The Perils Of Fed Tightening In One Chart (Or Sweet Home DC!) Treasury Yield Curve Remains In Reversion And Stock Market Declining As Fed Reduces Money Supply Growth

Sweet home DC! At least for the ruling elites. For the rest of us mortals, Bidenflation is crushing our finances.

To combat Bidenflation, The Fed has signaled that they will continue to raise interest rates. But at what cost?

(Bloomberg) — The world’s leading central banks are finally pushing their interest rates into restrictive territory, causing fears of overkill in financial markets and stoking chatter that policymakers may need to pivot at some point.

And with the withdrawal of monetary stimulus comes the slowdown of US M2 Money growth (green line). And with that slowdown, we see a declining stock market and an inverted US Treasury yield curve.

Of course, Biden could reverse his green energy agenda and allow for oil and natural gas exploration … again. Or begin building nuclear power plants again. But nooooo.

Another peril is rising mortgage rates.

Here is the S&P 500 against global liquidity.

Speaking of Freddie King, here is Joe Biden’s favorite song: hideaway.

Chain Gang! US Mortgage Rates Rise for Seventh Week to Highest in 16 Years (Basic Mortgage Applications Fall To May 1997 Levels, Refi Apps DOWN 86% YoY, Purchase Apps DOWN 37% YoY)

In addition to creating the highest inflation rate in 40 years, we are now seeing the highest mortgage rate in 16 years. I feel like we are all on a chain gang.

(Bloomberg) — US mortgage rates jumped to a 16-year high of 6.75%, marking the seventh-straight weekly increase and spurring the worst slump in home loan applications since the depths of the pandemic.

In fact, mortgage application just fell to the lowest level since May 1997.

The contract rate on a 30-year fixed mortgage rose nearly a quarter percentage point in the last week of September, according to Mortgage Bankers Association data released Wednesday. The steady string of increases in mortgage rates resulted in a more than 14% slump last week in applications to purchase or refinance a home.

Over the past seven weeks, mortgage rates have soared 1.30 percentage points, the largest surge over a comparable period since 2003 and illustrating the abrupt upswing in borrowing costs as the Federal Reserve intensifies its inflation fight.

The effective 30-year fixed rate, which includes the effects of compounding, topped 7% in the period ended Sept. 30, also the highest since 2006.

The Refinance Index decreased 18 percent from the previous week and was 86 percent lower than the same week one year ago. The seasonally adjusted Purchase Index decreased 13 percent from one week earlier. The unadjusted Purchase Index decreased 13 percent compared with the previous week and was 37 percent lower than the same week one year ago.

Here is today’s table of MBA mortgage applications and its ugly.

Meanwhile, the politicians in Washington DC are twisting the night away while the rest of the nation suffers.

Unfortunately for the US chain gang, gasoline prices are rising again as the US drains its petroleum reserve. Because, that’s the way … uh-huh … they like.

Wasting Away In Bidenville! Dow Tanks -500 Points On Friday As Fed Reaffirms Their Fight On Bidenflation

My investments are wasting away in Bidenville! Looking for my lost 401k value.

The Dow Jones Industrial Average was DOWN -500 points on Friday as The Federal Reserve continues their fight against inflation (green line).

If fact, since January 4, 2022, the Dow is down -22%.

Negative wage growth, relentless inflation, collapsing 401ks, we are wasting away in Bidenville.

Hey Joe! Where is the US economy? With Jackie Walorski??

UMich Buying Conditions For Houses Remain Depressed As Fed Tightens (Fed’s Brainard Calls For Fed To Keep Tightening!)

Bidenflation and The Fed’s counter-attack has caused considerable damage to the housing and mortgage markets.

Today, the University of Michigan consumer sentiment indices were released for September. Of note, buying conditions for houses remained in the tank.

Meanwhile, Fed Vice Chair Lael “Brainless” Brainard is calling for The Fed to NOT stop tightening money and raising interest rates.

As The Fed tightens, the entire range of Agency MBS TBA (to be announced) are under $100.

For example, the FNCL 2.5% TBA is now 84-17. And falling like a paralyzed falcon.

Here is Brainard with Fed Chair Jerome “Foul Owl” Powell, the dynamic duo of crashing markets.

The Great Bond Bubble Is ‘Poof, Gone’ In Worst Year Since 1949, MBS Bursting Too (At Least The REAL Freddie Mac Mortgage Rate Is Negative, -2.975%)

Pension funds hold large positions in US Treasuries and Agency Mortgage-backed Securities (MBS). As does America’s central bank, The Federal Reserve. All are suffering losses as The Fed fights inflation.

(Bloomberg) — Week by week, the bond-market crash just keeps getting worse and there’s no clear end in sight.

With central banks worldwide aggressively ratcheting up interest rates in the face of stubbornly high inflation, prices (created by The Fed, Biden’s Green Energy Follicies and reckless Federal spending) are tumbling as traders race to catch up. And with that has come a grim parade of superlatives on how bad it has become.

