Hallelujah, I love this economy so! Of course, former First Lady Jill Biden is on the national tour trashing the economy saying it was “perfect” under Joe Biden.
The Market Composite Index, a measure of mortgage loan application volume, increased 4.8 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 49 percent compared with the previous week. The seasonally adjusted Purchase Index decreased 2 percent from one week earlier. The unadjusted Purchase Index increased 32 percent compared with the previous week and was 19 percent higher than the same week one year ago.
The Refinance Index increased 14 percent from the previous week and was 88 percent higher than the same week one year ago.
Compared to the prior week’s data, which included an adjustment for the Thanksgiving holiday, mortgage application activity increased last week, driven by an uptick in refinance applications,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist. “Conventional refinance applications were up almost 8 percent and government refinances were up 24 percent as the FHA rate dipped to its lowest level since September 2024. Conventional purchase applications were down for the week, but there was a 5 percent increase in FHA purchase applications as prospective homebuyers continue to seek lower downpayment loans. Overall purchase applications continued to run ahead of 2024’s pace as broader housing inventory and affordability conditions improve gradually.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($806,500 or less) increased to 6.33 percent from 6.32 percent, with points increasing to 0.60 from 0.58 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans.
Having dipped lower in the previous month (following a few straight months of re-acceleration), expectations were for both headline and core measures to continue trending lower on a YoY basis… and they were.
Headline CPI FELL 0.1% MoM (vs +0.1% exp), which dragged the YoY CPI to +2.4%, matching the September lows…
Source: Bloomberg
That is the weakest MoM print since May 2020.
Core CPI also printed cooler than expected (+0.1% MoM vs +0.3% MoM exp), pulling the YoY print down t0 +2.8% YoY – the lowest since March 2021…
Source: Bloomberg
Services inflation tumbled…
Source: Bloomberg
CPI breakdown:
Headline:
CPI decreased 0.1% after rising 0.2% in February, and below the +0.1% estimate. Over the last 12 months, CPI rose 2.4%, below the 2.5% estimate.
Energy CPI fell 2.4% in March, as a 6.3% decline in the index for gasoline more than offset increases in the indexes for electricity and natural gas.
Food CPI rose 0.4% in March as the food at home index increased 0.5% and the food away from home index rose 0.4 percent over the month.
Core CPI:
The index for all items less food and energy rose 0.1% in March, following a 0.2% increase in February.
Indexes that increased over the month include personal care, medical care, education, apparel, and new vehicles.
The indexes for airline fares, motor vehicle insurance, used cars and trucks, and recreation were among the major indexes that decreased in March.
Core CPI details (MoM increase):
The shelter index increased 0.2% over the month.
The index for owners’ equivalent rent rose 0.% in March and the index for rent increased 0.3%.
The lodging away from home index fell 3.5 percent in March.
The personal care index rose 1.0%in March.
The index for education rose 0.4% over the month, as did the index for apparel.
The new vehicles index also increased over the month, rising 0.1%.
The index for airline fares fell 5.3% in March, after declining 4.0% in February.
The indexes for motor vehicle insurance, used cars and trucks, and recreation also fell over the month.
The household furnishings and operations index was unchanged in March.
The medical care index increased 0.2% over the month.
The index for hospital services increased 1.1% in March and the index for physicians’ services rose 0.3% over the month. In contrast, the prescription drugs index fell 2.0% in March.
Core CPI details (YoY increase):
The index for all items less food and energy rose 2.8 percent over the past 12 months.
The shelter index increased 4.0 percent over the last year, the smallest 12-month increase since November 2021.
Other indexes with notable increases over the last year include motor vehicle insurance (+7.5 percent), medical care (+2.6 percent), recreation (+1.9 percent), and education (+3.9 percent).
