Morning Report – Record outflows in bond funds 7/1/13

Posted on July 1, 2013 by Brent Nyitray

Vital Statistics:

Last Change Percent
S&P Futures 1607.5 8.2 0.51%
Eurostoxx Index 2618.1 15.5 0.60%
Oil (WTI) 97.87 1.3 1.36%
LIBOR 0.273 0.000 0.00%
US Dollar Index (DXY) 83.16 0.022 0.03%
10 Year Govt Bond Yield 2.53% 0.04%
Current Coupon Ginnie Mae TBA 102.3 -0.2
Current Coupon Fannie Mae TBA 101.3 -0.2
RPX Composite Real Estate Index 205.3 -0.2
BankRate 30 Year Fixed Rate Mortgage 4.39

 

Markets are higher on no real news. The Markit US Purchasing Managers Index came in a little lower than expected. Later this morning we will get construction spending and the ISM manufacturing. ISM could be market moving. Bonds and MBS are down.

 

This week is relatively data-light, with the 4th of July holiday in the middle. The highlight of the week will be the jobs report on Friday.

 

A record $80 billion was pulled out of bond funds and bond ETF funds in the month of June, according to Trim Tabs. This record outflow is also based on people who follow the news closely. Q2 statements are coming out soon and a lot of people who don’t follow their investments closely may be in for a shock. Which means we could face another deluge of selling.

 

Delinquencies are falling again, with serious delinquencies dropping to 2.83% in the month of May, according to Fannie Mae’s monthly summary. Serious DQs were 3.57% a year ago. Separately, Citi paid just under $1 billion to settle buyback claims on mortgages originated from 2000 to 2012.

 

I will be on Capital Markets Today later this afternoon discussing the latest from the bond markets

Filed under: Morning Report |

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29 Responses

  1. jnc4p's avatar
    jnc4p, on July 1, 2013 at 8:10 am said:

    Jerry Brown continues to be my favorite Democrat:

    “”Under the changes orchestrated by Gov. Jerry Brown last year, the number of state agencies will be reduced from 12 to 10, with departments that have related functions housed together.
    …

    Brown has said the changes will streamline government and could save money in the long run.

    “This far-reaching plan will make government more effective and will reduce wasteful spending,” the Democratic governor said in a statement after the plan was authorized last July. “”

    http://www.dailynews.com/breakingnews/ci_23571684/overhaul-state-agencies-take-effect-monday

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  2. lmsinca's avatar
    lmsinca, on July 1, 2013 at 8:18 am said:

    Mine as well jnc.

    And this with the 4th of July holiday in the middle.

    Four day weekend baby.

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  3. lmsinca's avatar
    lmsinca, on July 1, 2013 at 8:38 am said:

    And I can’t help but say how sad this story is. We know lots of firefighters and…………..dammit.

    http://www.reuters.com/article/2013/07/01/us-usa-fires-arizona-idUSBRE96003520130701

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  4. Michigoose's avatar
    Michigoose, on July 1, 2013 at 9:38 am said:

    Brent:

    Markets are higher on no real news.

    This seems to be a common trend lately. Oh, and your comment on PL Oh Cao, you just need to learn a little about business and economics. Some day you will get it. I have faith in you. was priceless.

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  5. jnc4p's avatar
    jnc4p, on July 1, 2013 at 10:47 am said:

    For any who have Shotime or another way to catch it, the movie Lawless was pretty entertaining, despite the presence of Shia LaBeouf. Tom Hardy’s performance is fantastic.

    http://en.wikipedia.org/wiki/Lawless_%28film%29

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  7. Brent Nyitray's avatar
    Brent Nyitray, on July 1, 2013 at 11:41 am said:

    @Michigoose. Thanks. Cao considers me part of the free-market Taliban

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    • ScottC's avatar
      ScottC, on July 1, 2013 at 12:42 pm said:

      Heh.

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      • ScottC's avatar
        ScottC, on July 1, 2013 at 2:19 pm said:

        I am assuming there are relevant details missing from this story…perhaps our resident Texans can fill us in and make some sense out of it?

        After a Facebook friend with whom he played video games described him as “crazy” and “messed up in the head,” Carter replied — sarcastically, one imagines — “Oh yeah, I’m real messed up in the head, I’m going to go shoot up a school full of kids and eat their still, beating hearts.” He added “lol” and “jk” for good measure. For this he was arrested by Austin police, charged with making a “terroristic threat,” and thrown into prison. He may languish there until the start of the next decade.

