The Great Reset … In Housing? Typical Buyer’s Monthly Payment Up 39.4%—The Biggest Annual Gain on Record (Mortgage Rates SOARING With Anticipated Fed Monetary Tightening)

We now have the proverbial double whammy happening … soaring home prices AND soaring mortgage rates.

The theory is, of course, that The Federal Reserve will slowly remove its staggering monetary stimulus leftover from 1) the financial crisis of 2008 and 2) the Covid recession of 2020. As you can see, the sheer volume of monetary stimulus remains outstanding and it is the EXPECTATIONS of The Fed tightening that is caused the 30-year mortgage rate to rise.

So, The Federal Reserve is participating in The Great Reset by helping send mortgage rates to the moon. But with soaring mortgage rates and still red-hot home price growth, a typical buyer’s monthly payment is up 39% —the biggest annual gain on record.

While I used the Case-Shiller National Home Price Index YoY, Redfin shows more contemporaneous home price data with April 24 median home sales price at 16.8%.

Thanks to The Fed, we are seeing homebuyer mortgage payments are up 39.4% YoY.

As inflation continues to damage America’s middle-class and low- wage workers, we may see regulations going into effect from the Consumer Financial Protection Bureau protecting consumers from … themselves.

Medusa Touch II: REAL Wage Earning Growth Remains Negative, Reverse Repos Continue To Grow, Lithium Prices And Mortgage Rates SOAR

President Biden (or whoever is pulling his strings) is inflicting a “Medusa Touch” on the US. That is, everything his administration touches turns to stone.

Yesterday, I walked through the rise in energy and food prices under Biden, and it is horrific. The only “disinformation” was generated by the Biden Administration itself claiming that soaring inflation is due to Russia’s invasion of Ukraine. I demonstrated that inflation began with Biden’s anti-fossil fuel executive orders and the Russia invasion only made things worse.

Let’s look at average hourly earnings. Thanks to “progressive” energy policies from Biden, REAL average hourly earnings growth has crashed and burned.

But here is the chart that the Biden Administration touts showing average hourly earnings growth at 5.6% YoY (although I doubt if Jen Psaki would leave out the massive distortion caused by The Federal Reserve’s “Let’s go crazy!” monetary policy.

Another Medusa Touch moment is the reverse repo market. When I wrote about reverse repos before, several people wrote me saying “You don’t understand. This is a temporary problem and will vanish shortly.” However, The Fed’s reverse repo facility has now climbed to an all-time high.

Then we have the disruptive effects of The Federal Reserve deciding for us that mortgage rates are too low and should be higher.

Now look at lithium prices, a key element for electric car batteries. Making the switch from Internal combustion engines to electric motors far more costly.

The list goes on and on.

Suffice it to say, everything the Biden Administration touches turns to stone.

But I wager that the Biden Administration wishes that Hunter Biden’s laptop would turn to stone.

Only an elitist DC bureaucrat like Joe Biden would laugh at inflation that is ruining the lives of millions of Americans.

Fed Fireball! Mortgage Rates Climb To Highest Level Since 2009 As Fed Attacks Inflation And Markets Get Crushed (S&P 500 Index Down 7% In April, Bitcoin Down 11%)

Its Saturday and I am dreading markets opening on Monday. But here is where we sit today.

The 30-year mortgage rate has soared to 5.29%, the highest level since 2009 at the beginning of Obama’s Presidency. Since 2009, we have seen the purchasing power of the US Dollar decline further (orange line) while inflation (blue line) has soared. M1 (yellow) and M2 (green) has been growing since the financial crisis, but really took-off with the Covid outbreak in 2020 and The Fed’s massive overreaction coupled with Federal government stimulus.

Since the creation of The Federal Reserve System under President Woodrow Wilson, the purchasing power of the US Dollar has collapsed so much that $10 in 1913 in worth 34.8 cents today. But notice that since 1949, the CPI YoY has rarely been negative meaning that prices are pretty much only going up.