While goods inflation is flat (zero-ish), services cost inflation is fading fast…
Source: Bloomberg
Shelter and Rent inflation is slowing fast:
Shelter inflation +0.3% MoM, +3.99% YoY, down from 4.25% in February (lowest since Nov 2021)
Rent inflation +0.3% MoM, +3.99% YoY, down from 4.09% in February (lowest since Jan 2022)
The so-called SuperCore CPI – Services Ex-Shelter – dropped 0.1% MoM dragging it down to +3.22% YoY – the lowest since Dec 2021…
Source: Bloomberg
Source: Bloomberg
Drill Baby Drill (and tariffs recession fears) have dragged energy prices lower and pulled CPI lower with it…
Mortgage applications increased 2.3 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending February 7, 2025.
The Market Composite Index, a measure of mortgage loan application volume, increased 2.3 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 6 percent compared with the previous week. The unadjusted Purchase Index increased 4 percent compared with the previous week and was2 percent higher than the same week one year ago. The seasonally adjusted Purchase Index decreased 2 percent from one week earlier.
The Refinance Index increased 10 percent from the previous week and was 33 percent higher than the same week one year ago.
Prepays are down significantly since 2021 which marks the beginning of The Fed starting to raise rates.
Aggregate prepayments for agency mortgage-backed securities (MBS) fell 12% in January, with housing seasonals declining and mortgage rates lingering near 7%. MBS turnover speeds have bounced back considerably relative to 2023 lows, though high rates may be starting to take a toll. Even at current elevated rates, GNMA streamline refinancings are picking up as loans issued in spring of 2024 pass out of the refi lockout period.
One reason that US home prices remain high (and unaffordable for many) is The Federal Reserve (aka, The Green Slime). Former Fed Chair (and Biden’s Treasury Secretary is no Luciana Paluzzi, the Italian beauty from the James Bond film Thunderball. Yellen is just a far-left economic hack.
Look at the Case-Shiller national home price index compared with The Fed funds target rate.
The S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index, covering all nine U.S. census divisions, reported a 3.8% annual return for November, up from a 3.6% annual gain in the previous month. The 10-City Composite saw an annual increase of 4.9%, recording the same annual increase in the previous month. The 20-City Composite posted a year-over-year increase of 4.3%, up from a 4.2% increase in the previous month. New York again reported the highest annual gain among the 20 cities with a 7.3% increase in November, followed by Chicago and Washington with annual increases of 6.2% and 5.9%, respectively. Tampa posted the lowest return, falling 0.4%.
The pre-seasonally adjusted U.S. National, 20-City, and 10-City Composite Indices’ upward trends continued to reverse in November, with a -0.1% drop for the national index, while the 20-City Composite saw a -0.1% decline and the 10-City Composite was unchanged.
While the Fed Funds target rate gyrates, The Fed’s balance sheet remains high.
As The Pretenders sang, “My City Was Gone.” That song was about Akron, Ohio. But it applies to the US Mortgage Market under Biden/Harris. The question is whether Trump’s deregulation plans can return to its former glory.
Mortgage applications increased 0.1 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending January 17, 2025.
The Market Composite Index, a measure of mortgage loan application volume, increased 0.1 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 3 percent compared with the previous week. The seasonally adjusted Purchase Index increased 1 percent from one week earlier. The unadjusted Purchase Index increased 7 percent compared with the previous week and was 2 percent higher than the same week one year ago.
The Refinance Index decreased 3 percent from the previous week and was 42 percent higher than the same week one year ago.
The Pretenders’ lead singer Chrissie Hynde likely would have made a better Federal Reserve Chair and Treasury Secretary than Janet Yellen.
This is the worst start to a fiscal year EVER: – Spending is up 10.9% – Receipts are down 2.2% – FYTD deficit up 39.4% at $711 billion They’re handing Trump a ticking time bomb!
Speaking of Biden handing a ticking time bomb (according to Zero Hedge), after rising for 5 straight months, analysts expected headline consumer prices to continue accelerating in December (+0.4% MoM exp) and it did exactly that – the highest MoM print since March, leading the YoY CPI to rise 2.9% (the highest since July)…
Source: Bloomberg
CPI details:
Food
The index for food increased 0.3% in December, after rising 0.4% in November. The food at home index also rose 0.3% over the month. Four of the six major grocery store food group indexes increased in December. The index for cereals and bakery products rose 1.2% over the month, after falling 1.1% in November. The meats, poultry, fish, and eggs index increased 0.6 percent in December, as the eggs index rose 3.2 percent. The index for other food at home rose 0.3 percent over the month and the index for dairy and related products increased 0.2 percent.
