Mortgage Refi Booms for Goldilocks

But ask why rates are falling...

SOME MEDIA, along with anecdotal sources witnessed on X, are trumpeting how strong the economy will be in 2025, using a mortgage refinance boom as a rationale, writes Gary Tanashian in his Notes from the Rabbit Hole.

While that will put some tailwind to the economy, my view is that it is simply one factor extending the Goldilocks economic phase – characterized by fading inflation signals/expectations and a still intact (but not as intact as portrayed) economy – conveniently, in alignment with NFTRH's favored "to or through the election" projection for the economy and by association, markets.

This article simply notes the "boom" in refinancing, without really extrapolating it further to a "strong economy" view.

But the public is well aware that rates are coming down (our target is 3.2% or so on the 30-year Treasury yield) and certain entities are going to promote that as "inflation is easing" and "the economy is improving" to serve agenda.

And I'm not only talking politics, as the massive financial services industry has skin in the game of keeping the public docile and obedient (ie, not trying to pull its capital out of the markets and out of its advisors' pockets).

For effect, here is the 30yr yield once again, as it is now and has long been one of my favorite pictures into the macro. You can see the basis for the 3.2% yield projection. It's the former backbone (now broken) that had held yields in check for decades. Now it will act as support.

Market participants are celebrating the decline in yields and the softening Fed. But they are weakening and softening for a reason.

If that reason (a weakening economy) persists, and policymakers (fiscal and/or monetary) react as they have historically, the future inflation problem could be severe...and the Continuum would factor that by holding the 3.2% area and turning up into the next phase.

But that's all future projection. For now, why don't we just turn off our brains like the legions of FOMO-driven MOMOs entering markets from stocks to (now) commodities to – sorry my buggish friends – precious metals.

In discussing future negatives, I am not talking my book because my book includes all of the things listed just above, and no short positions. My book has been "to or through the election" all year. My book projected Goldilocks over 1.5 years ago.

It's probably important to note who was saying what, when. I am not a perma-bear. I am a guy telling what I see.