Morning Report – No expanded HARP for you 1/23/14

Posted on January 23, 2014 by Brent Nyitray

Vital Statistics:

Last Change Percent
S&P Futures 1828.6 -10.0 -0.54%
Eurostoxx Index 3145.5 -5.8 -0.18%
Oil (WTI) 96.92 0.2 0.20%
LIBOR 0.239 0.002 0.63%
US Dollar Index (DXY) 80.64 -0.528 -0.65%
10 Year Govt Bond Yield 2.81% -0.05%
Current Coupon Ginnie Mae TBA 105.3 0.3
Current Coupon Fannie Mae TBA 104 0.3
RPX Composite Real Estate Index 200.7 -0.2
BankRate 30 Year Fixed Rate Mortgage 4.41
Stocks are lower on overseas weakness. Initial Jobless Claims came in at 326k, a little better than expected. The Markit PMI and the Chicago Fed National Activity Index came in lower than expected. Bonds and MBS are up
Existing home sales increased to 4.87 million in December, below the 4.93 million expectation. The median price increased 9.9% year-over-year to $198,000. All cash buyers remained steady at 32%, and just over 1/4 were first time homebuyers. Days on market jumped from 56 to 72.
The FHFA House Price Index rose .1% in November, which was lower than expected. Year-over-year, prices are up 7.6% and we are within 8.9% of the April 2007 peak. Home prices are at roughly the same level they were in April 2005. This index looks at houses with conforming mortgages only, so it tends to be a little less volatile than Case Shiller, etc which include distressed / cash sales as well as jumbos.
Fifth Third reported that origination volumes fell 46% quarter-over-quarter and 67% year-over-year.
A senior Treasury official spoke at the asset backed securities conference in Vegas and gave some insight as to the government’s thinking regarding the mortgage market. Key takeaways:
  • Treasury does not support changing the cut-off date for HARP
  • Treasury  would like to extend HARP to non-conforming loans as a way to deal with the eminent domain issue.
  • Fannie and Fred loans will probably trade in the same MBS at some point
  • The administration thinks mortgage standards are too inflexible, and wants to see more CRA lending.
  • The administration wants to restart private mortgage securitization, but doesn’t know how.
The WSJ has a good article on why hiring is still sluggish in the manufacturing sector, even as production increases. We still have some slack in the system and we probably won’t see a big hiring push until utilization levels are in the low / mid 80s.

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5 Responses

  2. Brent Nyitray's avatar
    Brent Nyitray, on January 23, 2014 at 12:24 pm said:

    Why I despise this administration, Part 123,456

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  3. jnc4p's avatar
    jnc4p, on January 23, 2014 at 12:27 pm said:

    Worth noting:

    “Economic mobility hasn’t changed in a half-century in America, economists declare
    By Jim Tankersley, Published: January 22 | Updated: Thursday, January 23, 12:01 AM”

    http://www.washingtonpost.com/business/economy/economic-mobility-hasnt-changed-in-a-half-century-in-america-economists-declare/2014/01/22/e845db4a-83a2-11e3-8099-9181471f7aaf_story.html

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    • ScottC's avatar
      ScottC, on January 23, 2014 at 1:38 pm said:

      jnc:

      I thought this was rather amusing. Early in the article, the author states:

      The landmark new study, from a group led by Harvard’s Raj Chetty, suggests that any advances in opportunity provided by expanded social programs have been offset by other changes in economic conditions. Increased trade and advanced technology, for instance, have closed off traditional sources of middle-income jobs.

      Then later:

      David Autor, an MIT economist who writes frequently about issues related to inequality, called the findings “a sort of Rorschach” test that will support many economists’ preconceived notions about the effectiveness of government programs in providing opportunity. Some could view the results as a failure of programs such as Pell grants, Head Start and nutritional supplements for children that are intended to promote mobility. Or, he said, “you can view this as: Social policies have fought market forces to a draw.”

      I guess we know which preconceived notions the author is laboring under.

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