economy. We are probably now at the interest rate peak; this would roughly align with that.

Basically, it takes about 12-18 months for an interest rate increase to impact the real economy. We have probably now reached the interest rate peak, which would roughly align with that.

I am reluctant to quote myself, but I can no longer edit, and the point might have been phrased ambiguously.

Of course, the interest rate increase arrives relatively quickly or immediately, in the sense of an immediate rise in credit/bond rates, but the effects on the economy, the business cycle, then take some time.

The base coat was applied here yesterday - last week the interior plaster... So currently airing 3-5 times daily for 15 minutes... Whether the top coat will be done this year - we'll see... Still flirting with the [Besenstrich]... Annoying but nothing helps :)

Contrary to the opinion of some professionals here, such as bank advisors from NRW or investment advisors, financing experts, etc., I had speculated here about further rising interest rates. But since I am just a small and insignificant layman, no one wanted to believe me.

Now, interest rates keep rising and anyone here who again talks about falling interest rates is ignoring the situation. A few weeks ago, I pointed out the connection between bond yields and interest rate developments.

The yields on bonds are rising significantly, whether US Treasuries or German 10-year government bonds. Since bond prices are falling accordingly and inflation remains constant, central banks are forced to raise interest rates. And we are far from the end of this. So don’t dream of falling interest rates. Take advantage of the currently still favorable and historically low interest rates.

[ATTACH alt="us10.png"]82380[/ATTACH]

In the chart, we see a clear bond crash that requires further drastic interest rate hikes. This does not look quite so drastic for German government bonds yet, but we are also well on our way there.

The central banks’ overly long zero-interest phase is now coming back like a boomerang, twice and thrice over.

Directly connected with the yield of the ten-year German government bond are also the mortgage interest rates. Banks primarily refinance their construction financing through covered bonds. Their yields are oriented to the interest rates of ten-year German government bonds. For this reason, mortgage rates have also risen massively. For ten-year financing, they were recently at an average of 4.13 percent, according to data from the Frankfurt FMH Financial Advisory. By comparison: two years ago, they were still 0.75 percent.

Here, people wanted to tell me that bond prices have nothing, absolutely nothing to do with mortgage interest rates. What nonsense. I stick to my statement that we are heading at least into a corridor between 6 and 8 percent.

And anyone who internalizes the above chart will see that an explosion of interest rates is still to come. And it will be tremendous!

Here we are already at financing interest rates of around 6 percent for high-priced capital goods, around 5.5 percent for subsidized machinery, depending on repayment and term.

[ATTACH alt="us10.png"]82380[/ATTACH]
In the chart, we see a clear bond crash, which makes further drastic interest rate hikes necessary. Although this does not yet look so drastic for German federal bonds, we are also on the best way there.

You are confusing something, but very badly.

The bond "crash" does not make further interest rate hikes necessary, the bond crash is relatively immediate the result of the interest rate hikes.
When the key interest rate rises, bond prices fall – because the paid coupon is comparatively less attractive – longer-term bonds react more strongly due to higher duration.
If you hold the bond until maturity, the price approaches 100 again the closer to maturity it gets – only if you have to sell now, you get less for it, because the bond is less attractive compared to newer ones with a higher coupon due to the lower paid coupon.

On the contrary, the sharply increased refinancing costs will lead to headaches for some nations next year – also in the USA!
Therefore, it is important to weigh inflation against debt servicing, and I would not want to be in the shoes of the central bankers...

By the way, your chart is nice to look at without labels, but unusable ;)