Morning Report

Posted on March 13, 2012 by Brent Nyitray

Vital Statistics:

Last Change Percent
S&P Futures 1371.5 4.7 0.34%
Eurostoxx Index 2541.2 26.2 1.04%
Oil (WTI) 106.48 0.1 0.13%
LIBOR 0.4737 0.000 0.02%
US Dollar Index (DXY) 80.276 0.386 0.48%
10 Year Govt Bond Yield 2.06% 0.03%

Markets are a little stronger this morning on stronger German economic reports. US bond futures are down, while MBS are flat. Feb retail sales were in line with expectations, up 1.1%.

The National Mortgage Settlement will offer relief to underwater homeowners and those who were improperly foreclosed upon. Read the details about who will qualify here. The banks will get varying credit against the settlement based on the sort of principal forgiveness they do. They get full credit if they own the loan, and 45 cents if they service the loan. So the banks get credit against their settlement by passing losses to someone else? Why wouldn’t they pass off all of the settlement to investors in paper they service? Investors in MBS have to be seething right now.

CNBC has some data on the rental market and the purchase market, noting that prices are going in opposite directions in some localities. They note FHFA’s pilot program to turn REO properties into rentals. It will be interesting to see if the program works. My initial take on it was that FHFA was trying very hard to make the program uninteresting to pure financial investors.

The Fed will be releasing the latest stress-test results this week. Bloomberg notes that the Street is leaning negative, with the skew between puts and calls on the XLF the highest they have been since 2007. In plain English, that means that puts (or bets that the index will fall) are in more demand than calls (bets that the index will rise).

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