| | | | |  | | By Katy O'Donnell and Aubree Eliza Weaver | Presented by cleanupbitcoin.com | Editor's Note: Morning Money is a free version of POLITICO Pro Financial Services morning newsletter, which is delivered to our subscribers each morning at 5:15 a.m. The POLITICO Pro platform combines the news you need with tools you can use to take action on the day's biggest stories. Act on the news with POLITICO Pro.
| | | Mortgage rates rise at fastest clip in nearly 30 years — The average rate for a 30-year fixed-rate home mortgage climbed to 4.72 percent last week, mortgage giant Freddie Mac said Thursday, marking the highest level since the fall of 2018. This was no short-term spurt: Over the past three months, the rate has increased by 1.5 percentage points — the quickest jump since May 1994, according to Freddie chief economist Sam Khater. Some economists — and homebuyers — expect the upward trend to continue, given that Federal Reserve policymakers are poised to aggressively raise interest rates in the coming months in a bid to rein in the highest consumer price inflation in four decades. MM chatted with Joel Kan, associate vice president of economic and industry forecasting at the Mortgage Bankers Association, about what it all means for the housing market going forward. "Rising [mortgage] rates have certainly added to an already challenging market in terms of affordability, but our forecast is still for a pretty healthy purchase market in 2022," Kan said. The reason: A combination of demographic pressures (from a glut of millennials seeking to buy their first homes) and short supply (the inventory of homes on the market remains historically low) will keep demand high, he says. "The general view of the housing market is that it's still positive — we have an economy that's still extremely strong," he said. But that could change: "The demand is there, but you add on the affordability challenges, increasing rates, that obviously acts in the other way" to cool demand, which could eventually lead to downward pressure on home purchases and on red-hot housing prices, though it will take time. As for the trajectory of mortgage rates going forward, Kan expects them to be volatile. "Rates could go a lot higher this year" – a situation many expect given the Federal Reserve's plans for cooling down the economy -- "but we've seen rates turn the other way pretty quickly as well," Khan said. "We're going to see a lot of volatility." IT'S FRIDAY — Victoria Guida will be in your inbox on Monday while Kate Davidson takes some time off next week. Send any tips to Victoria at vguida@politico.com or @vtg2, and to Aubree Eliza Weaver at aweaver@politico.com or @AubreeEWeaver. And you can always reach me at kodonnell@politico.com .
| | A message from cleanupbitcoin.com: Bitcoin's gigantic crypto mining operation has now become a major source of climate change and global pollution. Fortunately, this can all be avoided by a change to the software code that reduces Bitcoin's energy use by 99%. Go to cleanupbitcoin.com | | | | | | A conversation with Richmond Fed President Tom Barkin, who made some time to chat with Kate this week in between district meetings in Durham, N.C. Barkin isn't a voting member of the Fed's policy setting committee this year, but he's part of the broader conversation among central bank officials about how strongly to tighten policy to combat elevated inflation. Some key takeaways: He isn't worried about the yield curve inverting — "At this point, the yield curve in the U.S. has predicted eight of the last seven recessions," he quipped. But seriously: Barkin said he pays attention to metrics that markets think are important. But he questioned whether a yield curve inversion is a useful predictor of future recessions. In one instance, he said, it took 33 months following an inversion before a downturn actually occurred. "It feels to me like if something is going to be a recession predictor, there shouldn't be an unlimited time frame behind it," he said. But he is worried about supply chains — As a regional Fed president, Barkin spends a lot of time talking to business contacts in his district, which spans Maryland, Virginia, Washington, D.C., North and South Carolina, and West Virginia. They describe supply chain problems like the arcade game Whack-A-Mole: "Once you think you've got it fixed, something else comes up," he says. While Barkin and his Fed colleagues, including Chair Jerome Powell, have said they expect these kinks to be worked out eventually, he conceded, "It just doesn't feel like it's going to happen anytime soon." The pace of rate hikes will be a judgment call — Barkin has said he's open to the idea of a half-percentage-point rate increase but had no updates on whether he's likely to support one at the next meeting, in May.
