Home Price Growth Accelerates To 5.9% YoY While Hourly Earnings Growth Is At 2.31% YoY (Seattle Leads Growth At 13.5%, DC And Chicago Last At 3.3%)

The S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index, covering all nine U.S. census divisions, reported a 5.9% annual gain in July, up from 5.8% the previous month. The 10-City Composite annual increase came in at 5.2%, up from 4.9% the previous month. The 20-City Composite posted a 5.8% year-over-year gain, up from 5.6% the previous month.

Seattle, Portland, and Las Vegas reported the highest year-over-year gains among the 20 cities. In July, Seattle led the way with a 13.5% year-over-year price increase, followed by Portland with a 7.6% increase, and Las Vegas with a 7.4% increase. Twelve cities reported greater price increases in the year ending July 2017 versus the year ending June 2017.

csyoy20july17

The SLOWEST growing cities? Washington DC and Chicago at 3.3% increase YoY.

The Case-Shiller 20-City home price index YoY is still 2.52 times hourly earnings growth for most workers.

cshourly

The Case-Shiller index is now at an all-time high!  Along with the S&P 500 index.

bubblrdfd

US household equity holdings to GDP are back to bubble highs!!!

record

Instead of tiny bubbles, we have big bubbles!

61vrN7rnJqL._SY355_

 

Advertisements

Asset Managers Flip To Net Short on Treasuries As UST 10Y-2Y Curve Slope Falls Below 80 BPS

Asset managers have flipped to net short on 10-year Treasury futures for the first time since November, according to CFTC data. The group reduced long positions the past three weeks after 10-year yields approached the 2 percent level in the lead-up to the September FOMC meeting. Even with the liquidation, yields have risen less than a quarter-point from year-to-date lows reached Sept. 8, suggesting the bull-market trend may still be intact.

neytshorttreass

The US Treasury 10Y-2Y curve slope has just fallen below 80 basis points.

ust`10dsdsfsf

 

Undun: US Treasury 30Y-5Y Curve Slope Falls To Lowest Level Since November 2007

The US Treasury yield curve slope for the 5Y-30Y segment is now at the lowest level since mid-November 2007.

530low

The 10 year Treasury note volatility index (TYVIX) is largely unchanged from The Fed’s unwind announcement on Wednesday at 2pm EST.

tyvixfed

The US Treasury curve is coming undun.

And that is pronouced UN-dun, not as is Kim Jong Un-dun (OON-dun).

AP_17259031175136-960x633

 

(Un)Affordable Housing Alert! FHFA Purchase-Only Home Price Index Rises 6.3% YoY For July (4.5x Fed’s “Inflation” Rate and 2.73x Wage Growth)

The FHFA’s purchase-only home price index is out for July. It shows that home prices grew at a 6.3% YoY rate, but only 0.2% MoM. The largest home price increases were in Pacific and Mountain states.

wherefhfa.png

This means that housing, often the largest ticket item for American households, grew at 4.5 times the Fed’s inflation rate (core PCE price growth YoY). And 2.73x hourly wage growth.

wagesfhfainf

Yes, this is another alert for unaffordable housing.

alarm!

Broken Velocity: Yellen’s Low Inflation Quandary (Hint: FHFA Home Price Index Growing At 6.62% YoY)

Here is a brief summary of Fed Chair Janet Yellen’s thoughts from yesterday courtesy of Deutsche Bank’s Peter Hooper: The Fed is on track to raise rates once more this year and three times in 2018. Yellen recognized that inflation has been running low recently, and that while there was some uncertainty around this performance, one-off factors that are not expected to persist, and which have not been associated with the performance of the broader economy, have been important. At the same time, Yellen noted that monetary policy operates with a lag and that labor market tightness will eventually push inflation up.

Inflation has been running low “recently”? Actually, “inflation” (defined as core personal consumption expenditure price growth YoY) has been below 2% since April 2012 and below 3% since July 1992. Notice that hourly wage growth for production and nonsupervisory employees has remained low as well, particularly since 2007.

Of course, home price increases have been far greater than the “inflation” rate used by The Fed. The recent FHFA Purchase-only home price index YoY (released this morning for June) has US home prices growing at 6.62% YoY while “inflation” is growing at a palty 1.40% YoY.

But nothing really seems to be working as expected by some. Expanding the M2 Money Supply was supposed to increase Real GDP, but that really hasn’t worked since the Reagan/Clinton recovery when M2 Money Supply growth dropped from over 12.5% YoY in 1983 to 0.1% YoY in April 1995 under President Clinton and Federal Reserve Chair Alan “Maestro” Greenspan. Robert Rubin was the Treasury Secretary.

Notice that M2 Money growth has almost always been higher than real GDP growth since 1995. Hence, M2 Money Velocity has mostly been declining since 1997.

What about the old model where additional Federal debt is okay as long as real GDP growth is greater than Federal debt growth? We are nearly at that point again after decades of rapid Federal debt growth with modest real GDP growth.

I am guessing that rather than raise rates next year, The Fed may be forced to expand their balance sheet … again. Giving more oxygen to the asset bubbles.

frankoxy

As many Americans are forced to switch from exotic beers like Heineken to less expensive beers like Pabst Blue Ribbon. 

 

Fed Keeps Target Rate Unchanged, Yellen Sings “Tomorrow” For Balance Sheet Unwind

As expected, The Federal Reserve Open Market Committee (FOMC) kept their target rate unchanged at 1.25%.

fomc092017

But The Fed announced that asset-shrinking (unwinding their $4.4 trillion balance sheet) would begin in October. Janet Yellen announced the balance sheet will be allowed to normalize, with reinvestments slowed/stopped starting in October. In fact, here is Federal Reserve Chair Janet Yellen announcing the date of the asset-shrinking.

The Fed’s DOT plot (green) is lower today than it was previously marked in gray) reflecting dimming prospects for rate increases in the future.

feddots092017

BUT they are expecting a rate increase at the December FOMC meeting.

wirp092017

cool

On the news, the US Dollar smoked!

usdfed

Janet Yellen announcing the balance sheet unwinding accompanied by Goldman Sach’s Lloyd Blankfein.

yellenblankfein

 

Existing Home Sales YoY Flat in August, Inventory Still Missing (Median Prices Up 5.6% YoY)

According to the National Association of Realtors, existing home sales YoY were flat at +0.2% growth (while down 1.7% MoM from July to August). Hurricane season isn’t helping existing home sales.

ehsyoyaug17

The median price of existing home sales YoY grew at 5.6%.

ehsmedpriceyoy

Existing home sales inventory is still missing as in 1999-2001 levels.

ehsinvaug17

Let’s see what The Fed announces at 2pm regarding interest rates.

MW-EU814_yellen_20160826122033_MG