Energy
The energy index increased 2.6% in December, after rising 0.2% in November. The gasoline index increased 4.4% over the month. (Before seasonal adjustment, gasoline prices decreased 1.1 percent in December.) The natural gas index rose 2.4 percent over the month and the index for electricity rose 0.3 percent in December. The energy index decreased 0.5 percent over the past 12 months. The gasoline index fell 3.4% over this 12-month span and the fuel oil index fell 13.1 percent over that period. In contrast, the index for electricity increased 2.8 percent over the last 12 months and the index for natural gas rose 4.9 percent.
All items less food and energy
The index for all items less food and energy rose 0.2 percent in December, after rising 0.3 percent in each of the 4 preceding months.
The shelter index increased 0.3 percent in December, as it did in November.
The index for owners’ equivalent rent also rose 0.3 percent over the month, as did the index for rent.
The lodging away from home index fell 1.0 percent in December, after rising 3.2 percent in November.
The medical care index increased 0.1 percent over the month, after rising 0.3 percent in October and November.
The index for physicians’ services increased 0.1 percent in December and the index for hospital services rose 0.2 percent over the month.
The airline fares index rose 3.9 percent in December, after rising 0.4 percent in the previous month.
The index for used cars and trucks rose 1.2 percent over the month and the index for new vehicles increased 0.5 percent.
Other indexes that increased in December include motor vehicle insurance, recreation, apparel, and education.
In contrast, the index for personal care fell 0.2 percent in December after rising 0.4 percent in November. The indexes for communication and alcoholic beverages also declined over the month. The household furnishings and operations index was unchanged in December
The resurgence of energy costs drove the hot headline CPI along with Core Services…
Source: Bloomberg
Core CPI (ex Food and Energy) dipped to +0.2% MoM (below the 0.3% exp) and the YoY pace of inflation slowed to 3.24% YoY. Core CPI rose EVERY month under Biden…
Source: Bloomberg
Core Goods price inflation slowed MoM (but deflation is gone on a YoY basis)…
Source: Bloomberg
The Fed’s favorite indicator of the CPI bunch – SuperCore or Services CPI ex-Shelter – rose 0.28% MoM (slowing the pace of annual inflation to +4.17%)…
Source: Bloomberg
Transportation Services were not MoM…
Source: Bloomberg
Overall, it’s energy costs that are re-emerging as a drive of inflation… thanks Joe!
Source: Bloomberg
…and Energy prices aren’t going down anytime soon in the CPI world… thanks Joe!
Source: Bloomberg
While Producer Prices under Biden rose at triple the rate they did under Trump, Consumer Prices soared 21.25% under Biden (+4.9% p.a.) vs 8%, 1.94% p.a. under Trump…
Source: Bloomberg
Finally, equity traders were braced for a volatile day ahead of the print, with options implying moves of 1.1% in either direction for the S&P 500, the most for a CPI day since March 2023.
Mortgage applications decreased 21.9 percent from two weeks earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending December 27, 2024. The results include an adjustment to account for the Christmas holiday.
The Market Composite Index, a measure of mortgage loan application volume, decreased 21.9 percent on a seasonally adjusted basis from two weeks earlier. On an unadjusted basis, the Index decreased 55 percent compared with two weeks ago. The seasonally adjusted Purchase Index decreased 13 percent compared with two weeks ago. The unadjusted Purchase Index decreased 48 percent compared with two weeks ago and was 17 percent lower than the same week one year ago.
The holiday adjusted Refinance Index decreased 36 percent from two weeks ago and was 10 percent higher than the same week one year ago. The unadjusted Refinance Index decreased 62 percent from two weeks ago and was 6 percent lower than the same week one year ago.