| | | | DON'T MISS ANYTHING FROM THE 2022 MILKEN INSTITUTE GLOBAL CONFERENCE: POLITICO is excited to partner with the Milken Institute to produce a special edition "Global Insider" newsletter featuring exclusive coverage and insights from the 25th annual Global Conference. This year's event, May 1-4, brings together more than 3,000 of the world's most influential leaders, including 700+ speakers representing more than 80 countries. "Celebrating the Power of Connection" is this year's theme, setting the stage to connect influencers with the resources to change the world with leading experts and thinkers whose insight and creativity can implement that change. Whether you're attending in person or following along from somewhere else in the world, keep up with this year's conference with POLITICO's special edition "Global Insider" so you don't miss a beat. Subscribe today. | | | | | BOSTIC, EVANS BACK RATE RISES WITH DOVISH OVERTONES — Reuters: "As expectations rise that the Federal Reserve will step up its efforts to contain inflation with bigger interest rate hikes, Chicago Fed President Charles Evans and Atlanta Fed President Raphael Bostic on Thursday provided a somewhat dovish counterpoint. "'It's time that we get off of our emergency stance — I think it's really appropriate that we move our policy closer to a neutral position — but I think we need to do it in a measured way,' Bostic told a Chicago Fed virtual conference on economic mobility. Said Evans: 'I'm optimistic that we can get to neutral, look around and find that we're not necessarily that far from where we need to go.'" SCHUMER MOVES BRAINARD, COOK CLOSER TO CONFIRMATION — Our Victoria Guida: "Senate Majority Leader Chuck Schumer on Thursday moved to set up a vote on Federal Reserve nominees Lael Brainard and Lisa Cook when lawmakers return from recess in late April. Schumer moved to start debate on the nominations of Brainard, a sitting board member who has been tapped as vice chair, and Cook, who would fill an empty seat on the Fed board and become the first Black woman to hold the job. Both are expected to be confirmed; the Senate already voted 50-49 to move Cook's candidacy beyond the Banking Committee, while Brainard received some Republican support in that committee." U.S. BLACKLISTS RUSSIAN SHIPBUILDER, DIAMOND MINING FIRM — Reuters' Eric Beech: "The United States blacklisted two Russian state-owned enterprises, United Shipbuilding Corp and the Alrosa diamond mining company, denying them access to the U.S. financial system over Russia's invasion of Ukraine, the Treasury Department said on Thursday."
| | | | INTRODUCING DIGITAL FUTURE DAILY - OUR TECHNOLOGY NEWSLETTER, RE-IMAGINED: Technology is always evolving, and our new tech-obsessed newsletter is too! Digital Future Daily unlocks the most important stories determining the future of technology, from Washington to Silicon Valley and innovation power centers around the world. Readers get an in-depth look at how the next wave of tech will reshape civic and political life, including activism, fundraising, lobbying and legislating. Go inside the minds of the biggest tech players, policymakers and regulators to learn how their decisions affect our lives. Don't miss out, subscribe today. | | | | | | | | Crypto might be here to stay,but Treasury Secretary Janet Yellen isn't sure it'll work as advertised, our Sam Sutton writes: "Proponents of digital assets envision a more efficient payment system with instantaneous transactions and lower costs no matter where you live," Yellen said duringa speech at American University on Thursday. "Will the technology live up to that promise? Personally, I think it's too early to tell." More from Sam: While Yellen acknowledged the importance — and need — for innovation around payment systems and financial markets, her speech was emblematic of the skepticism that's likely to imbue some of the reports and recommendations called for by President Joe Biden's executive order on crypto policy. In addition to pressing for greater oversight of crypto trading platforms and stronger policies governing stablecoins, she emphasized the need for "tech-neutral" regulation that will incorporate protection for customers, investors and businesses while creating a runway for the industry to grow. "We need to work together to ensure responsible innovation," she said. "The government's role should be to ensure responsible innovation — innovation that works for all Americans, protects our national security interests and our planet, and contributes to our economic competitiveness and growth." …As the FDIC urges banks to consult the agency on crypto plans — From Victoria again: "The Federal Deposit Insurance Corp. on Thursday urged banks to inform the agency if they have any intention of providing services related to cryptocurrencies, taking a similar tack to the Office of the Comptroller of the Currency. 'As a result of the dynamic nature of crypto-related activities, it is difficult for institutions, as well as the FDIC, to adequately assess the safety and soundness, financial stability, and consumer protection implications without considering each crypto-related activity on an individual basis,' the FDIC said in a letter to financial institutions. "Any lenders hoping to launch products or services related to digital assets should notify the FDIC of their intent and 'provide all necessary information that would allow the FDIC to engage with the institution regarding related risks.' It also says any banks currently engaging in crypto activities should tell the regulator. ABA weighs in, praising Yellen and criticizing FDIC — Yellen's "leadership sets the tone for a coordinated interagency approach that is critical to this effort's success," said Rob Nichols, president and CEO of the American Bankers Association. "Unfortunately, within hours of the secretary's speech, the FDIC issued guidance that could make it more difficult for highly regulated and supervised banks to engage in crypto markets on behalf of their customers." WONKY SEC RULING REIGNITES SPOT U.S. BITCOIN ETF APPROVAL DEBATE — Bloomberg's Katherine Greifeld: "Those pining for a physically backed U.S. Bitcoin exchange-traded fund are embracing an under-the-radar ruling from the U.S. Securities and Exchange Commission. The SEC gave its blessing to the Teucrium Bitcoin Futures Fund application in a late Wednesday filing. Unlike existing Bitcoin futures ETFs, the Teucrium fund was filed under the Securities Act of 1933, rather than the Investment Company Act of 1940 — SEC Chair Gary Gensler's preferred format up to this point."
