Morning Report – Hello Hercules 1/2/14

Vital Statistics:

Last Change Percent
S&P Futures 1836.4 -4.7 -0.26%
Eurostoxx Index 3086.9 -22.1 -0.71%
Oil (WTI) 97.66 -0.8 -0.77%
LIBOR 0.243 -0.003 -1.32%
US Dollar Index (DXY) 80.69 0.581 0.73%
10 Year Govt Bond Yield 3.02% -0.01%
Current Coupon Ginnie Mae TBA 104 0.1
Current Coupon Fannie Mae TBA 103.1 0.1
RPX Composite Real Estate Index 200.7 -0.2
BankRate 30 Year Fixed Rate Mortgage 4.55
Markets are down to kick off the new year. Bonds and MBS are down. Initial Jobless Claims came in at 339k, a little lower than expected. We are scheduled to get hit with a big snowstorm this afternoon in the Northeast, so I would imagine bonds are going to become a little more illiquid this afternoon.
Some more bullish economic data – the Dec ISM manufacturing index came in a little better than expected at 57, and construction spending increased 1% month-over-month, topping expectations.
The buy-and-rent business is getting tougher. Part of the reason why the origination business has been so tough is that the most aggressive buyers these days are cash institutional buyers. Depending on who you ask, cash buyers are anywhere from 40% to 50% of buyers these days. Historically they have been closer to 20%. So even if existing home sales stay the same, the number of homes with mortgages on them could increase 45% or so if we went back to normal cash / mortgage percentages.
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