Not, Not, Not! Mortgage Purchase Applications Declined 9% YoY For Week Ending February 25, 2022 (Refi Applications Drop 56% YoY)

While Corelogic’s January home price index was hot, hot, hot (UP 19.1% YoY), today’s mortgage applications index for the week ending February 25, 2022 was not, not, not.

Mortgage applications decreased 0.71 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending February 25, 2022.

The seasonally adjusted Purchase Index decreased 1.76 percent from one week earlier. The unadjusted Purchase Index increased 1.16 percent compared with the previous week and was 9 percent lower than the same week one year ago.

The Refinance Index increased 1 percent from the previous week and was 56 percent lower than the same week one year ago.

Yes, the mortgage industry is going through some difficult times. But not as difficult as trying to understand Biden’s State of the Union address: “Putin may circle Kyiv with tanks, but he’ll never gain the hearts and souls of the Iranian people.” Huh?

And then Biden’s closing remark was “Go get ’em!” What? Go get whom? The Russians? Inflation? Trump supporters?? I feel like Biden thought the SOTU was the annual Army-Navy football game.

My State Of The Union Rebuttal: WTI Crude UP 126% Since Jan 1, Gasoline Prices UP 61% (GDP Near Zero, Inflation Still Rising)

President Biden is giving his first State of the Union address tonight with rebuttals from Iowa Governor Kim Reynolds and The Squad’s Rashida Talib (yes, a Republican is giving the rebuttal to Biden’s SOTU speech, and a Democrat is rebutting a Democrat President??)

Let’s look at a short list of Biden’s economic triumphs. I will ignore Biden’s catastrophic Afghanistan withdrawal and his weak response to the Russian invasion of Ukraine.

If you want higher oil and gasoline prices, Biden is a tremendous success.

If you like rampant government spending, then Biden is your man. Home price growth is up to 18.84%, making housing unaffordable for millions of American families.

Wages? They are up, but declining after 7.5% YoY inflation. And GDP is almost zero.

Biden can only point to rising average hourly wages, but not REAL average hourly wages.

Inflation? Highest in 40 years, due to excessive Federal spending, The Fed’s crazy printing and Biden’s energy mandates.

I am scratching my head to think of accomplishments for Biden to mention in the SOTU. But I am sure that he will say something positive. Otherwise, Biden’s SOTU speech should be the Billy Preston song “Nothing from Nothing.“

US 30-year Mortgage Rate Rises To 4.30% As 10-year Treasury Yield Plunges -8.2 BPS (Eurozone Yields Dropping Like A Rock)

As someone who needs to move to Ohio, I would really appreciate it if mortgage rates would more closely follow the 10-year Treasury yield. But alas, Bankrate’s 30-year mortgage rate just rose to 4.30% as the US Treasury 10-year yield dropped -8.2 basis points.

Europe. Middle East and Africa (EMEA) sovereign yields are all down over 10 basis points averaging around -15 bps.

Ukraine’s 10-year yield has plummeted by -48.3 bps this morning.

The anticipated meeting between Russia and Ukraine on Belarus soil was a failure. Likely due to Belarus showing-off their modern air force capabilities.

Oh Atlanta! Atlanta Fed GDPNow Q1 Forecast Drops To 0.631% With REAL Wage Growth At -2.38% (Coal Is SOARING!)

Oh Atlanta! Fed, that is.

The Atlanta Fed GDPNow Q1 real-time GDP index fell to 0.631%. And the Atlanta Fed REAL wage tracker fell to -2.38 growth.

Volatility reigns supreme on the energy front (look at NYM Dubai crude AVAT!) And coal is up 18.68% this morning.

Here is a map of gas and oil pipelines in Europe.

US Trade Balance Widens To All-time High, Rise In Imports, Drop In Exports (10Y Treasury Yield Sags To 1.884%, Russian Ruble Getting Clobbered)

The U.S. merchandise-trade deficit unexpectedly widened in January to an all-time high, reflecting a record value of imports and a drop in shipments overseas.

The shortfall grew to $107.6 billion last month from $100.5 billion in December, according to Commerce Department data released Monday.

Meanwhile, the US Treasury 10Y yield fell to 1.884%.

The cost for shipping from the US to China has surged.

Meanwhile, the Russian Ruble is getting clobbered.

At least Putin hasn’t put himself on Russian currency … yet. Or nyet.

Elmer Fed? US PCE Price Growth Hits 5.2%, Highest Since Mid-1983 (Taylor Rule Suggests Target Rate of 13.35%)

And this doesn’t include the inflation in prices caused by the Russian invasion of Ukraine. Yet.

