The Current Administration
The Economics of Housing and homelessness
Privatization
Timeline
- The Treasury bailed out the GSEs: 187.5 Billion
- The Treasury (1) received senior preferred shares (2) the option to buy 80% of common stock and (3) 10% dividends
- In 2012, Fannie went from paying dividends to paying ALL profits to the Treasury
- In 2019, Fannie was allowed to retain earnings to build up its capital reserve
# Loans
Interest Rate
Supply
Demand
Residential Mortgage Market
# Loans
Interest Rate
Supply
Demand
Following Privatization
Supply'
Tariffs
Are these tariffs legal?
- European and US yields tanked across the board as investors spurned riskier assets
- The odds of recession are increasing given the timing of tariffs and tax policy
In the News
- About 7% of the goods used in residential construction are imported, primarily from Canada, Mexico and China, which face Trump’s tariff threats
Notation
Pricing
There is an inverse relationship between the price of a bond and the interest rate
Treasuries
Price
Supply
Demand
10 Year Treasury Market
10 Year Treasury Yield
Price
Supply
Demand
Demand'
Yields Fall
If investors see the equity market as riskier (Flight to Saftey)
Treasuries
If investors expect a recession (Rate Cuts)
Price
Supply
Demand
Yields Rise
If investors expect inflation
Treasuries
Demand'
If investors see the US as more risky
If there is less trade
The bond market is keying off of the negative growth impact more than any inflation concern from the new tariff regime.
April 3
“Is this sovereign selling? That’s the one everyone keeps asking,”
April 9
Quantity
Price
Supply
Demand
Housing Market
Demand'
Supply'
"U.S. existing-home sales fell 5.9% in March from the prior month to a seasonally adjusted annual rate of 4.02 million.”