The fact that economic conditions are getting worse is certainly not good news, but it is better to know in advance what is coming. After four years under Joe Biden, the U.S. economy is a giant mess. We have been witnessing a slow-motion collapse right in front of our eyes, and those at the bottom levels of the economic food chain have been experiencing more pain than anyone else. Of course this is one of the biggest reasons why Donald Trump won the election.
Example? Sticky inflation remains far higher under Biden/Harris than it did when Trump was President. Prices remain elevated as you will notice when Christmas shopping!
#1 When the economy is in good shape, holiday spending increases each year. In 2024, only 16 percent of Americans say that they are going to spend more than last year and 35 percent of Americans say that they are going to spend less…
Americans this holiday season say they are seeing a ghost of Christmas past: inflation.
The CNBC All-America Economic Survey finds inflation is still haunting the buying public, leading to what’s shaping up to be just an average season for retailers. Just 16% of respondents say they will spend more, down two points compared to last year. Forty-eight percent said that they’ll lay out the same amount for holiday gifts, up five points. At the same time, 35% say they’ll spend less, down two points as well.
#2 The number of job openings in the U.S. is now the lowest it has been since January 2021, but unlike January 2021 we don’t have a pandemic to blame our poor performance on…
US job openings tumbled last month to their lowest level since January 2021, a sign that the labor market is losing some momentum. Still, posted vacancies remain well above pre-pandemic levels.
The Labor Department reported Tuesday that the number of job openings dropped to 7.4 million in September from 7.9 million in August.
Economists had expected the level of openings to be virtually unchanged. Job openings fell in particular at healthcare companies and at government agencies at the federal, state and local levels.
#3 The manufacturing numbers that we are getting are extremely dismal. For example, the Philadelphia Federal Reserve Manufacturing Index just experienced an extremely sharp decline…
The Philadelphia Federal Reserve Manufacturing Index, a critical gauge of the general business conditions in Philadelphia, has reported a significant drop. The actual figure stands at -16.4, a sharp decline that suggests worsening conditions for manufacturers in the region.
This figure starkly contrasts with the forecasted number of 2.9, highlighting a more severe downturn than initially predicted. Analysts had anticipated a positive shift, indicating improving conditions, but the actual data presents a different, more concerning situation.
Moreover, when compared to the previous index value of -5.5, the current reading of -16.4 further emphasizes the severity of the decline. This continuous drop indicates a concerning trend for manufacturers within the Philadelphia Federal Reserve district.
#4 Thanks to rapidly rising mortgage rates, the average U.S. homebuyer just lost $33,250 in purchasing power in just six weeks…
Mortgage rates hit 7% on October 28, the highest level since the start of summer and up nearly one percentage point from the 18-month low they dropped to in mid-September.
A homebuyer on a $3,000 monthly budget can afford a $442,500 home with a 7% mortgage rate, the daily average 30-year fixed rate on October 28. That buyer has lost $33,250 in purchasing power over the last six weeks; they could have purchased a $475,750 home with the 6.11% average rate on September 17. That was the lowest level since February 2023.
#5 Our cost of living crisis is officially out of control. According to Bank of America, almost a third of all households “spend more than 95% of their disposable income on necessities such as housing costs, groceries and utility bills”…
Many Americans are still in a tough spot: Nearly 30% of all US households this year said they spend more than 95% of their disposable income on necessities such as housing costs, groceries and utility bills, according to a Bank of America Institute report, up from 2019 levels.
#6 A recent Lending Tree survey discovered that nearly a quarter of all households couldn’t pay their entire power bill at some point within the past year…
LendingTree’s findings about electricity bill costs comes as it reported 23.4% of Americans experienced an inability to cover their entire energy bill or portions of it in the last year, based on Census Bureau Household Pulse Survey data.
#7 The same Lending Tree survey found that about a third of all households had to reduce spending “on necessary things” within the past year in order to pay utility costs…
Needing to cover utility bills prompted 34.3% of Americans to curb their spending on necessary things – or eliminate some altogether – in at least one instance in the prior year, LendingTree said.
