The American dream of homeownership is increasingly tied to inherited wealth, as a record number of first-time buyers rely on inheritances to navigate a historically challenging housing market.

Skyrocketing prices, substantial down payments, and an aging buyer pool paint a picture of a market accessible primarily to the affluent, leaving many aspiring homeowners struggling to gain a foothold.

The rise of inheritance-funded home purchases

The National Association of Realtors (NAR) latest report reveals a stark reality: 7% of first-time homebuyers utilized inherited funds for their down payments last year, more than double the rate for repeat buyers.

This trend underscores the growing wealth divide in the housing market, where access to family wealth increasingly determines who can afford to buy a home.

The affordability gap: older, wealthier buyers dominate the market

The profile of the typical homebuyer is shifting, with older and wealthier individuals dominating the market.

First-time buyers, traditionally younger and less affluent, now represent a shrinking share of the market, their lowest since 1981.

The median age and income of first-time buyers have also reached record highs, further highlighting the affordability challenges faced by younger generations.

Down payments surge: competing in a cash-heavy market

First-time buyers are now making the largest down payments in nearly three decades, a testament to the competitive pressures of a market where all-cash offers are increasingly common.

For many, an inheritance provides the crucial financial boost needed to bridge the affordability gap and compete in this challenging environment.

The great wealth transfer

The reliance on inheritance for home purchases coincides with a projected $84 trillion intergenerational wealth transfer over the next two decades.

This massive transfer of wealth is expected to further exacerbate existing inequalities, as only a segment of the population will benefit from inherited assets.

“These inheritances have become a lifeline for all these young buyers,” Alexandra Mysoor, CEO of Alix, an estate settlement platform, told Fortune.

“Sometimes it’s a small amount that goes to the beneficiaries… And it’s still life changing.”

Beyond the 1%

While wealthier individuals can bequeath more substantial inheritances, Mysoor emphasizes the importance of effective estate settlement for individuals across all income levels.

Even modest savings during the estate settlement process can significantly impact heirs, enabling them to achieve financial goals like saving for a down payment more quickly.

Unlocking intergenerational wealth

As wealth continues to flow from older generations to millennials and Gen Z, the trend of inheritance-funded home purchases is likely to accelerate.

Mysoor underscores the importance of accessible and well-managed inheritance to unlock the potential of intergenerational wealth transfer.

“Inheritance is only useful if it’s accessible and well managed,” she notes.

“That intergenerational wealth transfer and unlocking it is really important.”

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The US dollar stands tall, poised for its most significant weekly gain in months, buoyed by hawkish commentary from Federal Reserve Chair Jerome Powell that sent tremors through global markets.

Powell’s remarks, signaling a less aggressive approach to interest rate cuts, propelled short-term Treasury yields upward, painting a mixed picture for investors as Asian shares stabilized while Wall Street and European futures dipped.

Powell’s comments reshape rate cut expectations

Powell’s assertion that the Fed is in no rush to cut rates, citing continued economic growth, a robust job market, and persistent inflation above the 2% target, has significantly tempered expectations for a rate cut next month.

Fed fund futures tumbled, with December contracts reflecting a diminished likelihood of easing.

The probability of a December rate cut now stands at just 61%, down sharply from 82.5% prior to Powell’s comments.

Dollar strengthens amidst shifting global monetary policy

The dollar’s ascent has been particularly pronounced against the euro, as expectations of more aggressive policy easing in Europe weigh on the single currency, already trading near one-year lows.

This divergence in monetary policy outlooks between the US and Europe further amplifies the dollar’s dominance in the currency market.

Goldman Sachs now anticipates a higher probability that the Fed will slow the pace of easing sooner than previously expected, potentially as early as December or January.

JPMorgan, while still forecasting a December rate cut, also foresees a potential scaling back of easing in January.

“After the sugar hit of Trump’s election and its subsequent impacts on expectations for company profits, the market’s enthusiasm is being watered-down by greater interest rate uncertainty, especially going into next year,” said Kyle Rodda, a senior analyst at Capital.com.

The ripple effects of Powell’s hawkish turn were felt across global markets.

Nasdaq and S&P 500 futures retreated, mirroring declines in EUROSTOXX 50 futures.

However, Asian shares showed signs of stabilization after a turbulent week, partially supported by positive Chinese retail sales data.

Asian markets: navigating volatility

MSCI’s broadest index of Asia-Pacific shares outside Japan edged higher, but still registered a substantial weekly loss, its largest since June 2023.

A regional healthcare index lagged, impacted by news of Robert F. Kennedy Jr.’s nomination to lead the top US health agency, given his stance on vaccines.

Tokyo’s Nikkei index found support from a weakening yen, which benefits Japanese exporters.

Currency dynamics in focus

The dollar continued its climb against the yen, reaching its highest level since July.

However, Japanese authorities remain vigilant, with the finance ministry reiterating warnings against excessive currency fluctuations.

The Bank of Japan also announced an upcoming speech by Governor Kazuo Ueda, which will be closely scrutinized for insights into the timing of the next rate hike.

Chinese markets presented a mixed picture, with better-than-expected retail sales growth offset by weaker industrial output and deepening declines in property investment.

