Confounded Interest – Anthony B. Sanders
Financial Markets And Real Estate
The Fed will have to whip it good with rate cuts if the recession warnings are an indicator of what lies ahead for the US economy.
The ratio of The Conference Board’s Leading Economic Indicators (LEI) vs. The Conference Board’s Coincident Economic Index (CEI) ratio hasn’t been this low since 2008.
Fed Funds Futures are signalling rate cuts at the September 17th FOMC meeting and December 10th meetings.
On the crypto front, Ethereum is soaring.
Debt stress is mounting!
Tavi Costa at Crescat Capital (founded by my former MBA student at University of Chicago Kevin Smith) produced this excellent chart of silver prices showing the cup and handle of silver prices.
The rise in silver prices corresponds with a deterioration of the US bond market. Look at Treasury futures courtesy of Bravos Research.
Of course, Washington DC’s insane spending has led to insane money printing by The Feral Reserve.
Everyone in Washington DC deserves a “Silver Cup of Failure” for uncontrolled government waste and spending and mismanagement by The Feral Reserve.
The US Treasury yield curve is flattening at the short-end (2-3 years) but remains unchanged at the long end (>= 20 years).
And pending US Home Sales remain low.
It will take a while to recover from Biden’s horrid economic follicies.
Its like Joe Biden and his bonehead advisors are still gumming up the housing market. Pending home sales in April remains in the house latitudes.
NAHB home builder confidence remains below 50 at 34.
Is the music over for the housing market? High housing prices, high mortgage rates, restrictive zoning all hinder markets.
Doge is necessary to get close to closing the budget gap (tax receipts – spending). Biden left Trump and the US with an untenable fiscal situation (think Cloward/Piven). Extremely large debt load with debt maturing over the next couple of years. Thanks to former Treasury Secretary Janet “The Snake” Yellen government funding formula using ST government debt. And its time to pay the piper to pay for Biden’s overspending and Yellen’s Treasury mismanagement.
Most of the Treasury debt that Treasury Secretary Bessent must refinance is short-term.
And with interest rates higher under Trump/Bessent than Biden/Yellen, US Interest Payments on Public Debt is expected to keep rising.
And US trade balance fell to -140.5.
So, were Biden’s economic policies (and Yellen’s Treasury mismanagement) an intentional Cloward-Piven strategy?
Here are Columbia sociologists Cloward and Piven attending a bill signing by President Bill Clinton.
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!
Mortgage applications decreased 4.2 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending April 25, 2025.
The Market Composite Index, a measure of mortgage loan application volume, decreased 4.2 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 4 percent compared with the previous week. The seasonally adjusted Purchase Index decreased 4 percent from one week earlier. The unadjusted Purchase Index decreased 3 percent compared with the previous week and was 3 percent higher than the same week one year ago.
The Refinance Index decreased 4 percent from the previous week and was 42 percent higher than the same week one year ago.
The Agency MBS market shrank in April.
And MBS daily returns have the highest return volatility.
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.
The 10Y-2Y Treasury yield curve is steepening.
Fed Chair Jerome Powell. Nyuk, Nyuk, Nyuk!
The good news? The US Treasury 10Y-2Y yield curve is normalizing to January 2022 levels.
One the mortgage side, adjustable rate mortgage (ARM) share is the highest since the financial crisis (2008).
As Trump continues to stand up for Americans and China (and Democrats) continues to fight, the S&P 500 index lags MSCI World index by most since 1993 (The Clintons).
One can only hope!
Confounded Interest - Anthony B. Sanders 
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