US mortgage rates fall for a third week, hitting lowest since April
The average for 30-year, fixed loans was 6.63 per cent, down from 6.72 per cent last week, Freddie Mac said.
Borrowing costs followed 10-year Treasury yields, which slipped after last week's unexpectedly weak jobs report bolstered bets that the Federal Reserve will cut interest rates soon. Any sign of a faltering economy may keep anxious house hunters on the sidelines, but mortgages pulling further away from 7 per cent could potentially draw some interest.
'The decline in rates increases prospective homebuyers' purchasing power and our research shows that buyers can save thousands by getting quotes from a few different lenders,' Sam Khater, Freddie Mac's chief economist, said.
A handful of spots around the country have gotten slightly more affordable, according to a report by Redfin. In June, the income needed to buy a typical home declined from a year earlier in 11 of the 50 most populous US metro areas, the brokerage said.
The majority are in Sun Belt states where prices soared during the pandemic and are now coming back down to earth as inventory piles up.
'Buyers are battling affordability and they see a lot of listings sitting on the market, so they are asking for major concessions,' said Katie Shook, a Redfin agent in Phoenix. That city has been 'in a buyer's market for the past eight months', she said. BLOOMBERG
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International Business Times
4 hours ago
- International Business Times
Trump Makes Surprise U-Turn, Praises Intel CEO After Calling for His Resignation
President Donald Trump is doing an about-face on Intel's chief executive, Lip-Bu Tan. Trump had just a week ago publicly urged Tan to step down. He said Monday he met with Tan and called him a "winner." X Commerce Secretary Howard Lutnick and Treasury Secretary Scott Bessent also attended the meeting. Tan and his cabinet members will now assemble technology and manufacturing proposals that they intend to present to Trump next week, the president said. Trump posted about the meeting on Truth Social, saying Tan's rise in the tech industry was an "amazing story." The comments stood in stark contrast to the week before, when he had blasted Tan as "very conflicted" partly over historical business ties to China. Intel confirmed the meeting but called it "candid and constructive." The company included US tech and chip capabilities in the discussion. Tan, who became CEO of Intel in March, had been on the board since 2022. He has faced political scrutiny from Senator Tom Cotton for his past leadership of Cadence Design Systems, a company that is closely connected to China. Trump's change of tune comes as his administration champions an even more muscular industrial policy for the semiconductor sector. U.S. officials have described a global competition with China for supremacy in chip production and artificial intelligence technology. The same weekend, Nvidia said it would reserve 15% of certain sales to China in exchange for export control licenses granted by US regulators. Initially, Trump said, he would have made it 20%, OK, but Nvidia CEO Jensen Huang negotiated a lower figure. Intel is currently facing major challenges. It is struggling to catch up with Nvidia in AI development. The global tech giant has spent billions of dollars on ramping up its chip foundry business, but scaled back some expansion plans in Europe and Ohio. Tan has also announced job cuts to manage costs. Tan, 65, was born in Malaysia but is a Singaporean who immigrated to the U.S. He received his master's in engineering from MIT. Despite calling his first few months as CEO very difficult, he's sticking to Intel's restructuring. Shares of Intel rose 2 per cent in after-hours trading related to news of the meeting, indicating investor optimism over a possible renewed partnership between the company and the US government.
