Today in history – September 3

Posted on September 3, 2013 by ScottC

2004 – A three-day hostage crisis in a school in the town of Beslan, Russia comes to a violent end when a gun battle between Russian security forces and the hostage takers erupts following an explosion. Three days earlier Chechen terrorists had surrounded and then taken over the school, holding some 1,200 children, parents and teachers, who had been celebrating the first day of school, in the school gym. The gym was then rigged with explosives as the terrorists demanded a Russian troop withdrawal from Chechnya. On the third day of the siege, an explosion in the gym, which witnesses later say was accidentally set off, sparks a firefight between the terrorists and security forces. By the time it is over, 31 of the 32 terrorists are dead, along with 331 of the hostages, including 186 children.

1783 – America is officially recognized as an independent nation with the signing of the Treaty of Paris, formally ending the American Revolution. The last major battle of the Revolution had ended two years previously with the surrender of British General Cornwallis to French and American troops, but final peach negotiations had continued throughout 1782 and 1783. The final agreement granted America its independence as well as granting all lands from Florida to the Great Lakes and between the Atlantic and the Mississippi to the US, essentially doubling its size.

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Morning Report – it is all about Friday’s jobs report 09/03/13

Posted on September 3, 2013 by Brent Nyitray

Vital Statistics:

Last Change Percent
S&P Futures 1645.9 14.6 0.89%
Eurostoxx Index 2766.1 -8.0 -0.29%
Oil (WTI) 107.2 -0.4 -0.38%
LIBOR 0.26 0.000 0.00%
US Dollar Index (DXY) 82.34 0.256 0.31%
10 Year Govt Bond Yield 2.84% 0.05%
Current Coupon Ginnie Mae TBA 104.1 0.0
Current Coupon Fannie Mae TBA 102.8 -0.4
RPX Composite Real Estate Index 200.7 -0.2
BankRate 30 Year Fixed Rate Mortgage 4.47
Markets are stronger after a return from the long Labor Day weekend. While a short week, we will have all sorts of important data, with Friday’s jobs report the most important. Risk-on feel, as stock index futures are rallying and bonds / MBS are getting hit.
Friday’s jobs report will probably answer the September vs December question. If it is strong, the next questions will concern the actual amount and distribution of the cuts. The consensus seems to be that the Fed will reduce purchases by $10 billion a month. Will that be all Treasures, a mix of Treasuries and MBS, or all MBS? While I don’t think there is any chance the Fed will choose to do all MBS, there is a chance they could do all Treasuries. And that would be mortgage-rate positive.
Is the Syrian situation market-moving? It has the potential to be market-moving if it spreads to other countries in the Middle East, but on its own, probably not. Any sort of strike by the US will be limited and no one envisions sending troops in. The only real worry is if it drives oil higher, and that will affect Asia more than us.
The MBA Independent Mortgage Banker Report showed average profit per loan decreased to $1,528 (75 bp) in the second quarter from $1,772 (86 bp) in the first quarter. While overall volume was flat, per-loan production costs continue to rise, and we are seeing pricing pressures.
The jumbo market so far seems to be immune to rising rates.

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