Brent Nyitray
Fairlington Blade
Let the mutherfuker burn!
jnc4p
Kevin S. Willis
Michigoose
lmsinca
markinaustin
Arcanaut
novahockey
quarterback
ScottC
yellojktVital Statistics:
| Last | Change | Percent | |
| S&P Futures | 1677.8 | 3.5 | 0.21% |
| Eurostoxx Index | 2908.5 | 15.4 | 0.53% |
| Oil (WTI) | 101.8 | -0.6 | -0.57% |
| LIBOR | 0.246 | -0.003 | -1.21% |
| US Dollar Index (DXY) | 80.02 | -0.197 | -0.25% |
| 10 Year Govt Bond Yield | 2.63% | 0.02% | |
| Current Coupon Ginnie Mae TBA | 105.5 | -0.1 | |
| Current Coupon Fannie Mae TBA | 104.8 | -0.2 | |
| RPX Composite Real Estate Index | 200.7 | -0.2 | |
| BankRate 30 Year Fixed Rate Mortgage | 4.28 |
The government shuts down and markets are up. Kind of says it all. Bonds and MBS are down small. The markets are sanguine because it means that QE will remain in place.
Shutdowns are not as rare as the media likes to portray: it shut down once under Ford, and HW Bush, twice under Clinton, five times under Carter, and eight times under Reagan. So keep this in mind when you hear all the sturm and drang over how this is “unprecedented” and it will wreck the economy.
So there are two ways out that seem to be within the realm of possibility. The first (and most likely) is that John Boehner relents and allows a clean continuing resolution to the floor of the House and it is passed with moderate Democrats and Republicans. The far left will probably vote against it because they want the sequester cuts repealed and the Tea Party will obviously vote against it. The second (and less likely) is that Obama relents and throws the tea party a bone and disposes of some part of obamacare. The most likely candidate is the medical devices tax which is pretty much loathed universally and has powerful democrats lining up against it. It is unknown if this is enough to get the tea party on board.
The government shutdown started at midnight but most people will not notice. Entitlement checks will still go out, the mail will still get delivered, and government workers are about to take a paid vacation. HUD will still operate for the most part. In mortgage land, big banks like Wells Fargo have told their clients it is business as usual.
Here are some of the impacts on the mortgage business:
- FHA will continue insuring loans in Lender Insurance and FHA Connection will be operating. DE test cases and HUD insurance processing will be delayed
- VA – business as usual; minimal disruption
- Ginnie Mae – Will issue new securities; minimal impact on new issuer processing for at least the near future
- USDA – no guidance at the moment; expect no new guarantees during shutdown
- IRS – Apparently no 4506Ts during the shutdown
I noticed yesterday that some on the Street were backing off their FHA and VA pricing a little. The fact that things could get messed up at Ginnie Mae means mortgage bankers are wary of having too much inventory for fear they won’t be able to move it.
What does this shutdown mean for the markets? Well, first of all, you aren’t getting any government data until they are back at work. So no jobs report on Friday, which means the ADP employment report on Thursday will suddenly become a lot more important. A shutdown of any length will almost certainly take the possibility of reducing QE off the table at the October meeting, and possibly the December meeting. So, the longer it goes on, the more bullish it is for bonds.
That said, we will go from this crisis to the debt ceiling crisis. If the government does not get an increase in the debt ceiling, the government will have to prioritize payments. Principal and interest payments and social security payments will take precedence and will almost assuredly be paid, although some are warning that the computer systems at Treasury which pay the nation’s bills will have to re-programmed to allow this intervention. Of course with the government shut down, that becomes more difficult.
Filed under: Morning Report |
All Things in Moderation 
WE.NEED.THIS.
@David_Cameron: Speaking to Julie, the nurse at Range Medical Centre, about our plans to bring in 8am-8pm access to GP surgeries. http://t.co/oXVsgbOhci
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Brent–
I think you’re being just a tad disingenuous about earlier shutdowns; they often happened over a weekend, they only affected a few agencies at a time, and they were generally in the context of ongoing budget talks.
