Confounded Interest – Anthony B. Sanders
Financial Markets And Real Estate
The US Treasury yield curve is flattening at the short-end (2-3 years) but remains unchanged at the long end (>= 20 years).
And pending US Home Sales remain low.
It will take a while to recover from Biden’s horrid economic follicies.
The Fed continues printing money! And home prices continue to rise on year-over-year basis, but falling on a month-over-month basis.
Home prices in April tumbled 0.31% MoM (-0.02% exp) – the biggest MoM drop since Dec 2022.
But if we look at the national home prices via S&P Case-Shiller and YoY rather than MoM, home prices ROSE 2.64% YoY.
You can see the damage to homeownership caused by Covid and The Fed. The massive expansion of M2 Money in 2020 was followed shortly by rapid increases in home prices. This was followed by a normalization in Fed M2 Money printing. Consequently, home price growth has slowed.
The housing markets is in bits and pieces following The Fed’s fickle management of interest rates and Biden’s disastrous spending policies. U.S. household net worth fell by 0.93% in 1Q2025 … largest decline since 3Q2022, but not necessarily comparable to that quarter in terms of magnitude.
Bitcoin just broke below $100k.
What will The Fed? As I have said over and over again, The Fed needs to cut rates.
Fed Chair Jerome Powell’s favorite song: “No sugar tonight” for the mortgage market. The Fed provided plenty of sugar during the Covid crisis of 2020.
Mortgage rates grew under Biden from under 3% to nearly 8%, helping to choke off housing demand.
The good news? Median home price growth YoY has been negative since 2023 whilr average hourly earnings YoY has been positive and steady.
Please Jerome, lower rates!! We are in a ring of fire with high housing prices and high mortgage rates.
Thanks a lot Fed! Home prices rose dramatically after Covid as The Fed printed billions of dollar of currency (M2). Making housing unaffordable for much of America.
As a result of higher mortgage rates and higher home prices, homebuilder confidence is at a 13 year low (back to 2012).
Housing is simply unaffordable thanks to bad housing policies and The Fed.
Should President Trump fire Fed Chair Jerome Powell and replace his with someone else like Treasury Secretary Scott Bessent? The answer is … YES!
Why? First, there was a massive response to the Covid outbreak in 2020. And the monetary stimulus (aka, stimulypto) has never been removed.
The Fed Funds Target Rate (upper bound) remains high at 4.50% and M2 Money supply is $21.8 TRILLION.
Second, The Fed could help reduce the interest paid on the massive Federal debt load when the debt if refinanced.
The US Treasury yield curve tends to follow anticipated Fed moves.
Of course, The Fed should be abolished. But a step in the right direction would be to fire “Foul Powell” who is on the prowl.
Fed Chair Jerome Powell.
Welcome to the Trump economic revolution!
As of June 9, 2025, the Atlanta Fed’s GDPNow estimates that real GDP growth was 3.8%. So much for Trump’s tariff “war” destroying the economy.
Latest estimate: 3.8 percent — June 09, 2025
The GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the second quarter of 2025 is 3.8 percent on June 9, unchanged from June 5 after rounding. After recent releases from the US Census Bureau and the US Bureau of Labor Statistics, a decrease in the nowcast of second-quarter real personal consumption expenditures growth from 2.6 percent to 2.5 percent was partly offset by an increase in the nowcast of real gross private domestic investment growth from -2.2 percent to -1.9 percent.
Biden relied on government hiring and Fed’s money printing to drive the US economy. And then the gas ran out.
The dismal days of Biden/Harris/Yellen are gone. Although Chuck Schumer, Nancy Pelosi, Hakeem Jeffries and my in-laws are all singing “Those Were The Days.” Of immense government corruption and waste.
The GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the second quarter of 2025 is 3.8 percent on June 5, down from 4.6 percent on June 2. After recent releases from the US Census Bureau, the US Bureau of Economic Analysis, and the Institute for Supply Management, the nowcasts of second-quarter real personal consumption expenditures growth and real gross private domestic investment growth decreased from 4.0 percent and 0.5 percent, respectively, to 2.6 percent and -2.2 percent, while the nowcast of the contribution of net exports to annualized second-quarter real GDP growth increased from 1.36 percentage points to 2.01 percentage points.
Here is the breakdown.
The Fed still needs to lower rates by 100 basis points, but that looks unlikely.
I am glad all over … because the AI boom is delivering a record contribtion to US GDP.
And US home prices are contracting making housing more affordable.
I don’t care what you did when you lived in Fort Worth, but at least home prices are contracting.
The Fed’s favorite inflation indicator – Core PCE – fell once again in April to its lowest since April 2021 at +2.5% YoY.
And The Fed keeps on printing money!
Supercore inflation is down to -0.023 MoM.
The Fed is thinking that they can help.
Confounded Interest - Anthony B. Sanders 
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