Monday December 19 2016 Housing and Economic stories

TOP STORIES:

Treasuries Melt Down, Junk Bonds Boom, Yield Spreads Collapse – (www.wolfstreet.com) The costs of borrowing for the US government are jumping. On Monday, the US Treasury auctioned $34 billion of three-month bills at a discount rate of 0.53%, the highest since October 2008. These short-term bills sell for less than face value and are redeemed at face value. The difference is the yield for investors. For a three-month bill with a face value of $10,000, the price was $9,986.60. Holding this bill for three months until redeemed will make investors $13.40 in yield. That’s an annualized rate of 0.538%. During the rest of trading on Monday, the yield settled down a bit, but today is up again, currently at 0.55%. While still low by historic measures, it’s up from about zero in October last year (chart through Monday’s close, via Trading Economics):

Mortgage Applications Drop To 'Lehman' Lows As Rates Top 4%  - (www.zerohedge.com) Mortgage applications have fallen almost non-stop since their exuberant peak the week of July 4th, tumbling to 2016 lows to the same dismal level of activity as was witnessed after Lehman in Oct 2008. The reason is simple, as we detailed previously, the spike in mortgage rates has slashed the population of re-financeable borrowers from 8.3 million immediately prior to the election to less than 4 million, matching a 24-month low set back in July 2015.

Uber accused of tracking celebs, politicians  - (www.cnet.com) First there were worries about Uber's "god view." Now there are concerns the company is tracking celebrities and others through its ride-hailing app. In the latest lawsuit against Uber related to data privacy and security, former employee Samuel Ward Spangenberg alleges the company doesn't "have regard for data protection." He says Uber collected data regarding every ride users requested, their name, username and email, their pickup location, the amount paid, the device used to access the app and other information riders didn't know was being collected. Uber then allowed all employees to access information like ride tracking data of "high profile politicians, celebrities, and even personal acquaintances of Uber employees, including ex-boyfriends/girlfriends, and ex spouses," Spangenberg said in a court declaration from October, via the Center for Investigative Reporting.

Stock, bond markets could see sharp declines: U.S. financial watchdog - (www.reuters.com) Stock and bond markets may be riding for a fall as equity prices soar and interest rates stay low, a federal monitor of U.S. financial stability said on Tuesday, warning that such a tumble could inflict serious damage on banks, life insurers and other important parts of the economy. The Office of Financial Research found stock valuations, measured by comparing prices to earnings, have reached the same high level that they hit before "the three largest equity market declines in the last century." At the same time, commercial real estate prices have climbed while capitalization rates, which measure properties' returns, are close to record lows, it found. A price shock in one of these markets could threaten financial stability by hurting funds and banks that have high leverage or rely on short-term funding, the office added in its annual report on the leading risks to the financial system.

A Trump Economic Boom? The Fed May Stand in the Way - (www.nytimes.com) Investors in financial markets, and those predicting faster economic growth in 2017, would do well to remember the famous words that William McChesney Martin Jr., the former Federal Reserve chairman, uttered way back in 1955: The Fed’s job is to remove the punch bowl just as the party gets going. President-elect Donald J. Trump’s promises to cut taxes and regulation and to increase spending on infrastructure and defense have convinced many that a sugar high in the near term will goose the economy. But Fed officials say the economy is already expanding at something close to its maximum sustainable pace, meaning faster growth would drive inflation toward unwelcome levels.

OTHER STORIES:

Asian Futures Tip More Gains as Fed Day Dawns With Dollar Steady - (www.bloomberg.com)
Wall St. rallies to record; Dow nears 20,000 - (www.reuters.com)
Oil Closes at 17-Month High as OPEC Cut Seen Balancing Market - (www.bloomberg.com)
How Chinese Capital Controls Could Rattle the Asian Bond Market - (www.bloomberg.com)

Trump's tough talk on Taiwan threatens China more deeply than you think - (www.cnbc.com)
Trump’s plans threatened by strong dollar conundrum - (www.ft.com)
Suppressed rates ‘threaten price shock for markets’ - (www.ft.com)