#8 As I discussed last week, demand is at record levels at food banks all over the nation…
Why is demand at food banks all over the country higher than it has ever been before? The media keeps insisting that economic conditions are just fine, but it has become quite obvious to everyone that this is not true. In particular, the rising cost of living has been absolutely crushing households from coast to coast. In the old days, most of the people that would show up at food banks were unemployed. But now food banks are serving large numbers of people that actually do have jobs but that don’t make enough to pay for all of the basics. The ranks of the “working poor” are growing very rapidly, and this is creating an unprecedented crisis all over America.
#9 During normal times, troubled retailers would at least wait until after the holiday season to throw in the towel. But we haven’t even reached Christmas and Party City has already announced that it will be closing all stores…
Party City is closing down all of its stores, ending nearly 40 years in business, CNN has learned.
CEO Barry Litwin told corporate employees Friday in a meeting viewed by CNN that Party City is “winding down” operations immediately and that today will be their last day of employment. Staff were told they will not receive severance pay, and they were told their benefits would end as the company goes out of business.
Big Lots is beginning ‘going out of business’ sales at all its stores across the US, as it prepares to close its remaining locations.
The discount retail chain filed for Chapter 11 bankruptcy in September, and has already shut hundreds of stores nationwide.
In a press release Thursday, the company said it would begin the sales at its 963 remaining locations, after a sale to a private equity firm fell through.
#11 As of the end of November, more than 7,000 store closings had been announced in the United States. That is a 69 percent increase from last year…
According to a report from CoreSight Research, U.S. retailers had announced more than 7,100 store closures through the end of November 2024, which represents a 69% increase compared to the same time in 2023. These closures are spread across numerous different sectors of retail from auto parts to restaurants to pharmacies, leaving many consumers wondering which companies will survive. This brings us to GameStop, the beloved retail gaming store, which has not only been closing hundreds of retail store locations since 2020, but also appears to be on track to close hundreds more of its locations in the very near future.
Look at all of these beautiful Christmas decorations at the Crocker Galleria mall in San Francisco. It’s 4:47 PM and everybody should be shopping and buying Christmas presents for their family, but nobody is in this mall.
There are only three stores left that are open here. The escalators hum on inside this beautiful but empty decorated mall.
Outside on Market Street the fentanyl addicts lay folded over while a street performer sings Last Christmas to an empty Street.
Of course the lack of shoppers at that particular mall is just the tip of the iceberg.
California’s biggest downtown areas are crumbling under the weight of homelessness and drug addiction, causing a vital part of its economy to dry out.
Cities like Los Angeles and San Francisco have made countless headlines since the pandemic about their drug-infested streets where businesses are quickly pulling out due to high crime rates and low consumer passage.
The number of drug addicts in America is at the highest level ever.
The number of homeless people in America is at the highest level ever.
They are victims of our slow-motion economic collapse, and the holidays will not be very happy for them.
So if you still have food on the table and a warm home to sleep in, you should consider yourself to be incredibly blessed.
Sadly, more Americans are being forced out into the streets with each passing day as the slow-motion collapse of our economy accelerates.
Housing Starts: Privately-owned housing starts in November were at a seasonally adjusted annual rate of 1,289,000. This is 1.8 percent below the revised October estimate of 1,312,000 and is 14.6 percent below the November 2023 rate of 1,510,000. Single-family housing starts in November were at a rate of 1,011,000; this is 6.4 percent above the revised October figure of 950,000. The November rate for units in buildings with five units or more was 264,000.
And down -10.2% year-over-year.
Building Permits: Privately-owned housing units authorized by building permits in November were at a seasonally adjusted annual rate of 1,505,000. This is 6.1 percent above the revised October rate of 1,419,000, but is 0.2 percent below the November 2023 rate of 1,508,000. Single-family authorizations in November were at a rate of 972,000; this is 0.1 percent above the revised October figure of 971,000. Authorizations of units in buildings with five units or more were at a rate of 481,000 in November.
As we watch Biden and Democrats attempt to demolish the country as Biden leaves office. Let’s see how many criminals Biden will pardon on the way out … like the Jan 6th “select” committee of Adam Schiff, Adam Kinzinger, Liz Cheney, Bennie Thompson, etc.
