Washington DC is loaded with good ol’ boys. Willing to cut deals with anyone for a slice of financial pie. Like “10% For The Big Guy” Joe Biden.
Money flowing into Treasury funds hit its highest since 2017, by far.
And with the massive expansion of The Fed’s balance sheet with a) the financial crisis and b) Covid crisis, The Fed still has a staggering amount of bonds on its balance sheet, making it vulnerable to interest rate increases.
Like what has happened in 2023 and 2024 under Biden. A fine mess!
Sail away. We are all prisoners of the theft by DC politicians.
Fed Chair Jerome Powell is apparently waiting for the tariff “war” to settle down before he pushes for interest rate cuts. Meanwhile, rising mortgage rates are hurting consumers and the mortgage industry.
Mortgage applications decreased 12.7 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending April 18, 2025.
The Market Composite Index, a measure of mortgage loan application volume, decreased 12.7 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 11 percent compared with the previous week. The seasonally adjusted Purchase Index decreased 7 percent from one week earlier. The unadjusted Purchase Index decreased 6 percent compared with the previous week and was 6 percent higher than the same week one year ago.
The Refinance Index decreased 20 percent from the previous week and was 43 percent higher than the same week one year ago.
Overall mortgage application activity declined last week, as rates increased to their highest level in two months. The 30-year fixed rate rose for the second straight week to 6.9 percent, an almost 30-basis-point increase over two weeks.
Despite the slump in ‘soft’ survey data, analysts expected Empire Fed Manufacturing to bounce back from March’s tumble to one year lows and they were right with the headline index rising from -20.0 to -8.1 (considerably better than the -13.5), but still negative. However, while current conditions jumped, expectations plunged to the lowest since 9/11/.
Obama/Biden/Harris/Schumer/Pelosi have let the US be the punks for China. Trump is simply trying to level the playing field and China’s Xie doesn’t like the new equilibrium.
VIX Index fell by 18.7 points yesterday … largest one-day decline in history.
The correlation between stock prices and bond yields has returned to positive territory — hinting at a period of distress in equities and a regime shift in equity and bond markets where recession fears, rather than inflation, may be starting to drive direction of both. The correlation between the two asset classes was positive for the better part of 20 years prior to the pandemic, suggesting equities trended in the direction of yields as inflation mostly coincided with growth. Stocks held a negative correlation to yields throughout most of the 1980s and 1990s, when inflation hurt stocks — and that phenomenon returned for the 2022-24 bear market and recovery period.
Notably, major stock corrections occurred each time the correlation jumped out of its primary regime.
Thunderstruck! The tariff kerfuffle between the Trump Administration and China is causing turbulence in the Treasury market. The 10-year Treasury rate is soaring with China’s counterpunching.
MBS spreads are widening.
Along with volatility.
But corporate spreads are widening more than MBS spreads.
The 10Y-2Y yield curve has risen to the highest level since the early days of “China Joe” Biden.
On a related note, Freddie Mac serious delinquency rates on mortgages is now the highest since the financial crisis.
Soothe me? As we move further away from Sleepy Joe’s horrid economic policies, we should see an improvement in GDP from the current Atlanta Fed GDP Now Q1 Forecast of -2.8%.
The alternative model forecast, which adjusts for imports and exports of gold as described here, is -0.5 percent. After recent releases from the US Census Bureau and the US Bureau of Economic Analysis, the nowcast of the contribution of net exports to first-quarter real GDP growth declined from -3.95 percentage points to -4.79 percentage points in the standard model and from -1.92 percentage points to -2.53 percentage points in the alternative model.
The US Treasury 10Y yield has fallen to 4.157% as recession fears mount.
Freddie Mac Serious Delinquency Rate on Multifamily (Apartment) loans soared to highest rate since 2000. Since it is as of January 31, 2025, you can’t blame this on Donald Trump (although I am sure they will try).
Of course, home prices and rents soared under Biden. Home prices rose 37% under Biden and rents rose 25%. Simply unaffordable.
The Imperial March from Star Wars should have been the theme for Bidenomics, the top-down government-directed economy (mainly to political donors). It will take a while for the economy to recover from its addiction to Federal government spending.
Speaking of The Empire, the New York Fed’s Empire State business activity survey declined to -19.30. Would Jerome Powell and The Fed have cut rates had they known about the Empire activity survey yesterday?
Confounded Interest - Anthony B. Sanders 
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