Instead of April showers bring May flowers, it is April expected Fed rate hikes (now 10.408 rate hikes by February 2023) bringing declining assets prices. In April so far, the S&P 500 index is DOWN 7%, the 10-year Treasury Note price is DOWN 5%, Bitcoin is DOWN 11%, the 3.5 coupon agency MBS price is down 3.2%.

We are seeing increased volatility in both the equity and bond markets.

Well, Powell and The Fed are hurling fireballs at mortgage rates and asset prices in April.

Slipping Into Darkness! Bidenflation And Fed’s Reaction Causing Social Security And Pension Funds To Get Clobbered (Mortgage Rates Keep Climbing)

US President Biden went green and signed executive orders on his first day to limit oil and natural gas exploration of Federal lands and offshore (also, killed the Keystone Pipeline), helping to drive up energy prices and food prices. These orders begat inflation (also caused by the massive Covid relief by the Federal government). The highest inflation in 40 years begat The Federal Reserve signalling a tightening of Fed monetary policy … to fight the problem caused by The Fed in the first place … too much monetary stimulus for too long. Fiscal and monetary fanaticism and ignorance is forever busy and needs feeding

There was an interesting article on MarketWatch entitled “Bond rout exposes Social Security’s insanity.” The headline was “Every dollar of yours that’s invested in the Social Security trust fund is invested in low-yielding government bonds.”

Yes, another disastrous consequence of The Fed’s lax monetary policy since 2008, helping to push Treasury yields extremely low. And REAL Treasury yields into negative territory.

But here we sit today with The Fed threatening to trim their balance sheet and raise rates … to combat the inflation they helped create in the first place. Now we have the 10-year Treasury Note price falling like a paralyzed falcon with expected hate hikes going above rate hikes by February 2023 (based on Fed Funds Futures prices).

Most pension funds also invest heaving in US Treasuries, along with agency Mortgage-backed Securities (AgencyMBS).

Plus we have the Treasury curve slipping into darkness.

Speaking of “Slipping Into Darkness,” mortgage rates are soaring.

Meanwhile, Biden, Fed economists and Congress are merrily partying at some DC nightclub.

What is hip? NOT Biden, Pelosi, Schumer or Powell.

US Existing Home Sales Decline -2.7% In March As Available Inventory Remains MIA (Median Price YoY At 15.23% YoY As Fed Keeps Foot On Monetary Accelerator)

US existing home sales declined -2.7% MoM in March and are down -3.8% YoY.

The median price of existing home sales are still sizzling at 15.23% YoY while inventory available still remains MIA by historic standards.

While mortgage rates have been smoking, existing home sales growth slowed compared to February as the US begins its Spring/Summer buying season.

WHO is buying homes? There are considerably purchases by investors as of Q4 2021 taking advantage of Fed stimulypto.

T-R-O-U-B-L-E! Mortgage Purchase Applications DOWN 14% From Same Week Last Year, Refi Applications DOWN 68% (Yet Fed STILL Has Its Huge Foot On Monetary Gas Pedal) This One’s Gonna Hurt You For A Long, Long Time

There is one song that sums up the mortgage banking industry with proposed tightening of Fed monetary stimulypto: T-R-O-U-B-L-E.

Mortgage applications decreased 5.0 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending April 15, 2022.

The Refinance Index decreased 8 percent from the previous week and was 68 percent lower than the same week one year ago. The seasonally adjusted Purchase Index decreased 3 percent from one week earlier. The unadjusted Purchase Index decreased 2 percent compared with the previous week and was 14 percent lower than the same week one year ago.

All together now, mortgage rates are up 76% under Biden.

And yes, The Federal Reserve STILL has its enormous foot on the monetary gas pedal (with hints that they will remove it “soon.”

The number of ARMs increased 14.9% from the previous week.

Between Bidenflation and Powell and the Gang tightening monetary policy, This One’s Gonna Hurt You (For A Long, Long Time).

