In March of 2022 hackers infiltrated a crypto/NFT online game Axie Infinity and stole $600M worth of digital currency. As these currencies have open ledgers, they are traceable to a certain degree. In this case about 90% of it was traceable and 20% was recoverable. When the criminals attempt to launder the money through a centralized exchange the investigators have approximately 20 – 60m to freeze the transfers. In this case it was discovered that North Korea was behind the heist, and they have been using money from digital piracy to fund their nuclear/ballistic missile program.
Mortgage Rates – moved sideways this week as the price of Mortgaged Backed Securities (MBS) moved mostly sideways. They continue to trade within the bounds of their downward trading pattern. Rates are up approximately 1.25% from this time last year.
Fed – in the past 40 years the Fed Funds Rate has eclipsed the 10-year Treasury note yield 4 times (including right now). At 5.5% the overnight lending rate for depository institution is currently higher than the yield received for purchasing a 10-year treasury note. In the previous 3 times this happened the Fed cut rates, 10-year yields declined, and so did mortgage rates. Once the Fed stops hiking rates, I expect to see a similar pattern.
Home Values – the Zillow Home Price Index for August showed home values increased 0.2% during the month of August for a 0.4% year over year gain and a 4.5% gain from the beginning of the year. Zillow data shows home values are on pace to gain 7% gain in 2023, which is consistent with other indices.
Inflation – the Producer Price Index showed that producer inflation increased 0.7% in August. Year over year producer inflation rose from 0.8% in the previous report to 1.6%. While the increase isn’t favorable it is still a low number and well under 2%
The Consumer Price Index increased 0.6% in August to a 3.7% year over year clip. This is down significantly from a peak of 9.1% in 2022.
Mortgage Application to purchase homes rose 1% last week and are down 27% year over year. Refinances declined 5% last week and are down 31% year over year.