US Mortgage Rates Drop Below 7% in Biggest Decline Since July (But MBA Purchase Applications Drop -9.52% WoW, Refi Apps Drop -11.44%)

US mortgage rates fell last week by the most since the end of July, slipping below 7% and helping generate a bounce in purchase applications that otherwise remain depressed, but only in the Seasonally Adjusted data. The NON-Seasonally Adjusted data show a hefty decline.

The contract rate on a 30-year fixed mortgage decreased 24 basis points to 6.9% in the week ended Nov. 11, according to Mortgage Bankers Association data released Wednesday. The group’s index of applications to buy a home rose 4.4% — the most since June — but is still near the weakest level since 2015. 

But the bounce was in Seasonally Adjusted data only. The NON-seasonally adjusted data remained depressed.

Mortgage applications decreased -10.0 percent SA from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending November 11, 2022. This week’s results include an adjustment for the observance of Veterans Day.

The Refinance Index decreased -11.44% percent from the previous week and was 88 percent lower than the same week one year ago. The unadjusted Purchase Index decreased -10 percent compared with the previous week and was 46 percent lower than the same week one year ago.

Mortgage purchase applications will continue to fall in NSA terms since it is the Winter and home buying season won’t really start until January. Refinancing applications actually dropped -11.44% even with the drop in mortgage rates.

The data. As my former students know, I like the “raw” data, better known as NON-seasonally adjusted (NSA) data and avoid seasonally-adjusted data (SA) since it hides what is going on.

And on The Fed Futures Front, The Federal Reserve is still looking a hiking their target rate from 4% to just under 5%.

US Treasury Yield Curve Slips Into Darkness (Implied Yield On 3M T-Bills In 18 Months – 3M T-Bill Yield Inverts) Slippin’ Into Darkness

The US economy is Slippin’ Into Darkness.

The Fed’s favorite yield curve measure, the implied yield on 3-month T-Bills in 18 months less the 3-month T-bill yield has inverted. Note that this curve inverts prior to a recession.

The new face of reckless Fed policy and Federal spending. 19 straight months of negative REAL earnings growth as America re-elects the same irresponsible fools that are turning the US into Venezuela.

Bankrupt FTX Hit by Mysterious Outflow of About $662 Million (Yellen Calls For Regulation But Ignores Obvious Inflation and Debt Crisis) At Least Dogecoin Is Up Today

Sam Bankman-Fried’s bankrupt digital-asset exchange FTX was hit by a mysterious outflow of about $662 million in tokens in the past 24 hours, the latest twist in one of the darkest periods for the crypto industry.

Customers still coming to terms with the platform’s Friday plunge into Chapter 11 proceedings were subsequently confronted with what the general counsel of its US arm, Ryne Miller, described as “abnormalities with wallet movements.”

Miller said on Twitter that FTX had begun moving digital assets into cold storage — wallets that are unconnected to the internet — following its bankruptcy filing on Friday. The process was later expedited “to mitigate damage upon observing unauthorized transactions.”

Blockchain analytics firm Nansen, which gave the overall estimate of $662 million in withdrawals, said the coins flowed out of both FTX’s international and US exchanges. A separate analysis by Elliptic stated that initial indications showed almost $475 million had been stolen from the exchange in illicit transactions, with the stablecoins and other tokens that were taken being rapidly converted to Ether on decentralized exchanges — “a common technique used by hackers in order to prevent their haul being seized.”

And like that, O’Biden’s Treasury secretary Janet Yellen FTX Debacle said that it shows need for crypto regulation. Or Yellen could suggest a “buyer beware” tactic, but she is part of the most aggressively regulatory administration in history, MORE regulation is needed! /sarc

Regulate, regulate, dance to THEIR music!

At least Yellen is noticing Bankman-Fried (a new twist on Kentucky-Fried) and FTX since she is seemingly oblivious to the harm being done by The Federal Reserve and The Federal government with regards to inflation and debt growth. She is a Bird of War.

Like this chart of the Purchasing Power of the US Dollar CPI. Janet?

Or how about this chart of US Public Debt Outstanding and Real GDP growth per capita? The Fed and Federal government broke the bank, so to speak, by bailing out the banks in the financial crisis (pink box) and then again for the Covid crisis (orange box). Janet?