On Friday, the UK’s five-year bonds tumbled by the most since at least 1992 after the government rolled out a massive tax-cut plan that may only strengthen the Bank of England’s hand. Two-year US Treasuries are in the middle of the the longest losing streak since at least 1976, dropping for 12 straight days. Worldwide, Bank of America Corp. strategists said government bond markets are on course for the worst year since 1949, when Europe was rebuilding from the ruins of World War Two.

The escalating losses reflect how far the Federal Reserve and other central banks have shifted away from the monetary policies of the pandemic, when they held rates near zero to keep their economies going. The reversal has exerted a major drag on everything from stock prices to oil as investors brace for an economic slowdown.

And as The Fed tries to combat stubborn inflation (caused by The Fed, Biden’s Green Energy folly and reckless Federal spending), you can see the US government security liquidity is worsening.

At least inflation has produced one “positive.” REAL mortgage rates are NEGATIVE since Freddie Mac’s 30-year mortgage rate less headline inflation is currently -2.975%.

Then we have Agency MBS (example, FNCL 3% MBS) plunging like a paralyzed falcon as duration risk increases with Fed rate tightening.

Fed Funds Futures data points to tightening until May ’23, then a reversal of rate hikes.

Philly Fed Business Outlook Plunges -10% In September As Fed Tightens Rates (It’s NOT Always Sunny In Philadelphia)

It’s NOT always sunny in Philadelphia.

The Philadelphia Fed Business Outlook fell almost -10% in September as The Federal Reserve tightens monetary policy.

On a related note, the share of total net worth held by the bottom 50% in the US (red line) was always higher than the share of total net worth held by the top 1% (blue line) … until The Federal Reserve began QE in late 2008. Under Obama, the top 1% surpassed the bottom 50% in terms of share of total net worth. it equalized under Trump and before Covid. Then the massive QE (and surge in Federal spending) to battle Covid seemingly made the rich even richer and the bottom 50% even poorer. This is Biden’s America … massive Federal subsidies to the wealthy, crumbs for the bottom 50%.

Green energy anyone??

US Mortgage Applications Fall To Lowest Level Since 1997 As Fed Tightens The Monetary Noose (Purchase Apps DOWN -29% YoY, Refi Apps DOWN -83% YoY)

US mortgage applications dropped to the lowest level since 1997. I wonder if President Biden will invite boring crooner James Taylor back to the White House to sing about the collapsing mortgage market? Perhaps he can sing “Shower The People” and change the lyrics to “Shower ON The People.”

Mortgage applications decreased 1.2 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending September 9, 2022. This week’s results include an adjustment for the observance of Labor Day.

The Refinance Index decreased 4 percent from the previous week and was 83 percent lower than the same week one year ago. The seasonally adjusted Purchase Index increased 0.2 percent from one week earlier. The unadjusted Purchase Index decreased 12 percent compared with the previous week and was 29 percent lower than the same week one year ago.

The Bankrate 30-year mortgage rate is now at the highest level since 2008 at the advent of Fed’s QE.

Yes, The Fed has been slow as a sloth in shrinking its balance sheet.

NASAQ Index Plunges 4% On Fed’s Inability To Cool Inflation (Gimme Some Quantitative Tightening!)

That’s the way The Fed likes it!

On today’s inflation report for August, it is clear that The Fed has failed to cool off US inflation, meaning that MOAR QT is on the way.

The NASDAQ composite index plunged -3.85% after The Fed’s failure was released.

The Dow was down “just” -2.70% today. But things are red all over in Europe where they too are failing to tame inflation.

The Fed is probably singing “Give me some quantitative tightening!”

The likelihood of further rate increases just rose to over 4% for the December FOMC meeting.

Jay and The Statists At The Fed!

Pain is coming!

MBA Applications Sink To Lowest Since 1999 (Purchase Applications Down 23% YoY As Fed Tightens Monetary Noose)

The monetary noose tightens on the housing and mortgage markets.

Mortgage applications decreased 0.8 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending September 2, 2022. They are now the lowest since 1999.

The Refinance Index decreased 1 percent from the previous week and was 83 percent lower than the same week one year ago. The seasonally adjusted Purchase Index decreased 1 percent from one week earlier. The unadjusted Purchase Index decreased 3 percent compared with the previous week and was 23 percent lower than the same week one year ago.

At least the percentage of adjustable rate mortgages (ARMs) remained the same at 8.5%.

For the sake of the housing and mortgage market, somebody stop Powell and The Gang from tightening!

Fed’s Temporary Repo Facility Looks More Permanent As Inflation Rages (All Is NOT Well In The Economy)

The Federal Reserve’s overnight repo facility where banks park their money is seemingly becoming permanent.

As inflation has soared near the highest in 40 years, banks are increasingly parking their money at The Federal Reserve.

To quote Joe Biden, “All is well in the garden.” But apparently, not is all well in the banking industry or with the mortgage industry.