Morning Report – Progress on the GSEs 6/4/13

Vital Statistics:

 

Last

Change

Percent

S&P Futures 

1638.5

2.3

0.14%

Eurostoxx Index

2765.3

17.5

0.64%

Oil (WTI)

93.19

-0.3

-0.28%

LIBOR

0.274

0.001

0.26%

US Dollar Index (DXY)

82.81

0.149

0.18%

10 Year Govt Bond Yield

2.13%

0.01%

 

Current Coupon Ginnie Mae TBA

101.9

-0.2

 

Current Coupon Fannie Mae TBA

100.4

-0.1

 

RPX Composite Real Estate Index

201.5

0.6

 

BankRate 30 Year Fixed Rate Mortgage

4.11

   

 

Markets are up small after a 2% rally in Japan’s Nikkei 225 index last night. Bonds and MBS are down small.

Yesterday’s ISM report showed the manufacturing sector contracted slightly in May. New Orders and Production fell, while inventories rose. Employment was flat. The index level of 49 corresponds to a GDP growth rate of just about 2%.

The Senate is close to establishing a plan to abolish Fannie Mae and Freddie Mac and replace them with a government re-insurer that would backstop private mortgage insurance. F&F would be wound down and the US Treasury would assume responsibility for existing conforming loans. A new entity – the Federal Mortgage Insurance Corporation (FMIC) would provide re-insurance, which means they would only step in if the private mortgage insurer was unable to cover the losses. For holders of the junior preferreds, which includes a lot of big hedge funds, this doesn’t look like anything good for them.

And for those keeping track at home, here is Fannie Mae’s recent chart:

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