Business Times
a day ago
- Business Times
Citigroup oversaw US$1 billion in deals for trust while sanctioned oligarch held concealed interest
[WASHINGTON] Citigroup oversaw more than US$1 billion worth of transactions for a Delaware-based trust that US authorities say a sanctioned Russian oligarch held a concealed stake in, according to documents reviewed by Bloomberg News. Citigroup set up Heritage Trust in July 2017 with money that originated from billionaire Russian Senator Suleiman Kerimov, who was subsequently sanctioned by the US Treasury Department in April 2018. After the Treasury's action, the bank administered more than US$1 billion in transactions that included deposits into trust accounts and existing stakes in several US companies, including US$57 million in Uber Technologies and US$141.5 million in Snap, according to the previously unreported documents. As the trust's administrative trustee, the bank also oversaw an investment in SpaceX held by Heritage Trust while Kerimov was sanctioned, Bloomberg previously reported. Citigroup is under investigation by the Justice Department over its handling of Kerimov's money, Bloomberg reported in November. A review of documents associated with the trust reveals the extent the bank went, including engaging with lawyers and Treasury officials, to keep doing business with Heritage Trust lawfully after Kerimov's designation, and the large value of the deals Citigroup facilitated. Treasury requires companies to freeze assets and transactions of sanctioned individuals and to report any frozen interest they have within 10 business days. Treasury eventually froze the trust four years after Kerimov was sanctioned, saying he had retained a concealed stake. 'Citi has been fully transparent with our regulators and the US Department of the Treasury's Office of Foreign Assets Control (Ofac) regarding the Heritage Trust,' a Citigroup spokesperson said, in response to questions from Bloomberg. 'Despite suggestions to the contrary, we acted in compliance with our obligations under US sanctions laws and regulations.' BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up Kerimov did not respond to a request for comment. A representative for Snap did not address questions about the alleged holding in Heritage Trust. However, the representative said that the company does not know the underlying owner of shares in Class A common stock because they are registered in the name of a brokerage firm rather than the individual investor. Uber and SpaceX did not respond to requests for comment. The Justice Department declined to comment, and Treasury did not respond to requests for comment about any further investigations related to Heritage Trust or Kerimov. Treasury can fine companies that break sanctions whether they realise it or not, and in some previous cases, civil fines have run into the hundreds of millions of US dollars. Treasury can calculate fines based in part on the total value of transactions in violation and can levy penalties totalling as much as twice the value of those dealings, though they are often reduced based on mitigating circumstances or come to a negotiated settlement. Separately, in June, a San Francisco-based venture capital firm was hit with a fine related to its dealings with Kerimov. Treasury assessed a US$216 million fine on GVA Capital, which it said 'knowingly' managed an investment for Kerimov that was ultimately owned by Heritage Trust for more than three years while he was sanctioned. It was the maximum possible fine for the GVA case. The agency's determination makes no mention of Citigroup. Treasury made clear at the time of the GVA enforcement that it hoped the action would put a spotlight on 'the risks that arise when gatekeepers, such as investment professionals, accountants, attorneys, and providers of trust and corporate formation services, among others, fail to properly understand the risks associated with the provision of their services.' GVA managed the investments for Kerimov through his nephew Nariman Gadzhiev, whom the company 'knew served as Kerimov's proxy', according to the Office of Foreign Assets Control, the part of the Treasury that deals with sanctions enforcement. Gadzhiev himself was eventually designated by the Treasury in November 2022. Gadzhiev did not respond to a request for comment, and GVA could not be reached. Citigroup corresponded with Gadzhiev about transactions relating to Heritage Trust before and after Kerimov was sanctioned, according to communications reviewed by Bloomberg. It's not clear in what capacity Gadzhiev was acting, on the basis of those communications. Heritage Trust documents show the sole source of its funding was Kerimov, a Russian senator who built a fortune valued at US$9.7 billion by Bloomberg Billionaires Index via investments in Russia's energy, banking and mining sectors. The trust was set up with funds from Liechtenstein-based Diversity Foundation, which was founded in 2013 and held US$400 million that Kerimov had gifted to two of his adult children, who were listed as the foundation's two beneficiaries, according to the documents. By early 2017, Citigroup officials had secured Kerimov as a client and were involved in seeking a way to move the assets held by the Diversity Foundation into a US-based trust, one benefitting several more family members that the bank would be responsible for administering, according to correspondence reviewed by Bloomberg. But