Morning Report: Trump calls for negative interest rates

Vital Statistics:


Last Change
S&P futures 2983.5 5.25
Oil (WTI) 57.96 0.44
10 year government bond yield 1.73%
30 year fixed rate mortgage 3.85%


Stocks are up this morning on no real news. Bonds and MBS are flat.


We saw a big uptick in rates yesterday, with not much of a catalyst. It could just be position-squaring ahead of the expected stimulus announcements tomorrow from the ECB, although some pointed to the government bond auction. Regardless, these things happen. While the path of least resistance for interest rates clearly seems to be down, there will be inevitable retracements along the way – markets don’t go straight up or straight down.


Mortgage applications increased 2% last week as purchases rose 5% and refis increased about half a percent. “Mortgages rates continued to decline over the holiday-shortened week, with the 30-year fixed rate decreasing five basis points and remaining near three-year lows,” said Joel Kan, MBA Associate Vice President of Economic and Industry Forecasting. “Refinances were essentially unchanged, up just 0.4 percent, but August overall was the strongest month of activity so far in 2019.”


Steve Mnuchin, Mark Calabria, and Ben Carson appeared before the Senate yesterday to discuss GSE reform. The discussion fell predictably along partisan lines, with the left fretting about affordable housing while the right wanted to reduce the government’s footprint and risk in the system.


Meanwhile, Trump called on the “boneheads” at the Fed to cut interest rates, even below 0% if necessary. Trump is arguing that we should lower rates considerably in order to refinance our government debt into longer term loans, say 50 or 100 years. Note that cutting interest rates to 0% will wreak havoc on the banking system, as Europe is finding out. Check out the chart of Deutsche Bank, which has been annihilated by negative interest rates.


Deutsche Bank


Mortgage fraud decreased in the second quarter, according to CoreLogic.

29 Responses

    • Ideological rigidity is not only acceptable, it’s required, when you’re on the right side of history.


      • Kevin Williamson had an article about the left’s divine right to rule


      • …it’s required, when you’re on the right side of history.

        Which is also why four states have canceled the R primary. In the past, states have canceled uncontested primaries. Harold Stassen against RWR was practically uncontested, but those primaries were not canceled.

        Good grief.


        • Are you seeing some sort of ideological equivalence between SCOTUS and state primary elections? I’m not saying there isn’t, just not necessarily understanding how supposed SCOTUS objectivity versus election politics which are, by definition, partisan.

          Would you equate Walsh, Weld and that other dude to, say, Teddy in ‘76 or Buchanan in 92?


        • Also, I don’t believe SCOTUS has not been partisan. Just so you know my position.


        • No, he’s saying ideological rigidity isn’t just on one side.


        • jnc:

          No, he’s saying ideological rigidity isn’t just on one side.

          It is on the Supreme Court.


        • Mark:

          In the past, states have canceled uncontested primaries.

          In 1992, with Pat Buchanan challenging Bush for the nomination, 8 states cancelled their Republican primaries. And frankly far more egregious party manipulation of the nominee selection process in order to get the “right” nominee has a long and storied history in the US. How do you think FDR got nominated so many times? Or, if you don’t want to go back that far, how do you suppose HRC got the nomination in 2016? Ever heard of “super delegates”?

          I’m shocked…shocked!…to find party politics being played in the Republican party! Good grief indeed.


    • In sum, if lockstep voting and a results-driven court concern us, it isn’t the conservatives we should be worried about. While senators, journalists and academics love decrying the Roberts Five, it’s the (Ruth Bader) Ginsburg Four that represent a bloc geared toward progressive policy outcomes.

      How long have I been saying exactly this?


  1. Poignant 9/11 retrospective.

    Was it Brent or Scott who was trading that day in London and stayed to close out their book when everyone else evacuated to the pub?


    • that was me


    • I was in London, but because my father-in-law worked in Tower 2 and no one could get a hold of him, I left early to be with my wife. Turned out he left Tower 2 as soon as Tower 1 got hit, but left his phone in the office, so couldn’t contact anyone until several hours later when he finally got home.


  2. Pretty entertaining take on Brexit:


  3. Interesting.

    Justices Ruth Bader Ginsburg and Sonia Sotomayor dissented from the high-court’s order. “Once again, the Executive Branch has issued a rule that seeks to upend longstanding practices regarding refugees who seek shelter from persecution,” Sotomayor wrote.