Damn it, Janet. Why don’t you discuss the Medicare and Social Security crisis (remember Joe Biden said Republicans may try to fix it which Biden turned into a nasty attack claiming that Republicans were going to take away your Social Security).

Lastly, the US has $172.6 TRILLION in unfunded Federal promises. Janet? A least FLA Senator Rick Scott tried to address the problems with Social Security, but Nasty Joe Biden “yelled Republicans are going to take away your Social Security!” I argue that O’Biden, Yellen and Democrats are going to let SS blow-up rather than take on politically challenging issues. Social Security liability is $22.23 trillion yet O’Biden just promised $500 billion per year to third-world countries and keeps sending billions to Ukraine. Janet?

On the crypto side (that Yellin’ Yellen wants to regulate), at least Dogecoin is up 10.37%.

They call Yellen “The Breeze” because she breezes by the hard decisions and focuses on the easy problems like calling for regulation of cryptos.

Perhaps Sam Bankman-Fried could be ordered to do KFC ads as “The Colonel.”

The Gap! US Mortgage Demand Crashes As Fed Tightens (Taylor Rule Estimate Now 13.85% Versus 4.00% Current Target Rate)

The October Senior Loan Officer Opinion Survey on Bank Lending Practices came out yesterday and its a doozy.

The Net Percentage of Domestic Banks Reporting Stronger Demand for Mortgage Loans is sinking faster than Joe Biden’s oratory skills as The Fed tightens their monetary belts.

Jumbo mortgages, those that are greater than FHFA’s conforming loan limit, are tanking as well.

And today, the University of Michigan (BOOO!!) consumer survey for housing buying conditions fell to the lowest level in recorded history.

Given the latest inflation numbers (improving from disastrous, 8.2% YoY to really horrible, 7.70% YoY), and unemployment rate rising from 3.5% to 3.7%, we now see that Taylor Rule estimate for Fed Funds is now … 13.85%. The US is currently at 4.00%. THAT is a big gap!

Yes, The Fed will not be able to fill the gap between the Taylor Rule and the current Fed Funds Target Rate, without incredible damage being done.

Unfortunately, this is an ACTIVE FAILURE for The Fed which has left monetary stimulus too high for too long since late 2008.

On a personal note, I am glad the midterm elections are over. We saw John Fetterman arguing until he was blue in the face that he loved fracking and will continue to let Pennsylvania frack. Then PA governor-elect Josh Shapiro came out yesterday and said that PA will end all fracking. And we are to believe that Lt Gov Fetterman did not talk with PA Attorney General Shapiro about fracking? To quote Joe Biden, “C’mon man!”

Fed Is NOT Unwinding MBS, 30yr Mortgage Rate Falls To Under 7% (Will The Fed ACTUALLY Unwind Its Balance Sheet??)

Now that the midterm elections are over (except for counting of million of mail-in ballots, a massive moral hazard risk), President Biden has proclaimed that he isn’t changing any of his horrid policies. And apparently, neither is The Federal Reserve.

Despite the headlines that The Federal Reserve is rapidly downsizing its massive balance sheet of assets, The Fed is just letting their enormous holdings of mortgage-backed securities (MBS) run off. That is, just letting MBS mature. So, The Fed’s System Open Market Holdings of Agency MBS has barely declined.

Here is the table of MBS run-off. The mass of MBS doesn’t start to mature until … 2039. It is Treasuries that are maturing.

So, The Fed is raising its target rate rapidly, although that is likely to reverse course in the first half of 2022.

Meanwhile, mortgage applications fall to lowest level since 1997 with Fed tightening.

“So Mr Bond…let me tell you my plan for global domination.”

US Mortgage Rates At 7.32%, Up 154% Under Biden (As Fed Fights Soaring Bidenflation)

Biden’s magic trick was to turn the economy into a train wreck.

Example? The 30-year mortgage rate was 2.88% on Biden’s inauguration day (January 20, 2021). They are now 7.32%, a 154% increase under Biden.

The US economy is suffering from knucklehead energy policies, reckless Federal spending and rampant inflation.

Here is Joe Biden doing economic magic tricks, turning a vibrant economy into an inflation-ravaged one.

And why I won’t watch of subscribe to Peacock.

Double Whammy! Mortgage Holders Lose $1.3 Trillion in Equity in Q3 As Price Correction Continues (Nationally, Homes Shed 2.6% of Value Over Past Three Months As Treasury Yield Curve Remains DEEPLY Inverted)

Yes, this is an economic double whammy!