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        • markinaustin's avatar
          markinaustin, on July 1, 2013 at 4:05 pm said:

          The original story as it was broadcast in Austin.

          http://www.kxan.com/dpp/news/local/austin/teen-wanted-for-threatening-students

          I hadn’t heard about it again.

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        • ScottC's avatar
          ScottC, on July 2, 2013 at 5:15 am said:

          mark:

          The original story as it was broadcast in Austin.

          I can see how the comments could spark an investigation of the guy. But how can the guy be jailed for this? Seems totally crazy to me.

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        • ScottC's avatar
          ScottC, on July 2, 2013 at 5:40 am said:

          Interesting….an example of a literacy test used by Louisiana in 1964.

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        • ScottC's avatar
          ScottC, on July 2, 2013 at 7:37 am said:

          More on the guy in Texas who is currently in prison and about to stand trial for, er, his speech. The author seems to share my intuitive reaction, albeit with a better legal underpinning.

          Even if one considers that Carter’s joke met the “imminent lawless action” threshold — which I absolutely do not — the subsequent search and questioning of the suspect rendered it demonstrably clear that Carter did not present anything close. That the case has been carried beyond that point is astonishing — and unconstitutional.</i?

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  8. novahockey's avatar
    novahockey, on July 1, 2013 at 1:51 pm said:

    scott — the title of the movie — LOL

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  9. Michigoose's avatar
    Michigoose, on July 1, 2013 at 4:47 pm said:

    McWing: It’s pretty amazing that deaths and injuries have been as low as reported. Al Jazeera is reporting that there were between 14 and 17 million–million!–protesters today.

    That’s a butt load of angry people!

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  11. lmsinca's avatar
    lmsinca, on July 1, 2013 at 5:28 pm said:

    That was interesting jnc. I’ve been reading a lot more oil industry stories since our daughter started working for the company in Denver. Chevron paid her way through Mines and she almost went to work for them. As a matter of fact she was the first one in their partnership with the school to turn down a Chevron job.

    She sends me articles all the time but a lot of them are centered around the CO/Utah area as that’s where her basin is. Would you be interested in any of them?

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  12. yellojkt's avatar
    yellojkt, on July 1, 2013 at 6:54 pm said:

    Another tale from Florida of responsible gun ownership. A guy shoots and kills someone he chases down on the highway thinking it’s a guy he was in a fight with at a strip bar and it wasn’t even the right person. But he’ll probably get off on a Stand Your Ground defense.

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  13. Michigoose's avatar
    Michigoose, on July 2, 2013 at 6:23 am said:

    This is the family portrait for one of the firefighters that died in Arizona. You’ve got to love a family with that sense of humor.

    What a terrible week out here, and there isn’t any relief from the heat before the weekend. At least it seems that people around here are being smarter about fireworks than in years past and not setting them off willy-nilly.

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  14. novahockey's avatar
    novahockey, on July 2, 2013 at 7:39 am said:

    nothing about that is related to stand-your ground.

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  15. yellojkt's avatar
    yellojkt, on July 2, 2013 at 7:53 am said:

    That the case has been carried beyond that point is astonishing — and unconstitutional.

    The legal system is notoriously humorless and will be the death of sarcasm.

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    • ScottC's avatar
      ScottC, on July 2, 2013 at 8:15 am said:

      yello:

      The legal system is notoriously humorless and will be the death of sarcasm.

      It’s worth noting that apparently the police were notified of the original facebook comment by a woman living in Canada. Canada, of course, is notorious for its criminalization of speech.

      Edit: Corked by jnc

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  16. jnc4p's avatar
    jnc4p, on July 2, 2013 at 8:08 am said:

    The clear precedent that should be taken from the Texas case is that any reports from Canadians on the Internet are insufficient as probable cause.

    Only another Texan is qualified to determine if he poses a real danger, given the vast gulf between Texan and Canadian culture.

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  17. yellojkt's avatar
    yellojkt, on July 2, 2013 at 8:29 am said:

    Sarcasm translates very poorly to electronic/written media even with smileys and ‘j/k’s. Case in point:

    But he’ll probably get off on a Stand Your Ground defense.

    nothing about that is related to stand-your ground.

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  18. novahockey's avatar
    novahockey, on July 2, 2013 at 8:37 am said:

    sorry about that yello

    (but it didn’t see a smiley — just me?)

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  19. yellojkt's avatar
    yellojkt, on July 2, 2013 at 8:41 am said:

    No problem. I eschew smileys, so that is the risk I take.

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