Even before Powell’s comments, US producer price data hinted at persistent inflationary pressures, adding to market concerns about the pace of future easing.

Short-term Treasury yields surged in response and remained elevated, reflecting investors’ reassessment of the interest rate outlook.

Dollar’s reign and commodity pressures

The dollar’s robust performance weighed on commodity prices.

Gold suffered significant weekly and monthly losses, while oil prices also retreated.

The euro remained under pressure, facing substantial weekly losses.

Minutes from the European Central Bank’s latest meeting suggest that the recent rate cut was primarily a precautionary measure.

However, market expectations lean towards more dovish ECB policy, with a significant probability assigned to further easing in the coming months.

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Global brokerage CLSA has made a significant pivot in its investment strategy, moving back to Indian equities while reducing exposure to China. .

The reversal marks a significant move for CLSA, which initially increased its allocation to Chinese equities in October 2024 while trimming its overweight position in India from 20% to 10%.

This tactical adjustment aimed to capture perceived signs of recovery in the Chinese market.

However, after reassessing conditions and noting persistent challenges, CLSA has chosen to revert to a heavier India allocation.

It has adjusted its strategy to increase its investment in India by 20%, driven by the growing uncertainty surrounding China’s economic prospects.

China faces ‘misfortune in threes’

CLSA’s report, titled Pouncing Tiger, Prevaricating Dragon, highlights three key setbacks that have pressured Chinese equities.

The re-election of Donald Trump and the reappointment of Robert Lighthizer as US Trade Representative signal a return to protectionist policies, including potential tariffs of up to 60% on Chinese goods.

This development comes as exports play an increasingly pivotal role in China’s economic recovery.

China’s economic difficulties are compounded by sluggish real estate investment, high youth unemployment, and continued deflationary pressures.

Despite the stimulus measures introduced by China’s National People’s Congress, CLSA believes these efforts lack the strength needed for substantial economic recovery.

“The NPC stimulus amounts to de-risking with little reflationary benefit,” the brokerage commented.

Adding to China’s woes are rising US yields and heightened inflation expectations, which restrict the ability of both the US Federal Reserve and China’s central bank, the People’s Bank of China (PBOC), to enact accommodating monetary policies.

CLSA expressed concerns that these dynamics could trigger a pullback by offshore investors who previously invested after the PBOC’s initial stimulus in September.

India: a relative haven amid global uncertainties

In contrast to China’s vulnerabilities, India’s economic landscape presents fewer exposures to international trade tensions and protectionist US policies.

CLSA emphasized India’s relative insulation: “India appears as among the least exposed of regional markets to Trump’s adverse trade policy.”

Despite recent net outflows of ₹1.2 lakh crore from foreign institutional investors (FII) since October, driven by rising inflation and weaker second-quarter earnings, domestic investment appetite in India has remained resilient.

This robust local demand helps counterbalance external pressures and positions India as an attractive option for global investors seeking stability.

China’s valuations are not so attractive now

CLSA said China is now trading on a cyclically adjusted earnings multiple of 12.0x, versus 9.2x in early September or 8.2x at the start of the year.

While this is still a discount to the rest of emerging markets—EM excluding China trades on a CAPE of 14.0x—but not as extreme as the 36% discount on offer in early September.

Besides, it acknowledged that while India’s equity market remains expensive, current valuations have moderated, making them slightly more attractive for investment.

The cyclically adjusted PE ratio has decreased from 37.9x to 33.5x, while the price-to-book ratio has fallen from 4.5x to 4.0x.

This warranted book multiple, estimated at 3.5x, now reflects a smaller premium.

The brokerage also pointed out that India’s earnings momentum, though softened, remains strong.

Projected earnings per share (EPS) growth for 2025/26 is anticipated to reach 18% and 14%, respectively, backed by stable GDP forecasts and a solid rupee.

Additionally, the stability of the rupee and local currency earnings has driven dollarized EPS back in line with its 30-year trend.

Risks on the horizon for India

Despite its optimism, CLSA also highlighted potential risks to Indian equities, particularly a surge in market issuance.

The firm noted that the cumulative 12-month issuance level is nearing 1.5% of the market cap, a historical threshold that could weigh on market performance if demand doesn’t keep pace.

The brokerage also maintains caution, pointing out that India’s heavy reliance on energy imports, especially oil, makes it vulnerable to price fluctuations.

“We remain concerned about the potential for risk premium in the oil price or at worst, a substantive supply interruption from Iran-Israel tensions,” it stated.

However, as long as energy prices remain manageable, India is seen as an oasis of relative stability amid global market turbulence.

Trump’s tariffs could spark a pivot away from China

The brokerage expressed apprehensions over Trump’s second term, which could spark fresh trade disruptions.

Lighthizer’s commitment to high tariffs could result in early economic turmoil, potentially affecting global growth.

While China’s direct exposure to US trade is limited to 2.9% of GDP, CLSA pointed out the country’s vulnerability through indirect trade routes and its rising export dependency.

In light of growing tensions, US investments may further pivot away from China as corporations continue implementing “China plus one” strategies to mitigate supply chain risks.