First, according to Black Knight, US home values declined -2.6% over the past three months.

Second, the US Treasury 10Y-2Y yield curve remains near 1980s low.

There is a third whammy, rising utility costs (highest in a decade).

Yes, its a double whammy!

Next US Inflation Report After Midterm Elections Likely To Remain High (Projection For Headline Inflation = 7.9%, Core Inflation = 6.5%) As Diesel Prices UP 102% Under Biden And Inflation UP 486%

The US midterm elections are Tuesday. I was denied an absentee ballot for some reason, but I will get my disabled body over to the local precinct to cast my ballot.

Fortunately for Democrats, the next inflation report is not due out until November 10th. Because the forecast for the next inflation report is ugly.

Headline CPI YoY = 7.9%

Core CPI YoY = 6.5%

These numbers are slightly lower than the last inflation report, but Americans are still suffering mightily under Biden’s Reign of Error.

Diesel fuel prices, the lifeline of the food industry, is up 102% under Biden’s mandates with the inventory of diesel fuel down 36%.

Inflation is relentless like Jason from Halloween.

Inflation is UP 486% under Inflation Joe, The Bully of DC.

I am going for a few Tequila shots on Wednesday.

MMT Alert! US Debt At $10.7 Trillion In Q4 2008, Now At $30.6 Trillion, +186% In 14 Years (M2 Money UP +162.5%) US Unfunded Liabilities At $172.4 TRILLION!

Ever since the financial crisis of 2008 and the election of President Obama and a Democrat Congressional sweep, the US has embraced Modern Monetary Theory (MMT or borrow, print and spend without consequence). And between the financial crisis and the Covid crisis of 2008, we have seen an increase in US public debt from $10.7 trillion in Q4 2008 to a staggering $30.6 trillion as of Q2 2022. That is a staggering increase of 186% in only 14 years.

How about US Money stock? M2 Money stock has grown by 162.5% since the beginning of 2009 and the “Blue Wave” of 2008. And nothing has been the same.

The Covid outbreak in early 2020, we saw Fed money printing that has never seen before … or since. But one thing is for sure, M2 Money Velocity (GDP/M2) is near all-time lows.

Then we have headline US inflation as a function of M2 Money growth YoY.

To paraphrase Alexander Dayne from Galaxy Quest, “They broke the financial system, they broke the bloody financial system!”

And it is the midterm election “silly season” where no politician will discuss the complete and utter mess they have made. According to US Debt Clock, US national debt is already up to $31.26 trillion (OMG!), but the REALLY scary number that not a single politician will address is UNFUNDED LIABILITIES OF $172.4 TRILLION.

Can we go back to the gold standard? Or silver standard? Or ANY standard for that matter??

Instead, we have porous borders and patently UNSOUND money, thanks to MMT.

How Biden And The Fed Defanged The FANG Index And Clobbered Growth And Real Estate ETFs (Cousin Eddie And Clark Griswold Strike Again!)

There is no doubt that Biden is the Cousin Eddie of politics with his gifts that keep on giving. Like rampant inflation, soaring food, gasoline and diesel prices, and Pelosi/Schumer’s helping hand in creating price controls that will kill potential cures for illnesses.

In addition to rampant 40-year highs in inflation, we have the Clark Griswold of the economy, Fed Chair Jerome Powell, slamming his foot on the economic breaks to combat inflation created by Biden’s energy mandates and reckless Federal spending (like the aforementioned, laughable “Inflation Reduction Act.”

So, Biden helps creates massive inflation and Powell and the Gang counterattacked by raising their target rate with more to come (at least until May 2023). And with the implied Fed Funds rate soaring (red line), we are seeing the FANG stocks (Facebook or Meta, Amazon, Netflix and Google) falling more rapidly (white line) than the S&P 500 index. Which is also falling like a rock (yellow line). All this is happening as M2 Money YoY crashes and burns.

How about growth versus value under Cousin Eddie and Clark Griswold? The Vanguard Growth ETF and Vanguard Real Estate ETF are plunging with Fed tightening (red line). Vanguard’s Value ETV (yellow line) is down too, but not by as much.

Yes, Washington DC elites. The gift that keeps on giving … bad things.

Thanks to my former GMU student Andrew Edwards for the Cousin Eddie suggestion!