Good morning on this best day of the week, Wednesday,

Another slow day for economic data releases.

We did have the existing home sales numbers which to no one’s surprise, were poor. That said and as I have shared, there is a disconnect between sales velocity, inventory build, and pricing as of late. The lower sales volume is not equating to a reduction in home prices despite increased inventory. Quite the contrary.. Home prices have continued to nudge up despite the other metrics. Why? That is the right question. Most sellers do not need to sell and faced with the prospects of selling for less than they want and then buying with rates 2x from where they currently are is just not appealing. Rates are continuing to tread water as we are in the same trading channel. The hope is we close below 4.35% on the 10yr and give us some room to improve but we are not seeing any follow through buying yet. The only other piece of scheduled news was the 20yr Treasury auction which went exceedingly well, and does give us more support that rates are improving.

A trade deal with Japan was announced this morning, but that isn’t having too much of an effect on bonds.

One interesting tidbit in the headlines though, there is a proposal of a bill called the “No Tax on Home Sales Act” that would eliminate capital gains tax on the sale of primary residence. Right now, homeowners can exclude $250,000 in taxable income on capital gains, and double that for couples filing jointly. Would a bill like this make a difference in inventory? Maybe, especially in markets with high priced homes like California and Massachusetts. It is still just a proposal.

Overall outlook is still that rates will remain near these levels and are not in danger of making any big moves higher but not yet poised to make any big moves lower.

Interesting that economists at Goldman Sachs project, after the Fed likely holds rates steady at its meeting next week, a labor-market slowdown will become too significant for monetary policymakers to ignore and will probably drive the central bank to cut rates at all three of its remaining 2025 meetings, They are concerned that private-sector job creation is slowing to something like “stall speed,” a level below which labor market weakness becomes self-reinforcing. Goldman’s projection is for two additional cuts over the Fed first four meetings of 2026. Price pressures from tariffs are landing at a time when the consumer economy is already weakening: “We estimate that real personal consumption has now stagnated on net for six months, which rarely happens outside of recession,” Goldman writes.

Some interesting data points:

270,000: The number of net-new apartment units completed in the first half of 2025, a 25% drop from the same period last year, according to CoStar. This slowdown in new supply has helped the national vacancy rate, which has been rising since 2021, plateau around 8%.
6.2%: The decline in on-location production in Los Angeles in the second quarter of 2025 compared with the same period last year, according to FilmLA, the city’s official film office. Industry leaders hope the state’s recently expanded tax credit program will bring more production back to Hollywood.
$435,300: The national median existing-home price in June, a record high and 2% increase from a year earlier, according to the National Association of Realtors. This year’s crucial spring selling season has been a bust due to high prices and mortgage rates.

And the heat on Chairman Powell keeps rising…

Rep. Anna Paulina Luna of Florida has submitted a letter to U.S. Attorney General Pam Bondi requesting a U.S. Department of Justice (DOJ) investigation into Federal Reserve Chairman Jerome H. Powell for potential perjury and making false statements to federal officials. The letter cites Powell’s sworn testimony before the Senate Banking Committee on June 25, 2025, in which he denied the inclusion of luxury features—such as a VIP dining room, premium marble, water features, and a roof terrace garden—in the controversial $2.5 billion renovation of the Federal Reserve’s Eccles Building. However, official project documents submitted to the National Capital Planning Commission directly contradict his statements. Just days after President Trump called for the resignation of Powell over the renovation project at the Federal Reserve headquarters, OMB Director Vought wrote a letter to Powell over “mismanagement” of the Fed. “Chairman Jerome Powell has grossly mismanaged the Fed,” said Vought in a social media post accompanying his letter. “While continuing to run a deficit since FY23 (the first time in the Fed’s history), the Fed is way over budget on the renovation of its headquarters. I do not see why Mr. Powell wants to continue to play in this sand box. There is no win that I can see… He is going to be rendered powerless soon and will continue to have to play defense as the current administration guns for him.

A lot to share given the slow economic news.

Stay safe and make today great!