CLSA noted that India stands to benefit from this shift, given its scalable growth potential, manageable leverage, and low foreign equity ownership compared to other emerging markets.

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China is set to strengthen its position in Latin America with the official opening of the first phase of the Chancay port project, located 70 kilometers north of Lima.

This $3.4 billion venture, spearheaded by China’s state-owned Cosco Shipping Company, is poised to become a vital logistics hub in the region and could reshape trade routes between South America and Asia.

The Chancay port, designed to house 15 docks, administrative offices, logistics services, and a two-kilometer tunnel to expedite freight movement, represents a strategic investment aligned with China’s global Belt and Road Initiative (BRI).

The port’s opening coincides with Chinese President Xi Jinping’s visit to Lima, signaling strong ties between the two nations and China’s expanding foothold in Latin American markets.

Chancay port project

The Chancay port project, which took eight years to complete, faced numerous challenges, including environmental concerns, local opposition, and debates over its socioeconomic impact.

While job creation promises were initially attractive, critics have noted that past Chinese investments in the region sometimes favored importing labor over employing locals.

Peru’s Minister of Communications and Transport, Raúl Pérez Reyes, emphasized the port’s strategic importance, stating, “With this port, we will not only increase our cargo capacity but also enhance our competitiveness on a global scale.”

The government estimates that the port will generate approximately 7,500 direct and indirect jobs, although concerns about fair employment practices remain.

This project will facilitate the import of critical resources like copper and lithium from South America and enhance exports of agricultural products to China.

The port’s impact extends beyond Peru, potentially shifting regional trade dynamics and prompting neighboring countries to seek similar investments.

The growing demand for commodities in China and Asia has raised expectations for Chancay’s economic contributions.

With global supply chains adapting post-pandemic, efficient transportation networks are essential, and the Chancay port is expected to cut transit times and costs for shipping between South America and Asia.

However, the Peruvian government must address local employment concerns and ensure transparency in operations to gain public trust. Equitable job distribution and oversight will be critical to maximizing the port’s benefits for Peruvians.

As China strengthens ties with mineral-rich nations like Chile, Brazil, and Peru, and maintains trade relationships with countries such as Argentina and Venezuela, its strategic foothold in the region grows.

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Gold prices were flat on Thursday, but were on course for its worst weekly performance since 2021. 

Hot US inflation and dovish signals from the Federal Reserve cast doubts over further interest rate cuts in December. 

Among industrial metals, copper prices were in the green on Friday, but were headed for steep weekly loss on the back of a strengthening dollar and concerns about poor China demand. 

According to Commerzbank AG, metal prices are expected to fall further if the dollar index continues to rise. 

A stronger dollar makes commodities priced in the greenback more expensive for overseas buyers. 

Gold price falls sharply

Gold prices on COMEX were down about 4.5% so far this week. This was the precious metal’s worst week since June 2021. 

The yellow metal had fallen from record highs since the outcome of the 2024 US presidential election last week as the dollar surged.

The price decline has been accompanied by significant outflows from gold ETFs, totalling almost 22 tons since the beginning of the month, according to Bloomberg.

Additionally, earlier this week, the US consumer price index for October remained high. 

On Thursday, at a Dallas event, Fed Chair Jerome Powell said that the labour market remained resilient and the economy was strong, which meant the US central bank had to be careful with further rate hikes. 

According to the CME FedWatch tool, traders priced in a 62.1% probability of the Fed cutting rates by 25 basis points at its December meeting. 

Undersupplied silver market

According to the Silver Institute’s latest report, demand should increase by 1% to 1.21 billion ounces, reaching the second-highest level since records began.

Industrial demand is expected to increase by 7% to a record level, driven by electrical and electronic applications. 

Increases are also expected for jewellery and silverware. 

In contrast, physical investment demand is expected to fall by 15% to a four-year low

However, silver supply is expected to increase by 2% to 1.03 billion ounces, less than the expected rise in demand. 

This year, the silver market is expected to show a supply deficit for the fourth year in a row, which at 182 million ounces is likely to be considerable again. 

Nonetheless, silver prices on COMEX were under pressure this week with prices falling below $30 per ounce on Thursday for the first time in two months. 

Metals market may remain subdued

Copper prices rose on Friday after nursing steep losses throughout this week. However, experts see the price rise as just a temporary rebound. 

According to Commerzbank, metal prices are expected to fall even further if the dollar continues its upward trajectory. 

Copper prices have fallen nearly 3% so far this week as a firm dollar weighed on sentiments. 

Prices were also under pressure on mixed economic data from China, the top consumer of the red metal. 

Data from the National Bureau of Statistics showed on Friday that industrial output grew slower than expected in October. But, retail sales rose more than expected during the Golden Week holiday. 

“However, there are also many critical voices pointing to the scarcity of copper concentrate, which is slowing down production,” Volkmar Baur, FX analyst at Commerzbank, said in a report. 

According to the German bank, the deficit in supply could exceed 1 million tons next year. 

At the time of writing, the three-month copper contract on the London Metal Exchange was $9,168 per ton, up 1.5% from the previous close. 

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