US Personal Consumption Expenditures (PCE) price index rose by 5.2% in January, the fastest rate since mid-1983.

With CPI inflation at 7.5% YoY, the Taylor Rule suggests a Fed Funds target rate of 13.35%, higher than the current rate of 0.25%. Overstimulated much??

Let’s see if The Fed actually goes hunting inflation.

Let’s see if inflation makes The Fed dance!

Slowing! US Pending Home Sales Declined -9.07% YoY In January As Mortgage Rates Rise (UMich Buying Conditions for Houses Falls To 71)

Well, at least markets recovered yesterday (Dow up 500 points this AM) from the Russian invasion of Ukraine. But now on to other news.

US pending home sales fell -9.07% YoY as mortgage interest rates began rising.

The University of Michigan Buying Conditions for housing fell to 71 as mortgage rates increase.

Russian Stock Market Drops Over 30% As Their 10-year Yield Rises To 15.23%, Ruble Crashes And UK Natural Gas Rises 51% (As Biden Throws The Booklet At Russia)

We now know that Russia has invaded Ukraine and President Biden really threw the booklet at Putin in a speech today. Rather than removing Russia from the SWIFT banking system which would have really hurt Russia’s trade with Europe, he gave a surprisingly cogent speech about the US and NATO agreeing to do … not much. He did warn us that energy prices would rise (which he helped do when he took office) and told energy companies not to gauge consumers.

The reaction in Russia? Their stock market tanked over 30% (not because of Biden’s speech, but because of negative costs of war).

Russia’s 10-year sovereign yield rose to 15.23%.

The Russian Ruble crashed and burned.

UK natural gas prices rose 51% today.

And while 17 Euro nations have negative 2 year sovereign yields, Russia has 2-year sovereign yield of 28.65% which is nothing compared to Ukraine’s 75% 2-year yield (in US Dollars).

The SWIFT system, or Society for Worldwide Interbank Financial Telecommunication, facilitates financial transactions and money transfers for banks located around the world. The system is overseen by the National Bank of Belgium and enables transactions between more than 11,000 financial institutions in more than 200 countries around the world. Removing Russia from the SWIFT system would really hurt Russian trade with Europe. I assume that Europe is scared of soaring energy costs, so probably doesn’t want Russia removed from SWIFT.

Queue Creedence Clearwater singing “Lookin’ Out My … Limo Window.”

Rocket And United Wholesale Mortgage Equity Drop To All-time Low On Fed Tightening (Despite Ukraine, Fed Looks To Keep Tightening)

As The Federal Reserve threatens to tighten monetary policy, 30-year mortgage rates have risen to 4.25% leading two major mortgage companies, Rocket Mortgage and United Wholesale Mortgage, to decline to all-time lows.

But wait, Federal Reserve officials signaled they remain on track to raise interest rates next month despite uncertainty posed to the global economy by Russia’s invasion of Ukraine.

While acknowledging the risks created by the conflict, which has triggered one of the worst security crises in Europe since World War II and caused oil prices to surge, U.S. central bankers stressed the need to confront the hottest U.S. inflation in 40 years.

So, The Fed plans to raise rates to fight inflation, even if it tanks the housing and mortgage markets? Fed Funds Futures are still signaling 6 rate hikes over the next year.

At least US Treasury 10Y yields are down just 7.6 bps. Look at 10Y Russian and Ukraine sovereign yields. Now THAT is a yield surge!

Putinesca! European Markets Tank, Energy Prices Explode, US 10Y Treasury Yields Plunge 13.3 BPS After Russia Invades Ukraine (Russian 5Y CDS Soars To 917)

I admit, I follow market data to get a signal of what is happening to mortgage rates and I got one. With Putin and Russia invading Ukraine, markets are in turmoil

WTI Crude is up 8.14% this morning, Brent Crude is up 8.45% and NBP (UK) Natural gas is up 40%.

Europe is having a bad day equity market-wise. Eurostoxx 50 was down 4.92%. The US Dow is braced for a 2.5% opening.

Now to bonds. The 10-year Treasury yield is down 13.3 bps this morning. Sweden and UK are down 10 bps as well.

How about the new Russian front? Ukraine’s 10y yield rose 691.0 bps while Russia’s 10Y yield rose 435 bps.

Russian 5Y Credit Default Swaps (CDS) leaped to a Greek-like 917.

Well, it looks like the sanctions imposed by Winken (US VP Harris), Blinken (US Secretary of State) and Nod (US President Biden because he always looks half-asleep) apparently didn’t work as intended.

Putin finally made up his mind.