Confounded Interest – Anthony B. Sanders
Financial Markets And Real Estate
Good news! Consumer prices rose only 3% YoY. Lower than the growth in M2 Money of 4.66% YoY and Federal government spending of 7.8% YoY.
While consumer prices rose only 3% YoY, housing (shelter) rose 3.65 YoY.
The US Treasury yield curve remains upward sloping from 2Y-30Y.
Of course, CPI data release has been delayed thanks to the US Federal government shutdown (aka, the Schumer Shutdown). But never fear, the Federal government is continuing to spending like the proverbial drunken sailors in port. The Federal debt just breached the $38 trillion mark.
And the Federal budget deficit just breached the $7 trillion mark. Why? Too much Federal spending! The Federal government COULD raises taxes, but that would strangle the economy. But politicians in DC are terrified of not being re-elected, so they are terrified of cutting spending.
What about The Federal Reserve? M2 Money printed by The Fed now exceeds $22 trillion and The Fed’s balance sheet is now around $6.6 trillion. Can The Fed print our way out of the debt crisis? Think of the Weimar Republic with its hyperinflation due to excessive money printing.
The only way out is to drastically cut Federal spending. Or we could rename the US Dollar as the Reichsmark.
Any wonder why gold and silver prices are through the roof?
September US home sales printed at 4.06 million units.
The US still hasn’t recovered from the Covid 19 outbreak of 2020 and the Fed’s response to Covid.
On the commercial real estate side, CRE prices remain below Covid 19 outbreak levels.
The US housing market is in a pickle. Home sellers now outnumber buyers by more than 500,000, the largest gap ever recorded.
The September drop in mortgage rates is sparking the biggest boom in refinancings since the pandemic. Mortgage-refinancing applications have surged above the decade average, despite that period including the record-breaking refi boom of 2020-21 when rates fell to all-time lows. Purchase-loan demand has also rebounded to its best for this time of year since 2022, yet remains well below pre-pandemic levels.
Purchase demand (applications) nearing 2022 levels.
While not mortgage-related, gold is soaring!!
Thanks to Bloomberg’s Erica Adelberg for her amazing charts.
The Federal government is having a party! A spending party requiring massive growth in Federal borrowing AND Fed M2 money printing.
Federal borrowing has increased by 56% since Covid in 2020. And Fed M2 Money increased by 43.2% since Covid outbreak.
M2 money velocity (GDP/M2) is now at 1.392.
As of Q2, interest payments on the national debt exceeds spending on defense.
Despite being shut down by Democrats and Chucky Schumer, The Federal government and Federal Reserve continue to borrow and print money like crazy.
Can we ask the US House and Senate if they will ever return US Federal government spending to pre-Covid levels? Both US Federal government spending and public debt are up 56% since the Covid outbreak in 2020.
The answer is no. Politicians thrive on Federal spending.
Feelin’ stronger for the most part.
Mortgage applications decreased 4.7 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending October 3, 2025.
The Market Composite Index, a measure of mortgage loan application volume, decreased 4.7 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 5 percent compared with the previous week. The seasonally adjusted Purchase Index decreased 1 percent from one week earlier. The unadjusted Purchase Index decreased 1 percent compared with the previous week and was 14 percent higher than the same week one year ago.
The Refinance Index decreased 8 percent from the previous week and was 18 percent higher than the same week one year ago.
With mortgage rates on fixed-rate loans little changed last week, refinance application activity generally declined, with the exception of a modest increase for FHA refinance applications.
Mortgage demand dwindled since Covid and Biden/Powell and hasn’t recovered.
Due to the ongoing government shutdown – now in its third day – the BLS did not release the September jobs report this morning forcing traders and the Fed to “fly blind.” Or blinder than usual. And with ADP reporting earlier this week that some 32,000 jobs had been lost in September, putting markets and economists on edge and the US economy on the verge of a labor recession, the lack of data could not have come at a worse time. Luckily, private sector alternatives to the BLS do exist and, in many cases, are far more accurate and certainly less politicized.
The latest Revelio Labs number (+60.1k) is very notable as it suggests that the labor picture is nowhere near as bad as ADP indicated. In fact, as shown in the chart below, in September the Revelio Labs data set showed the best monthly increase in jobs in 2025!
The Federal Reserve will do what they want and will likely ignore the good report from Revelio. Besides, the Atlanta Fed GDPNow is at 3.8% for Q3.
Here is the GDP breakdown.
This should get The Fed to cut rates! ADP reported that in September, the US private sector shed 32,000 jobs, the worst print since March 2023.
Here is the breakdown.
Confounded Interest - Anthony B. Sanders 
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