April 17 2024
Chill estate
1 Higher mortgage rates have frozen housing market
2 Glut in US bonds makes them harder to sell
3 House Speaker cautiously proceeds on Ukraine, Israel aid
4 Selective amnesty for certain migrant groups alienates others
5 Drug trade remaps Latin America
4/17/1970 Apollo 13 safely returns to Earth
see ad astra on x @greg_loving
1 Higher mortgage rates have frozen housing market
Something deeply unusual has happened in the American housing market over the last two years, as mortgage rates have risen to around 7 percent. Rates that high are not, by themselves, historically remarkable. The trouble is that the average American household with a mortgage is sitting on a fixed rate that’s a whopping three points lower. The gap that has jumped open between these two lines has created a nationwide lock-in effect — paralyzing people in homes they may wish to leave — on a scale not seen in decades. For homeowners not looking to move anytime soon, the low rates they secured during the pandemic will benefit them for years to come. But for many others, those rates have become a complication, disrupting both household decisions and the housing market as a whole. Indeed, according to new research from economists at the Federal Housing Finance Agency, this lock-in effect is responsible for about 1.3 million fewer home sales in America during the run-up in rates from the spring of 2022 through the end of 2023. That’s a startling number in a nation where around five million homes sell annually in more normal times — most of those to people who already own.
Another way to state how unusual this dynamic is: Between 1998 and 2020, there was never a time when more than 40 percent of American mortgage holders had locked-in rates more than one percentage point below market conditions. By the end of 2023, as the chart below shows, about 70 percent of all mortgage holders had rates more than three percentage points below what the market would offer them if they tried to take out a new loan.
2 Glut in US bonds makes them harder to sell
A series of weak auctions for U.S. Treasurys are stoking investors’ concerns that markets will struggle to absorb an incoming rush of government debt. A selloff sparked by a hotter-than-expected inflation report intensified this past week after lackluster demand for a $39 billion sale of 10-year Treasurys. Investors also showed tepid interest in auctions for three-year and 30-year Treasurys. Behind their caution lies a growing conviction that inflation isn’t fully tamed and that the Federal Reserve will leave interest rates at multidecade highs for months, if not years, to come. The 10-year yield—the benchmark for borrowing rates on everything from mortgages to corporate loans—finished the week around 4.5%, near its highest levels since touching 5% in October. At the same time, the government is poised to sell another $386 billion or so of bonds in May—an onslaught that Wall Street expects to continue no matter who wins November’s presidential election. While few fear a failed auction—an unlikely scenario that analysts said could potentially trigger prolonged turmoil—some worry that a glut of Treasurys will rattle other parts of the markets, raise the cost of government borrowing and hurt the economy.
3 House Speaker cautiously proceeds on Ukraine, Israel aid
House Speaker Mike Johnson plans to bring separate bills funding Ukraine, Israel and Taiwan to the House floor, in a maneuver aimed at breaking a monthlong deadlock over a $95 billion foreign-aid package the Senate passed earlier this year. Other congressional leaders of both parties and President Biden had urged Johnson to take up the Senate bill. Instead, Johnson is splitting the aid up in an effort to work around a large bloc of Republicans who have long opposed sending more money to Ukraine. Those GOP holdouts, together with some Democrats who have soured on more aid for Israel, could have been enough to sink a combined bill.
4 Selective amnesty for certain migrant groups alienates others
Sam Sanchez, a Chicago restaurateur, was incensed when President Biden announced last September that his administration would extend work eligibility to nearly half a million Venezuelans, many of them migrants who had recently crossed the border illegally. What about his undocumented employees like Ruben, a Mexican father of two U.S.-born children who has been in the United States since 1987, and Juan, another Mexican worker, who has trained dozens of new hires at Moe’s Cantina? “It’s offensive that my employees and other immigrants are being leapfrogged by new arrivals,” said Mr. Sanchez, who is on the board of the National Restaurant Association. Having built lives and families since entering the country unlawfully many years ago, they have been waiting for Congress to give them a path to work legally. “For those of us here a long time trying to do everything right, it’s just not fair that we are forgotten,” said Juan, 53, whose last name was withheld out of concern about his immigration status.
5 Drug trade remaps Latin America
The cocaine trade is booming like never before, and the vast riches it and other crimes generate are corroding institutions and democracy in the region. Across the globe, demand for cocaine has soared as America’s addiction has been replicated in Europe and Latin America itself. As cocaine users increase at a faster rate than population — and as drug trafficking expands eastward, according to the United Nations — markets in Asia and Africa have begun to explode. South America now produces more than twice as much cocaine as it did a decade ago. Colombia, still the source of most of the world’s cocaine, logged record levels of coca production in 2022, and the amount of land used to grow that base ingredient is more than five times what it was when Pablo Escobar — among the first and most infamous of the Colombian drug lords — was killed in 1993. The cartels have expanded their reach and extended their routes, penetrating ports from Costa Rica to Argentina, and turning nearly every Latin American mainland nation, including Ecuador, into major producers or movers of cocaine, according to the U.N. Office on Drugs and Crime. Across Ecuador and much of Latin America, these criminal groups have also diversified their portfolios, relying heavily on extortion, kidnappings, illegal gold mining and migrant smuggling to grow their profits and gain territorial control.
4/17/1970 Apollo 13 safely returns to Earth
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