Confounded Interest – Anthony B. Sanders
Financial Markets And Real Estate
New home sales are going down.
New home sales plunged in May, the biggest MoM drop since June 2022.
The median sales price increased 3% from a year ago to $426,600 last month, marking the first year-over-year price gain in 2025.
The plunge in new home sales came as mortgage rates ticked back higher.
Another example of the carnage left behind by President Autopen (Joe Biden).
The Fed’s themesong: Keep on printing!
The GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the second quarter of 2025 is 3.5 percent on June 17, down from 3.8 percent on June 9. After recent releases from the US Census Bureau, the US Bureau of Labor Statistics, the Federal Reserve Board of Governors, and the Treasury’s Bureau of the Fiscal Service, the nowcasts of second-quarter real personal consumption expenditures growth and second-quarter real government expenditures growth decreased from 2.5 percent and 2.3 percent, respectively, to 1.9 percent and 2.1 percent, while the nowcast of second-quarter real gross private domestic investment growth increased from -1.9 percent to -1.4 percent.
GDP growth corresponds to Fed money printing.
Here is the breakdown. True, real GDP growth has been slowing over June.
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.
May Rent inflation 3.81% YoY, down from 3.98% in April, lowest since Jan 2022.
May Shelter inflation 3.86% YoY, down from 3.99% in April, lowest since Nov 2021
In general, CPI increased 0.1% MoM after rising 0.2 percent in April; Over the last 12 months, the all items index increased 2.4 percent before seasonal adjustment. The index for all items less food and energy rose 0.1% in May, following a 0.2% increase in April.
The index for shelter rose 0.3% in May and was the primary factor in the all items monthly increase. The food index increased 0.3% as both of its major components, the index for food at home and the index for food away from home also rose 0.3% in May.
In contrast, the energy index declined 1.0% in May as the gasoline index fell over the month.
Indexes that increased over the month include medical care, motor vehicle insurance, household furnishings and operations, personal care, and education.
The indexes for airline fares, used cars and trucks, new vehicles, and apparel were among the major indexes that decreased in May.
Core inflation is up 2.787% YoY, considerably lower than under Autopen Biden.
M2 Money is currently growing at 4.3%.
CC Rider! 30Y MBC Current Coupon (CC) spreads is widening.
And metals are along for the ride! Gold and silver are soaring!
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.
US 30y bond yields are heading toward their highest level since 2007.
The yield curve has finally normalized!
And significantly steeper in 2025.
Later and shallower rate cuts are being priced.
The not shocking news out of DC: The ‘Big, Beautiful Bill’ Will “Massively” Increase Near-Term Deficits, Add $5 Trillion In Debt. The surprising news? New home FHA Mortgage Share has surged!
On the not surprising news front: FHA debt-to-income ratios have surged (the surge started under Biden).
New-home loan sizes have fallen to 2021 levels.
Well, U.S. and China reached an agreement to lower tariffs in a 90-day cool-off period. Despite China claiming they would NEVER agree to tariffs! The result? The NASDAQ 100 rose to its highest level since mid-February.
So much for the MSNBC/CNN doomsayers.
The April Jobs report blew away the tariff crash hysteria. 177k jobs were added, far better than the doomsayers predicted. Even better, more jobs went to native-born workers than foreign-born workers. Even better still, Federal jobs decreased (thanks to Doge).
The US labor market under the Biden administration “grew” almost entirely on the back of “foreign-born” workers, who – as we also first revealed and eventually was widely accepted – were primarily illegal aliens. But in April, we saw a reversal with native-born workers growing and foreign-born workers declining.
And Federal workers continue to decline.
The good news? The Fed will likely not change rates at the next meeting.
I hope the good news on employment continues!
Confounded Interest - Anthony B. Sanders 
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