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government workers are about to take a paid vacation
I’d suggest that you wait to gloat about government employees being the moochers that they are. Whether or not they get paid is quite up in the air at the moment.
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I’m no longer sanguine that this is going to get resolved quickly. It could well roll into the debt ceiling and become one big fight. Ironically, having the debt ceiling fight during the shutdown simplifies prioritization as there’s no competing appropriations bill to balance with debt servicing and entitlements.
This is the reason I think it will go longer:
“In a last-minute ray of hope for active-duty troops, Congress on Monday approved and sent to the White House an agreement to keep issuing military paychecks.”
http://www.washingtonpost.com/politics/government-shutdown-begins-senate-expected-to-reject-latest-house-proposal/2013/10/01/ef464556-2a88-11e3-97a3-ff2758228523_story.html?hpid=z1
If various items starting being peeled off and funded individually, then this lessens the Democrats leverage and it could become a replay of the FAA funding during the sequester.
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The first (and most likely) is that John Boehner relents and allows a clean continuing resolution to the floor of the House and it is passed with moderate Democrats and Republicans. The far left will probably vote against it because they want the sequester cuts repealed and the Tea Party will obviously vote against it.
Here in TX our R Speaker has been Joe Straus of San Antonio for several sessions, now. He has been so bipartisan that he has named some D committee chairs even when he had a veto proof R majority for one session. As a result, he holds the votes of the non-TEA members of his own caucus and the pledges of the Ds, who could not elect a D on their own.
Boehner can remain Speaker if he pulls off such a deal. He can lose fifty votes in his caucus and gain 150 from the minority Ds. Just by bringing a “clean” CR to the floor.
Is that crazy? Works for TX.
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Breakdown of the older shutdows. http://www.neontommy.com/news/2013/09/list-all-government-shutdowns
Some were long in the 70s as the abortion lobby terrorists took hostages and shut down the government in spite and in wanton disregard of the economy in order to fulfill their nihilistic view of reproduction.
(Note, I am joking in the last sentence)
Of course I remember Dan Rather going apoplectic over Tip O’neill’s annual economic terrorism during the Reagan years. I especially remember the outrage over gerrymandered Democratic house seats.
And the government employees will get paid in for their time when it is all over. They always are.
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I was I’m the no shutdown camp. I was wrong. But I think this could go long.
At a conference I wasn’t planning on going to But might was well as nobody is home at CMS. Ironically I can’t loot it if there is nobody there.
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For instance, the U.S. Department of Agriculture informed Genex Cooperative Inc. on Monday afternoon that no international health certificates would be processed starting Tuesday.
The company collects semen from bulls and ships it overseas. Its business grinds to a halt without the certificates.
“We have a rancher in Argentina who is waiting for 5,000 doses. It’s a very big deal for him,” said James Chenevert, Genex Cooperative’s manager in Baton Rouge and Fort Payne, Ala.
http://theadvocate.com/home/7201068-125/federal-shutdown-impact-on-louisiana
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Frankly, Brent, I stopped having any faith in your prognostication skills when you said the sequester wouldn’t hurt anybody.
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“I was I’m the no shutdown camp. I was wrong. But I think this could go long.”
Yes, that’s where I am now. Now that it’s happened, everyone is in a wait and see mode to see how it plays out.
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NYT Editorial page is exactly right:
“John Boehner’s Shutdown
By THE EDITORIAL BOARD
Published: October 1, 2013
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FREEDOM!
@LeoShane Honor flight vets just knocked over the barriers at the WWII memorial to get inside http://t.co/ltfa4RAccQ
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Looks like they are going with the piecemeal CR approach.
http://www.nationaljournal.com/congress/the-day-after-the-government-shut-down-20131001?mrefid=LeadStoryTiles_normal
http://www.washingtonpost.com/blogs/plum-line/wp/2013/10/01/dems-to-gop-no-obamacare-extortion-period-full-stop/
The link to Cruz’s statements is illuminating. Apparently the consolation prize for the Tea Party if they can’t defund Obamacare isn’t a CR at sequester levels.
