| | | | | | | | | | | Axios Markets | | By Emily Peck and Matt Phillips ·Mar 25, 2022 | | 👑 Ah, Friday. King of weekdays. We made it. Begin your charge toward the weekend below, where we debunk a key pandemic storyline, offer a distressing update on mortgage rates and report on the heavily managed reopening of stock trading in Moscow. Today's newsletter is 1,056 words, 4 minutes. | | | | | | 1 big thing: Debunking a pandemic storyline |  Data: CPS monthly accessed via IPUMS; Chart: Baidi Wang/Axios College-educated mothers were stressed and under extreme pressure at home and at work during the pandemic. But that didn't lead them to leave the job market in greater numbers than men, new research finds. Why it matters: The findings, from Harvard economics professor Claudia Goldin, debunk one of the storylines that came out of the pandemic — the idea that droves of well-educated women left or would leave the labor force, Emily writes. - "[Women] have been stressed, frustrated, and anxious because they did not leave their jobs," Goldin writes in her paper.
- "There have been so many doomsday predictions, it's really important to go back to the data and see what actually happened," Jane Olmstead-Rumsey, an economist at the Federal Reserve Bank of Minneapolis, emphasized at a Brookings conference yesterday discussing the paper.
Yes, but: You can still call it a "she-cession." More women than men did drop out of the workforce during COVID — but they tended to be those with less education. - Their reasons for leaving were less about caregiving and more about their ability to work remotely.
- Less-educated women were more likely to work in roles that couldn't be done from home, and to work in sectors more affected by COVID risks and regulations — retail, restaurants, etc.
- Women of color were also more likely to face health-related challenges that pushed them out of work, Goldin finds.
The backstory: Women's labor force participation rates were relatively stagnant from the 1990s up until right before the pandemic — when a surge of women entered the workforce, particularly the service sector, as the job market improved. - That surge made the resulting job losses during COVID seem more dramatic, Goldin says.
- So, for her paper, she uses census data to compare the percentage of women at work during 2020-2021 to the percentage at work in the era before women's participation spiked.
The big picture: Until 2020, recessions always hit men harder than women, because of job losses in male-dominated industries like manufacturing and construction. - But the 2020 recession was different in that it hurt female-dominated industries, like retail and hospitality.
What to watch: Though college-educated women kept their jobs by working remotely, they also took on more caregiving work at the same time. The question now is: What will that mean for their chances of advancement at work in the years to come? - More work on this will undoubtedly shed light, Goldin said yesterday, "Terrible times lead to more research."
|     | | | | | | 2. Catch up quick | | ⚡️Europe agrees on big new package of tech rules. (Axios) 🚨Biden unveils deal to supply the E.U. with LNG. (AP) | | | | | | | | 3. 🇷🇺 "A Potemkin market" |  Data: FactSet; Chart: Axios Visuals The Moscow Stock Exchange reopened yesterday — kind of — after a monthlong closure that followed the start of the war in Ukraine, Matt writes. - The benchmark ruble-denominated index, known as the Moex, rose 4.4% yesterday, and then fell 3.7% today.
The big picture: The reopening was heavily managed by Russian authorities. - Foreigners weren't allowed to sell.
- Traders weren't allowed to short stocks, that is, bet prices will fall.
- The Russian government said it told its sovereign wealth fund to pour some $10 billion into stocks.
U.S. officials mocked the reopening, comparing it to the famously fraudulent "Potemkin Villages" that a courtier of Catherine the Great's once had built before a royal visit, in order to impress his patron. - "What we're seeing is a charade: a Potemkin market opening," said Daleep Singh, deputy national security adviser for international economics, in a statement. "This is not a real market and not a sustainable model — which only underscores Russia's isolation."
| | | | | | | | A message from Axios | | Your daily research, done in 5 minutes | | |  | | | | Axios Pro delivers deeper news and analysis on everything transforming the investment world. - If you care about the Fintech, Health Tech, Retail, Media or Climate industries, then Axios Pro is for you.
Try it free, or inquire about corporate subscriptions. | | | | | | 4. 🏠 😥 Mortgage rates soar |  Data: Mortgage Bankers Association; Chart: Axios Visuals Mortgage rates continue to romp higher, adding to headwinds for those looking to buy in the red-hot residential real estate market, Matt writes. Driving the news: Weekly numbers from the Mortgage Bankers Association published yesterday show the average 30-year fixed mortgage rate rose to 4.5% from 4.27% in just the last week. - These mortgages haven't cost 4.5% since 2018.
The bottom line: "Overall, rising mortgage rates and high prices are pricing some buyers out of the market," wrote Rubeela Farooqi, an analyst at High Frequency Economics. | | | | |  | | | | If you like this newsletter, your friends may, too! Refer your friends and get free Axios swag when they sign up. | | | | | | | | 5. Bond traffic jam |  Data: FRED; Chart: Axios Visuals Rapidly rising rates aren't just affecting regular folks who want a mortgage — they're rippling through the corporate debt market too, Axios' Kate Marino writes. Why it matters: The speed and volatility at which risk has repriced over the last few months have caused a traffic jam in corporate lending. That could mean a slowdown not just in companies borrowing, but also in things like M&A that these borrowings fund. How it works: When large U.S. companies want to borrow money — for instance, to make acquisitions — an investment bank usually agrees to underwrite a debt offering, with caps on the interest rates baked in. - The bank will eventually sell off the debt in pieces to the mutual funds and hedge funds that invest in corporate credit.
- Usually, the prevailing cost of capital doesn't change that much between the time that the deal is agreed upon, and the point at which the bank sells the debt to investors, which could be a few months later.
What's happening: But in the last two months, the average yield on high yield corporate bonds shot up by more than a full percentage point, to 6% — a rapid increase rarely seen in the market — as Fed chair Jerome Powell's comments got more hawkish, and fallout from Russia's invasion of Ukraine added to market jitters. - This threw some things out of whack. Investment banks have a hard time placing bond deals if they're contractually stuck offering yields they agreed to a few months ago, that don't match current market conditions.
- Case in point: Bank of America recently had to sell a bond deal at a loss, as Bloomberg reported.
State of play: Against the volatile backdrop, corporate debt issuance slowed dramatically in March, compared to January, according to data provided by Leveraged Commentary & Data. What's next: Banks will adjust to the new market conditions when they commit to future deals and bake in more flexibility to price bonds where the market demands, sources tell Axios. - But in the meantime, they could face losses on a few more bond deals that were originally structured months ago, says a credit portfolio manager.
The bottom line: With rates rising rapidly, there's bound to be a host of dislocations while everyone adjusts to the new normal. | | | | | | | | A message from Axios | | Your daily research, done in 5 minutes | | | | | | | | Axios Pro delivers deeper news and analysis on everything transforming the investment world. - If you care about the Fintech, Health Tech, Retail, Media or Climate industries, then Axios Pro is for you.
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