it was not a straightforward process, documents show. Diversity Foundation's trustees, Andreas Schurti and Ernst Walch, felt uncomfortable about agreeing to transfer all the funds from the foundation to Heritage Trust. That's because it would mean the two adult children's share would be diluted, according to the correspondence. The trustees, Schurti and Walch, at one point proposed making Citigroup 'the new sole beneficiary' of the foundation, replacing Kerimov's two adult children, records from 2017 show. Citigroup officials requested multiple amendments to the draft document, removing the language that would have made it a beneficiary, the correspondence shows. Nevertheless, a document signed by the trustees describing Citigroup as 'the new sole beneficiary' of the foundation was included in a 'Know Your Customer' package provided to an investment adviser and a law firm representing Heritage Trust in 2018, according to correspondence reviewed by Bloomberg. Schurti declined to comment, while Walch did not respond to requests for comment. However, they resolved the transfer, the assets ended up in Heritage Trust. Under the terms of the trust set up by Citigroup, Kerimov's mother was the grantor and could distribute the trust's funds to any of her descendants unless they were explicitly barred from receiving them. A subtrust also included a provision that any mothers of Kerimov's children would be included as beneficiaries, according to trust documents. The records refer to Kerimov as his mother's 'second oldest son'. Kerimov's mother, Kuncha Kerimova, could not be reached for comment. Kerimov was sanctioned on Apr 6, 2018, as part of the Trump administration's effort to hold Russian officials accountable for profiting from alleged corruption and foreign aggression. That's when the clock started ticking for Citigroup. Under federal regulations, the bank had 10 business days to report the trust to Treasury as blocked property, or seek legal reassurance it could continue to operate it. Treasury's Ofac urges caution over transacting with an entity in which a blocked person has 'significant ownership' even if it is less than 50 per cent, or if they 'may control by means other than a majority ownership interest'. A source familiar with Citigroup's view said that at the time of the designation, it was not clear to the bank that Kerimov was sufficiently involved to require them to block the trust, Bloomberg has previously reported. Citi and others pursued a series of measures so that the trust could continue to operate legally. After the sanctions, James Langdon, an attorney who represented and advised the trust independent of Citigroup, inquired whether its terms could be modified, according to the documents. That resulted in an Apr 24, 2018, document that would have excluded any child of Kerimov's mother from receiving income or principal from the trust, according to a Bloomberg review of the material. That necessarily would have excluded Kerimov. It's not clear whether the document was acted upon. Peter Gordon, a partner at the Delaware law firm GF&M that worked on the proposed modification, said the document was drafted after Langdon asked him if there was anything that could be done under Delaware trust law to rectify an unspecified problem facing Heritage Trust. The trust was classified as 'irrevocable,' meaning its terms could not be changed. 'What I understood is this inadvertent thing had happened,' Gordon said in an interview, and that the trust now needed to be changed to remove any possibility that a sanctioned person could ever benefit. 'The people who unknowingly had this person as a beneficiary' wanted to ensure this person 'could never receive benefit from the trust,' he said. Gordon added that his firm 'took the necessary steps under Delaware law' to ensure Kerimov could never receive any benefit from the trust, adding he did not know at the time that Kerimov had recently been sanctioned. He said that he was subsequently contacted by US Treasury 'because there was an investigation' and said he gave them the same answer. On Apr 26, 2018, Citigroup emailed information about Heritage Trust to Ofac, seeking a determination that Heritage Trust was not subject to blocking. In response to Citigroup's e-mail, a Treasury official said it did not appear that the bank needed to block the trust, based on what was shared, but that it should review additional information before deciding, a person familiar with the correspondence said, asking not to be identified discussing private matters. Citigroup needed to rule out any scenario in which Kerimov could have a future or contingent interest in the trust, which certain terms and conditions of the trust indicated might be the case, the Treasury official wrote, according to the source. Under Treasury guidance, any interest by a sanctioned person whatsoever – even if indirect, future or contingent – needs to be frozen. On Apr 27, 2018, a letter written at Citigroup's request and signed by Langdon, listed Kerimov and several others as 'prohibited' persons who shall not be considered a beneficiary of the trust, Bloomberg previously reported. That would prevent his mother, the Heritage Trust grantor, from distributing money to Kerimov. Whatever legal steps were taken, they ultimately weren't enough to satisfy Treasury. Four years later, on Jun 23, 2022, the department privately issued a 'Notification of Blocked Property' stating that Ofac had reason to believe that Kerimov retained an interest in the trust based on, among other things, 'a review of the Trust provisions and its course of investments', according to a Bloomberg review of the document. A week later, Ofac publicly announced the trust was blocked. While Citigroup continued to correspond with Kerimov's nephew, Gadzhiev, after Kerimov was designated in 2018, Langdon cut ties with him, correspondence reviewed by Bloomberg shows. That's despite Gadzhiev signing a Dec 13, 2018, document stating that he has not 'and will not, take instruction from any SDN', short for the Specially Designated National term used to describe a sanctioned person, 'in relation to trust property,' according to correspondence that refers to the document. 