Confounded Interest – Anthony B. Sanders
Financial Markets And Real Estate
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.
Welcome to the Trump economic revolution!
As of June 9, 2025, the Atlanta Fed’s GDPNow estimates that real GDP growth was 3.8%. So much for Trump’s tariff “war” destroying the economy.
Latest estimate: 3.8 percent — June 09, 2025
The GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the second quarter of 2025 is 3.8 percent on June 9, unchanged from June 5 after rounding. After recent releases from the US Census Bureau and the US Bureau of Labor Statistics, a decrease in the nowcast of second-quarter real personal consumption expenditures growth from 2.6 percent to 2.5 percent was partly offset by an increase in the nowcast of real gross private domestic investment growth from -2.2 percent to -1.9 percent.
Biden relied on government hiring and Fed’s money printing to drive the US economy. And then the gas ran out.
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%.
I’ll feel a whole lot better when CMBS office serious delinquenies get below 10%. But serious delinquencies on office space is currently at 10.59%.
The US Treasury yield curve is steepening.
Office delinquencies are likely to rise in Los Angeles as Governor Newsom sits on his greasy hands as LA burns.
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.
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 Fed can help, but won’t. We are still struggling to recover from Biden’s cockeyed management of the economy,
Mortgage applications increased 11.0 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending May 2, 2025.
The Market Composite Index, a measure of mortgage loan application volume, increased 11.0 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 12 percent compared with the previous week. The seasonally adjusted Purchase Index increased 11 percent from one week earlier. The unadjusted Purchase Index increased 12 percent compared with the previous week and was 13 percent higher than the same week one year ago.
The Refinance Index increased 11 percent from the previous week and was 51 percent higher than the same week one year ago.
The economic news last week included a negative reading for first-quarter GDP growth and further signs of contraction in the manufacturing sector, mixed with a solid employment report for April. The net impact on mortgage rates was mostly downward but just back to levels from early April. The 30-year fixed rate declined to 6.84 percent.
But there will be no rate cuts today from The Fed.
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.
Confounded Interest - Anthony B. Sanders 
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