US mortgage rates are soaring, US home prices are soaring, The Fed’s balance sheet is still growing, and US average hourly earnings are growing at a fraction of home price growth.
The unafforable nature of US housing prices is similar to that of 2005-2007 when home price growth greatly exceeded wage growth.
Another side effect of soaring mortgage rates: MBA refinancing applications plunged 14.37% from the preceding week.
US existing home sales fell -7.24% from January as mortgage rates soar. On a YoY basis, existing home sales declined by -2.43%.
The median price of existing home sales “slowed” to 15% YoY in February as inventory picked-up slightly. And yes, Fed Stimulypto is still around and hasn’t helped increase inventory for sale.
As I said earlier, we are seeing the Treasury yield curve plunging towards recession.
The US Producer Price Index (PPI) final demand rose 10% YoY in February, further evidence of spiraling inflation under Biden/Pelosi/Schumer’s reign of error.
And speaking of Senate Majority Leader Chuck Schumer (D-NY), the Empire State Manufacturing Survey (General Business Conditions) crashed to -11.8.
And Russia is losing the economic demolition derby with Ukraine (at least for sovereign debt).
I am still trying to figure out what House Speaker Nancy Pelosi (D-San Francisco) meant by “When we’re having this discussion, it’s important to dispel some of those who say, well it’s the government spending. No, it isn’t. The government spending is doing the exact reverse, reducing the national debt. It is not inflationary.”
Really Nancy?
Here is a chart of Federal government outlays and inflation. Massive expenditures and growth in Federal debt and the resulting inflation. Nancy?
Well, so much for rising gasoline prices being the fault of Vlad “The Ukrainian Impaler” Putin and Russia invading Ukraine. In fact, gasoline prices were rising at a 62% YoY pace in April 2021, well before Russia’s invasion of Ukraine.
REAL gasoline prices (nominal gasoline prices less inflation) are up 32.72% YoY in February.
Press secretary Jen Psaki can take the opportunity to proclaim that REAL gasoline prices have actually declined in February.
I keep waiting for the Biden Administration and Congress to launch price controls and supply rationing rather than simply allow the Keystone Pipeline to be built and allow drilling on Federal lands.
US Speaker of the House and American Oligarch Nancy Pelosi together with Senate Majority Oligarch Charles Schumer passed yet another massive spending bill that seemingly benefited them and not the American middle class.
This legislation would provide $774.4 million for the Members Representational Allowance, known as the MRA, which funds the House office budgets for lawmakers, including staffer salaries. This $134.4 million, or 21 percent, boost over the previous fiscal year marks the largest increase in the MRA appropriation since it was authorized in 1996, according to a bill summary by the House Appropriations Committee. For paid interns in member and leadership offices, the House would get $18.2 million.
This is especially unfortunate given at inflation is growing at 7.9%. If we remove food and energy (two important categories for consumers and retirees), core inflation is growing at 6.4% YoY. As such, Social Security COLA doesn’t even keep pace with CORE inflation, let alone food and energy costs.
In August, Speaker Nancy Pelosi announced staffers’ salaries could exceed those of lawmakers. Members in both the House and Senate, with the exception of leadership, make an annual salary of $174,000. Staffers can make up to $199,300.
After an 11-year drought, congressional earmarks are back with vengeance.
The $1.5 trillion, 2,741-page omnibus spending package is loaded with funding for lawmaker pet projects, some of which could help incumbents in this fall’s elections.
The legislation includes more than 4,000 earmarks, according to a list of projects provided to The Hill by a Senate Republican aide that spanned 367 pages.
One of the biggest winners was New York — thanks to Senate Majority Leader Charles Schumer (D-N.Y.), who is up for reelection this year.
Schumer’s name is attached to 59 earmarks totaling nearly $80 million in the omnibus’s transportation and housing and urban development (HUD) section alone, according to a review by The Hill. He successfully requested funding for the projects either individually or with other lawmakers from his home state.
Is wild-spending Pelosi actually “The Bride of Chucky (Schumer)”?
US 30-year mortgage rates rose to 4.32% (Bankrate) as the 10-year Treasury yield broke through the 2% barrier. This is happening as Fed Funds Futures are pointing toward 6+ rate increases over the coming year.
Actually, Fed Funds Futures are pricing in 7 rate increases over the coming year.
At least all is quiet on the commodities front.
So, it appears that Fed Chair Jay Powell will follow-through with numerous rate hikes over the coming year.
I guess Powell is tired of being a low-rate chump instead of a high-rate champ?
The flexible cut of the CPI—a weighted basket of items that change price relatively frequently—increased 19.76 percent (annualized) in February.
If we added the U-3 unemployment rate, we get a MISERY Index under Biden of 23.56%, the highest in modern history. Worse than Carter-era inflation and malaise.
Bear in mind that the traditional use of the misery index is CPI YoY + U-3 unemployment rate, we see that Biden’s misery index is similar to the early years of Obama (following the financial crisis) but lower than the Ford/Carter years.
The mayhem caused by the Russian invasion of Ukraine is helping drive down interest rates … for the time being … and this is helping push down mortgage rates and increase mortgage applications.
Mortgage applications increased 8.5 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending March 4, 2022.
The seasonally adjusted Purchase Index increased 9 percent from one week earlier. The unadjusted Purchase Index increased 11 percent compared with the previous week and was 7 percent lower than the same week one year ago.
The Refinance Index increased 9 percent from the previous week and was 50 percent lower than the same week one year ago. Diane Olick at CNBC has the hilarious headline “Brief drop in mortgage rates sparks mini refinance boom.” The slight rise in refi applications from the previous week is more of a firecracker going off than a boom given that refi apps are still down 50% from the same week last year.
Bear in mind that the US Treasury 10-year yield is up since the MBA’s reporting week ended on March 4, 2022. So, look for Olick’s mini-refi boom to end as quickly as it started.
Here is the rest of the MBA story.
The MBA Mortgage Purchase applications index typically peaks in mid-to-late April, so we still have another month (seasonality) until purchase applications begin declining again.
The US Treasury 10Y-2Y curve continues to flatten and is the worst curve recovery in modern history.
The general rise in US mortgage rates is more closely tied to expectations of Fed rate increases than Fed Agency MBS holdings.
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