'Langdon focused intently on compliance and enlisted a team of legal experts who advised him on each and every decision that crossed his desk as a fiduciary to the trust,' a spokesperson for Langdon said. 'Based on the consistent advice that he received, and despite the prior administration's conclusions about the status of the trust, Langdon believed at all times that the activities and operation of the trust were entirely compliant with applicable laws and regulations.' Citigroup and Gadzhiev meanwhile, regularly exchanged messages in 2018 about the trust, documents show. In an Aug 6, 2018 e-mail, a Citigroup employee confirms receipt of US$65 million paid to one of several Heritage Trust accounts. In a Nov 23, 2018 e-mail, the employee confirms receipt of another US$23.8 million payment to the account, before signing off with: 'Have a wonderful weekend!' BLOOMBERG
Business Times
2 days ago
- Business Times
US consumers to bear brunt of tariff hit: Goldman economists
[NEW YORK] The impact of US President Donald Trump's tariffs on consumer prices is just getting started, according to research by Goldman Sachs Group, adding more uncertainty to a Treasury market that has been gripped by shifting bets on the pace of interest rate cuts. US companies have so far taken the bulk of the hit from Trump's tariffs but the burden will increasingly be passed on to consumers as companies hike prices, economists including Jan Hatzius wrote in a note. Consumers in the US have absorbed an estimated 22 per cent of tariff costs through June, but their share will rise to 67 per cent if the latest tariffs follow the pattern of levies in previous years, they wrote. The net result: faster inflation. The core personal consumer expenditure index, one of the Federal Reserve's favourite measures of inflation, will hit 3.2 per cent year on year in December, according to the Goldman analysts. They said underlying inflation net of tariffs would be 2.4 per cent. The rate was 2.8 per cent in June. The report adds weight to a widespread view among economists that Trump's sweeping tariffs will fuel inflation at a time when Fed policy has become a hot topic not just for bond traders but even for the president himself. Trump has broken convention by publicly calling for the Federal Reserve to cut rates, suggesting Fed chair Jerome Powell should resign and adding an ally – at least temporarily – to the monetary policy committee. Bond traders are now looking ahead to Tuesday's inflation data for clues on how fast the Fed can cut. Treasury 10-year yields rose around seven basis points last week, but fell during European trading hours on Monday (Aug 11). BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up Traders are pricing in a more than 80 per cent chance of a rate cut at the Fed's next meeting in September, but the prospect of more easing in the months to come is clouded by the uncertain impact of tariffs on inflation. Staggered impact Most economists consider tariffs to be inflationary, since logic suggests companies will pass the additional costs onto their customers. But the view is not unanimous – and the debate partly comes down to definitions. 'Inflation, certainly as it's relevant to a central bank setting monetary policy, concerns an ongoing increase in the overall price level,' said Oren Cass, founder and chief economist at American Compass, in a recent episode of Bloomberg's Trumponomics podcast. 'If you choose a specific policy that by design makes a one-time change in the price of certain things, that is not inflation in a sense that you would want a central bank to worry about.' Goldman's analysis, which suggests businesses have held back from an all-at-once increase in prices, supports the argument that tariffs will ultimately be inflationary. The bank said tariff effects have boosted core PCE by 0.2 per cent so far, with another 0.16 per cent expected in July and an additional 0.5 per cent over the rest of the year. While American businesses have taken around 64 per cent of the hit from tariffs so far, their share will fall to less than 10 per cent as they pass on more of the costs onto consumers, according to the report. The analysts added that the impact on US businesses has been mixed – while some have taken a larger share of the tariff hit, domestic producers shielded from competition have raised prices and benefited. Those opportunistic price rises also push up inflation. Foreign exporters have absorbed an estimated 14 per cent of the cost of tariffs through June, but their share may rise to 25 per cent, Goldman said. The impact on foreign exporters can be gauged from a slight decline in import prices on tariffed goods, they said. BLOOMBERG