| | | | A message from cleanupbitcoin.com:   | | | | | | THREE-QUARTERS OF AMERICANS SAY ECONOMY IS ON THE 'WRONG TRACK' — Bloomberg's Alexandre Tanzi: "Almost three-quarters of consumers in Fannie Mae's Home Purchase Sentiment survey said the economy is on the 'wrong track,' the highest level in 11 years. The share of respondents who expect their personal financial situation to worsen over the next year, 25 percent, is at a record in data that goes to 2010. In spite of a robust job market, increasing wages and a build-up in household savings during the pandemic, Americans' view of the economy has deteriorated sharply as inflation flared in the past months." …AS JOBLESS CLAIMS FALL TO LOWEST LEVEL SINCE 1968 — WSJ's Gabriel T. Rubin: "New applications for U.S. unemployment benefits fell last week to a near 54-year low as employers held on to workers in a tight labor market. Initial jobless claims, a proxy for layoffs, fell to 166,000 during the week that ended on April 2, compared with a revised 171,000 the prior week, the Labor Department said Thursday. The weekly total was the lowest since November 1968, when the labor force was less than half of its current size." WYDEN, PORTMAN FLOAT BILL TO AX TAX PERKS FOR BUSINESS IN RUSSIA, BELARUS — Politico's Bernie Becker: "Sens. Ron Wyden and Rob Portman on Thursday previewed legislation that would strip tax benefits for ongoing U.S. business operations in Russia and Belarus, including foreign tax credits. The discussion draft of the bipartisan bill aims to deny companies credits for taxes paid to the two countries. The ban would take effect 30 days after it becomes law. Companies would also be charged the full 21 percent corporate tax rate on any income generated in Russia or Belarus." TECH REBOUND LIFTS STOCKS ON WALL STREET AFTER EARLY SLIDE — AP's Damian J. Troise and Alex Veiga: "Stocks recovered from an early slide and closed higher on Wall Street Thursday as investors weigh the latest update from the Federal Reserve amid concerns about rising inflation. The S&P 500 rose 0.4 percent, the Dow Jones Industrial Average rose 0.3 percent, and the Nasdaq rose 0.1 percent. Health care and technology stocks helped lift the market. Retailers and other companies that rely on direct consumer spending also rose. HP soared after Warren Buffett's Berkshire Hathaway disclosed an 11 percent stake in the company. Every major index is headed for a weekly loss. Crude oil prices edged lower and bond yields rose."
| | A message from cleanupbitcoin.com: Bitcoin's wasteful use of energy already rivals most mid-sized European nations like Sweden, and is growing at an alarming rate. It all comes from an outdated, complex verification system where a massive number of computers suck up enormous amounts of energy from coal, fracked gas and other polluting sources. Scientists estimate Bitcoin alone could push the planet beyond the catastrophic 2 degree C threshold.
We need to persuade the few dozen decision makers running and backing Bitcoin's polluting operations to move Bitcoin to a new software code. The cost to Bitcoin is small — but the cost to our planet could be enormous. Let's change the code, not the climate. Go to cleanupbitcoin.com | | | | | | | Follow us on Twitter | | | | Follow us | | | | |
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