    • “Once again, the Executive Branch has issued a rule that seeks to upend longstanding practices regarding refugees who seek shelter from persecution,”

      Once again, the Wise Latina has issued a legal opinion appealing to emotion and sentimentality rather than the law.


      • jnc said the other day that initial asylum interviews were more substantive than my characterization of it simply being a case of saying the magic word “asylum”. I was curious about just how substantive they are, so I’ve been looking for stats on the percentage of interviews which find a “credible” claim and therefore result in a full hearing, in order to compare that number to the percentage of hearings that result in the actual granting of asylum. I still have not been able to find any hard stats on how often an initial interview results in a “credible claim” determination (I’d love to see them if anyone has them), but in my research I did discover this interesting table on decisions in asylum hearings broken down on a judge-by-judge basis.

        If it is accurate, it suggests to me that in many instances the asylum process really is nothing more than a lottery, with the winners and losers determined mostly by which jurisdiction the case is heard in, and even which judge hears the case.

        The chart doesn’t seem to distinguish between hearings on affirmative and defensive asylum claims, which limits the kinds of conclusions that can be drawn. But it is quite interesting to see the wide variation of acceptance/denial rates between courts, and even more interesting to see the variation between judges sitting on the same court. Variations between jurisdictions are conceivably explainable by factors other than personal sympathies of the judges involved, but I can’t think of any reason other than personal sympathies why judges sitting on the same court, and therefore presumably hearing the same range of cases, should have wide variations in their acceptance/denial rates.

        San Francisco seems to be the most outrageous, with per judge acceptance/denial rates varying from 3%/97% all the way to 90%/10%. New York’s ranges from 36.5%/63.5% to 97%/3%. Still, if you are angling for asylum, you’re most of the way towards winning the lottery if you managed to be heard in either NY or SF. Even with the wide variation between judges, the overall acceptance rate in NY immigration courts is 80%, and in SF it is 72%, while the rate across all other jurisdictions in the rest of the country combined is only 28%.

        Even including the high acceptance rates in NY and SF, it is more likely than not that an asylum claim will be denied, with a national acceptance/denial rate of 44.5%/55.5%. Again, the lack of a distinction in these numbers between affirmative and defensive asylum claims makes it difficult to draw definitive conclusions, but if they are at all reflective of the defensive claims that are the subject of the whole child separation issue, then the alternative catch/release policy would be granting access to more people whose claims will ultimately fail than to those who claims will ultimately be successful. So if you were an illegal who knows these odds and, even more, knows that your own personal circumstances makes the odds even less in your favor, what would you do once you were given access to the US pending your more-likely-than-not-to-be-denied asylum hearing?


        • If the Trump Presidency only ever results in a curtailing of Federal judges issuing national injunctions it will be the most successful presidency of the modern era.


        • Found this today, on the percent of asylum interviews that result in a “credible fear” determination:


          In fiscal year 2018, about 89 percent of asylum seekers passed the initial screening.

          If it is true that 89% of those who claim asylum get past the initial interview and are granted a full hearing, then I’d say that my characterization of “asylum” being a magic word that gets one into the country (under a catch and release policy) is only a slight exaggeration.

          Also, there was this:

          But under much stricter rules imposed by the Trump administration, immigration judges went on to grant asylum in only 17 percent of the cases.

          If 89% of interviewees are granted a hearing, but only 17% are ultimately granted asylum, it seems to me that one would be fool not to simply disappear into the country under a catch and release policy. Your chances of being denied asylum must surely be higher than the chances of getting discovered and deported by ICE as an illegal once in the country. Especially given the number of so-called sanctuary cities that will actively abet any efforts to avoid detection by ICE.


      • If they won’t seek asylum anywhere else but America, they aren’t really seeking asylum, almost by definition.


        • KW:

          If they won’t seek asylum anywhere else but America, they aren’t really seeking asylum, almost by definition.

          Excellent point.


  4. Look, we’ve all been there.


  5. Hmmmmm, I didn’t have time to read all the comments on this thread but even I know that less than 0% interest rate is a dead end.

    Hi everyone!

    Liked by 1 person

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