It’s funding only what they want funded at sequester levels and leaving the rest shut down.
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Troubling if true?
http://dailycaller.com/2013/10/01/ben-carson-i-had-my-first-encounter-with-the-irs-following-the-national-prayer-breakfast/
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Mark, I think they have figured out their strategy. They are going to pass clean CR’s for everything that they care about and leave the rest.
I underestimated Cruz’s ability to plan ahead. You were right about him.
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Cruz did not get stupid, that is for certain.
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What if the shutdown has an impact on the public similar to the Sequestor?
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Effect of the shutdown obviously depends on its length. 12 hours in I am not speculating.
The sequester did not bring the parties to the table to bargain for a balancing of the budget. I guess this won’t either.
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Troubling if true?
http://dailycaller.com/2013/10/01/ben-carson-i-had-my-first-encounter-with-the-irs-following-the-national-prayer-breakfast/“
Color me shocked…
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“What if the shutdown has an impact on the public similar to the Sequestor?”
The mortgage market will shut down as lenders can’t verify income / tax data from the IRS… Also, can’t insure FHA loans and get case numbers.
So for a short shutdown, no big deal, but if it goes on a long time, you won’t be able to get a mortgage unless the government decides to relent and allow these functions to happen.
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If they pass various individual CR’s to fund all the high impact services, that removes a lot of the pressure from the shutdown.
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Milkulski is saying the Senate Ds won’t go for a piecemeal approach.
let’s see if she sings that tune if she has to cast a no vote on something popular.
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It’s worse then I thought in DC.
@ChampionCapua: @AceofSpadesHQ @rickklein The People are walking around the Mall as if they owned it.
God speed NoVa!
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McWing:
The People are walking around the Mall as if they owned it.
LOL
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Milkulski is saying the Senate Ds won’t go for a piecemeal approach.
let’s see if she sings that tune if she has to cast a no vote on something popular.”
She must hate food inspection…Send her teabagging ass to Somalia…
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If they lob a clean CR over to the Senate for a specific department, I think it’s going to cause a world of problems for Reid. The Defense one set the precedent.
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“This business will get out of control. It will get out of control and we’ll be lucky to live through it.”
http://hotair.com/archives/2013/10/01/honor-flight-vets-break-through-shutdown-imposed-barriers-to-visit-wwii-memorial/
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I “mad maxed” up the station wagon awhile ago, so i’m good to go.
and let’s be honest, excited for the chance to take it out on the road.
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if they were smart, they’d send one over for WIC or food stamps or something. and call it the Continuing Resolution For the Children.
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Good Wonkblog piece:
http://www.washingtonpost.com/blogs/wonkblog/wp/2013/10/01/why-boehner-doesnt-just-ditch-the-right/
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I read the Boehner piece by EK you linked. No emulation of TX is coming.
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jnc (from the Ezra interview on Boehner):
He loves being a major American political figure, but he’s not a Newt Gingrich-like figure trying to lead the party in a certain direction. He’s just trying to survive and enjoy it while it lasts.
Maybe that is precisely the problem…R’s need a leader, not a caretaker. Especially not a caretaker of deal-cutting, slow-drift-to-the-left business as usual.
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My government shutdown name is Lord Humungus , the Ayatollah of RockandRolla.
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I think a GWAR character might be more suitable.
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What’s that take, 12 hours?
http://dailycaller.com/2013/09/14/obamacare-exchange-leaks-data-of-2400-unsuspecting-customers/
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McWing:
What’s that take, 12 hours?
If a bank had such a security breach, it would probably face a slew of regulatory and compliance fines and heightened regulatory scrutiny. New rules, more oversight. Who’s regulating the regulators?
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You know how WWII vets are, they’ll literally shit anywhere unless a park ranger is there.
C’mon Wingnuts! Common sense!
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Wow.
@stephenfhayes: Nat’l Park Service tells Toledo #HonorFlight Vets they’ll be “arrested” if they visit WWII Memorial. (H/T @neomom99) http://t.co/lHsm2vEnzu
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