After yesterday’s in line – but really cooler than whispered – CPI which restored hope in a December rate cut, all eyes are on this morning’s PPI print to boost dovish hopes that the Fed’s easing cycle would remain on track. It was not meant to be, however, as the PPI came in hotter than expected across the board on both a monthly and annual basis.
Starting at the top, headline PPI rose 0.2% MoM (in line with the +0.2% expected) but September was revised higher from 0.0% to 0.1%; meanwhile on an annual basis, headline PPI rose 2.4%, higher than the 2.3% expected, with the last month also revised higher from 1.8% to 1.9%.
Unlike last month when a drop in energy prices weighed heavily on the headline PPI number, this month energy subtracted just 0.02% from the final print, the lowest detraction since July. Meanwhile, Services added a hefty 0.179% to the bottom line number.
Indeed, according to the BLS, most of the rise in final demand prices can be traced to a 0.% advance in the index for final demand services. Prices for final demand goods inched up 0.1%, the first increase in the index since July.
Taking a closer look at the components:
Final demand services: The index for final demand services increased 0.3 percent in October after rising 0.2 percent in September. Over three-fourths of the broad-based advance in October is attributable to prices for final demand services less trade, transportation, and warehousing, which moved up 0.3 percent. The indexes for final demand transportation and warehousing services and for final demand trade services also increased, 0.5 percent and 0.1 percent, respectively. (Trade indexes measure changes in margins received by wholesalers and retailers.)
Product detail:
Over one-third of the rise in the index for final demand services can be traced to prices for portfolio management, which advanced 3.6 percent. The indexes for machinery and vehicle wholesaling; airline passenger services; computer hardware, software, and supplies retailing; outpatient care (partial); and cable and satellite subscriber services also moved higher.
In contrast, margins for apparel, footwear, and accessories retailing fell 3.7 percent. Prices for securities brokerage, dealing, investment advice, and related services and for truck transportation of freight also declined.
Final demand goods: The index for final demand goods inched up 0.1 percent in October following two consecutive decreases. The advance can be traced to a 0.3-percent rise in prices for final demand goods less foods and energy. Conversely, the indexes for final demand energy and for final demand foods declined 0.3 percent and 0.2 percent, respectively.
Product detail:
An 8.4-percent increase in the index for carbon steel scrap was a major factor in the advance in prices for final demand goods. The indexes for meats, diesel fuel, fresh and dry vegetables, and oilseeds also moved higher.
In contrast, prices for liquefied petroleum gas fell 18.1 percent. The indexes for chicken eggs, processed poultry, and ethanol also decreased.
Even more problematic for the doves, however, is that core PPI jumped to +3.1% YoY (hotter than the 3.0% exp) with the prior month revised higher to 2.9% from 2.8%. This was the second hottest print going back to March 2023 with just the June outlier surge hotter than October…
… as sticky Services costs continue to rise.
The hotter than expected PPIs have pushed yields and the dollar higher, even as the market waits to see the details of what impact today’s numbers will have on the Fed’s preferred core PCE metric – according to UBS key PPI components to PCE look hot – although Bloomberg noted a big jump in air passenger services (3.2%), which suggests some upside risks (i.e., 0.3% core PCE).
The most notable takeaway from the data appears to be the increase in final demand for services in October, which is similar to the factors that increased CPI yesterday — shelter, food and energy, which are components the Fed cannot control with interest rates.
Bottom line: this is a long way from the Fed’s mandated 2%, and it’s moving in the wrong direction, something which has not been lost on the market, where Treasury curves are flattening after the data, which suggests traders are wavering over the prospects of a December rate cut. That has yet to be reflected in rates markets — bets have been trimmed but marginally, not enough to really change the swaps market outlook as of now. According to BBG’s Vince Cignarella, sizeable block trades are going through Treasuries, mostly in the five-year tenor and some ten-year tenors, which looks like positioning for higher yields and flatter curves.
Confounded Interest - Anthony B. Sanders 
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