People Get Ready! Agency MBS Prices Drop Like A Rock As Mortgage Rates AND Duration Risk Soar (Energy Prices Drop Over 5% On Covid Shutdown In China)

People Get Ready! For The Federal Reserve to actually withdraw its massive stimulus.

I generally discuss that negative impact of rising mortgage rates on the housing market, but today I am focusing on the decline in agency mortgage-backed security prices due to rising mortgage rates.

Here is the uniform MBS price for a 3.5% coupon security. It is falling like a rock with anticipated Fed monetary tightening.

And duration risk is going to the moon! (That is, accelerating rapidly).

FNCL 3.5 coupon MBS has a WAC of 4.206 and a WAM (or WARM) of 359. Not to mention a factor 0.997.

At least energy prices are cooling thanks to China grinding to a halt with the latest Covid epidemic.

I wish The Fed would back off its allegedly ambitious tightening and soothe me.

But hold on, Powell and The Fed are coming with their sword of destruction.

US Mortgage Rates Rise To 5.25%, Up From 2.88% Under Biden (Fed May Boost Rate 50 BPS At Next Meeting)

Fortunately, I refinanced my home mortgage while Trump was still President. When Biden was installed as President, the 30-year mortgage rate was 2.88% (according to Bankrate). It has now risen to 5.25%.

The Federal Reserve is now expected to raise their target rate as much as 50 basis points at the next meeting on May 4, 2022. This chart shows the anticipated rate hikes coming our way, peaking in summer 2023.

Fed Funds Futures are pricing in a 50 bps rise at the May meeting.

The good news is that the US Treasury actives curve is upward sloping, but is showing fatigue in the forward rates between 7Y and 10Y.

On the hard asset front, precious metals are up over 1% with silver and platinum leading the way.

Fed’s Fahrenheit 451! Freddie’s Mortgage Rate Hits 5% For First Time In A Decade As Fed Keeps Buying Assets

WASHINGTON (AP) — Long-term U.S. mortgage rates continued to climb this week as the key 30-year loan rate reached 5% for the first time in more than a decade amid persistent high inflation.

The average 5% rate on the 30-year mortgage was up from 4.72% last week, mortgage buyer Freddie Mac reported Thursday. The average rates in recent months have been showing the fastest pace of increases since 1994. By contrast, a year ago the 30-year rate stood at 3.04%.

The average rate on 15-year, fixed-rate mortgages, popular among those refinancing their homes, jumped to 4.17% from 3.91% last week.

Yet The Federal Reserve’s balance sheet keeps on growing.

The Federal Reserve reminds me of the Ray Bradbury novel Fahrenheit 451 where the fireman actually burn books rather than extinguish fires.

Bidenflation SOARS To 8.5%, Real Average Hourly Earnings Growth Falls To -3% YoY, Mortgage Rates Rise To 5.14% (The Four Horsemen Of The Inflation Apocalypse?)

The US inflation numbers were released this morning and they are grim. Inflation YoY grew to 8.5%.

With 8.5% YoY inflation, REAL average hourly earnings growth fell to -3% YoY.

And with The Fed intent on extinguishing their part of the inflation, Bankrate’s 30Y mortgage rate rose to 5.14%.

Energy is the biggest culprit (fuel oil up 70.1% YoY) thanks to the double whammy of 1) Russia’s invasion of Ukraine and 2) Biden’s restrictions on oil and natural gas production. Food at home is up 10% YoY.

Here is a colorful chart of MoM growth in prices.

The Taylor Rule model now says that The Fed Funds Target Rate should be 11.90%. Hence, Fed Stimulypto is still in place with the signal that rates will increase.

How about WTI Crude and Brent Crude soaring over 4% today?

Once again, the Four Horsemen of the Inflation Apocalypse (Biden, Powell, Pelosi, Schumer) overstimulated the economy and financial markets with excessive monetary stimulus (Powell) and excessive Federal spending (Biden, Pelosi, Schumer) where demand soared for products and supply naturally hasn’t caught up.