All Things in Moderation

Stocks are lower this morning again after yesterday’s bloodbath. Bonds and MBS are up small.

Some people think the bond market’s strength is telling the Fed not to hike rates. I agree that bonds are pricing in the view that inflation is never, ever, ever going to come back. However, the US interest rate market is so manipulated by central banks (indeed all bond markets are these days) that I don’t think bond prices are the reliable signal they typically are.

Foreclosure inventory is down 24% year over year, according to Black Knight Financial Services. The delinquency rate has fallen to 2.2%, pretty much a post-crisis low.

Is the rust belt making a comeback? House prices are rising again in the Midwest as the auto industry recovers and the place becomes simply too cheap for business to ignore. Of course parts of the Midwest were ground zero for CRA lending, especially places like Detroit, which is filled with abandoned homes worth $10,000 with $100,000 mortgages on them. If you want to see what economic collapse looks like, check out this video of Toledo Ohio, my hometown. Most of these houses are worthless, and this is why I have always thought the fears of the big foreclosure inventory were overblown. These houses may count for the foreclosure numbers, but they certainly are not competing with anything and are probably never going to sell.