Confounded Interest – Anthony B. Sanders
Financial Markets And Real Estate
It’s Friday and the US Treasury yield curve is rising/steepening at the 10-year tenor.
As of yesterday, the 30-year mortgage rate fell to 6.17%
Thanks in part to Funky Cold Jerome!
Fed Chair Jerome Powell is the God of Hellfire! We should always wait a day to digest Fed’s annoucements since they often make little sense. For example, yesterday the 10Y yield fell below 4% after The Fed’s announcement … then promplty rose above 4% again. And today, the US Treasury 10Y yield rose to 4.1276%
The 30Y US mortgage rate fell to 6.493%.
How about the US Dollar? Similar to the US 10Y yield, volatility reigned following Powell’s muddled message.
Powell rarely is straightforward and never puts cash on the barrelhead.
Well, The Fed cut their target rate by 25 basis points.
Following The Fed’s 25 bp cuts, the 10Y yield fell below 4% to 3.9879%.
The Fed Dots??
We shall see tomorrow if mortgage rates fall.
Of course, as soon as I posted this, US Treasury 10Y yields surged. This often happens with The Fed’s incompetent messaging.
Zowie!
Mortgage applications increased 29.7 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending September 12, 2025. Last week’s results included an adjustment for the Labor Day holiday.
The Market Composite Index, a measure of mortgage loan application volume, increased 29.7 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 43 percent compared with the previous week. The seasonally adjusted Purchase Index increased 3 percent from one week earlier. The unadjusted Purchase Index increased 12 percent compared with the previous week and was 20 percent higher than the same week one year ago.
The Refinance Index increased 58 percent from the previous week and was 70 percent higher than the same week one year ago.
Indicative of the weakening job market, and in anticipation of a rate cut from the Federal Reserve, mortgage rates last week dropped to their lowest level since last October, with the 30-year fixed rate declining to 6.39 percent. Homeowners responded swiftly, with refinance application volume jumping almost 60 percent compared to the prior week. Homeowners with larger loans jumped first, as the average loan size on refinances reached its highest level in the 35-year history of our survey. Almost 60 percent of applications were for refinances, but there was also a pickup in purchase applications.
The Biden/Powell “reign of error” is ending.
It will take a while to recover from Biden’s “Reign of Error.” According the US Census Bureau, housing starts are 6.0 percent below the August 2024 rate.
Housing starts:
Housing permits?
Let’s see if Powell and The Gang drop rates 25 or 50 basis points at today’s FOMC meeting.
Between The Fed’s persistent policy errors and Biden’s centralized mismanagement of the economy, Biden’s Maladministration is the epitome of a “Reign of Error.”
Under The Federal Reserve, the purchasing power of the US Dollar has declined -97% since the establishment of The Federal Reserve in 1913. It is the House of the Dying Dollar.
Under The Federal Reserve, the purchasing power of the US Dollar has declined -97% since the establishment of The Federal Reserve in 1913.
Of course, Trump II is only 9 months old and Biden had 4 long years to destroy the dollar.
US housing is simply unaffordable!
Mortgage rates remain elevated since the Biden Administration took control in 2021. Although under Trump, the rise in the 30-year mortgage rate has slowed. But the 30-year mortgage rate is up 126% since the beginning of 2021 and the “Joe The Boss” Biden administration.
Mortgage originations at large banks declined a whopping 74% under “Joe The Boss” Biden.
Between mortgage rates rising by 126% and house prices rising by 41.5% under “Joe The Boss” Biden.
US housing is simply unaffordable.
Guiseppe “Joe The Boss” Biden.
Actually, this is a photo of Guiseppe “Joe The Boss” Masseria. A New York crime boss assassinated by Lucky Luciano in 1931.
According to the Bureau of Labor Statistics (BLS), headline inflation rose 0.4% MoM and 2.9% YoY in August.
Shelter (housing) is up 3.6% YoY. Gimme (expensive) shelter!
Of course, Federal government spending is the source of inflation. Notice the lag between Covid spending and resulting inflation.
So much for Trump Tariffs causing runaway inflation.
Prayers for Charlie Kirk and his family. I hope they catch the sick SOB that assassinated Charlie.
The car market bubble is bursting! Subprime auto loan delinquency rates have now surpassed 5% for the first time in history. The 60-day delinquency rate for subprime auto loans has more than DOUBLED over the last 3 years. Delinquency rates are now ~1.5 percentage points above the 2008 Financial Crisis peak. At the same time, prime auto loan delinquencies rose to their highest in 15 years. Meanwhile, the total value of auto loans in the US jumped $13 billion, to a record $1.66 trillion in Q2 2025. An auto debt crisis is brewing.
The office CMBS delinquency rate is at an all-time high.
Not exactly the Guns Of August. More like a wet cap gun firing.
The jobs report for August showed only 22k jobs added.
U-3 unemployment rate rose to 4.3%. U-6 unemployment and part-time rose to 8.1%.
Total private jobs added was 38k while manufacturing jobs added was down -12k.
Government jobs dropped -16k.
It gets worse! All of the jobs added were PART-TIME!
It gets even worse: native-born workers plunged by 561K, the biggest one month drop since August 2024. Foreign-born workers increased by 50K, the first increase since March.
Let’s see if The Fed drops the hammer on rates by 50 basis points.
Confounded Interest - Anthony B. Sanders 
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