Morning Report – The margin clerk approacheth… 6/12/13

Vital Statistics:

  Last Change Percent
S&P Futures  1637.7 10.6 0.65%
Eurostoxx Index 2697.5 14.3 0.53%
Oil (WTI) 96.07 0.7 0.72%
LIBOR 0.273 0.001 0.37%
US Dollar Index (DXY) 81.15 0.037 0.05%
10 Year Govt Bond Yield 2.23% 0.04%  
Current Coupon Ginnie Mae TBA 101.6 -0.3  
Current Coupon Fannie Mae TBA 99.92 -0.2  
RPX Composite Real Estate Index 202.8 -0.2  
BankRate 30 Year Fixed Rate Mortgage 4.04    

 

Markets are higher this morning after yesterday’s decline. This week is relatively data-light until Friday. Bonds ad MBS are down small.
 
Mortgage Applications rose 5% last week as the Bankrate 30 year fixed rate average fell from 4.1% to 4.03%. Refis were up 5%.
 
The sell-off in bonds and MBS has not only hit mortgage REITs like Annaly and American Capital, who are down 25% + in the last month, it has also hit some hedge funds as well. $1.5 billion Metacapital is down 6.5% this year. The REITs are levered something like 6:1 and the hedge funds are undoubtedly levered as well. Margin calls could start soon, and when they happen, look out below. MBS are one of those investments that pretty much everyone is long, and there are few buyers when they get hit. The point of this: watch your locks. It is a dangerous environment to float in.
 
Corelogic has put out its latest equity report. Just under 20% of all homes are underwater and negative equity fell by 8.7% in the first quarter.
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