Morning Report: FOMC minutes soothe the markets 4/10/14

Vital Statistics:

 

Last Change Percent
S&P Futures 1863.6 -1.2 -0.06%
Eurostoxx Index 3168.4 -14.4 -0.45%
Oil (WTI) 103.3 -0.3 -0.33%
LIBOR 0.227 -0.001 -0.22%
US Dollar Index (DXY) 79.52 0.036 0.05%
10 Year Govt Bond Yield 2.67% -0.02%
Current Coupon Ginnie Mae TBA 105.8 0.1
Current Coupon Fannie Mae TBA 104.4 0.1
RPX Composite Real Estate Index 200.7 -0.2
BankRate 30 Year Fixed Rate Mortgage 4.44

 

Markets are flattish after initial jobless claims came in lower than expected and import prices rose. Bonds and MBS are up small.
Stocks and bonds took off on the release of the FOMC minutes yesterday. The Fed considered a more explicit commitment to keep rates low until inflation reaches their target. This additional hurdle for raising rates cheered the markets and stocks went out on their highs. “A few” members (probably Plosser) thought the Fed Funds rate should increase soon, but the rest of the Committee disagreed, saying that the evidence the hawks cited was inappropriate to focus on at the zero bound. The takeaway is that the forecast of a June 2015 rate hike is looking more and more like an outlier and if inflation stays below the target rate of 2%, the Fed may consider holding rates at zero until inflation its 2%. Which, if China indeed hits the wall and its real estate bubble bursts, could be a long time. Start thinking about where the next bubble is going to be.
Remember Greece? The fiscal ne’er-do-well of Europe that got cut off from the bond market? Well, guess what? They just raised 4 billion euros of 5 year paper, with a bid to cover ratio of 5:1. The rate they paid? 4.75%. People have such short memories….. Or it is just the fact that since rates are so low, people have to reach for yield. Either way, once rates start going up, it is going to be a bumpy ride, IMO.
One other point about Greece – they did clean up its public spending issues a bit and trimmed its debt (the dreaded austerity that liberal economists love to hate). That is the difference between not being able to finance your government at all and being able to borrow at under 5%. Note to Paul Krugman. The bond market always gets the last word. Always.
Unintended consequence of Dodd-Frank? Turning non-judicial states into judicial ones anyway. Lenders are choosing to go through the court process, even if it takes more time, in order to reduce the potential liability under the new foreclosure laws (especially in states like California).
The CFPB is holding a forum on the mortgage closing process on April 23. It will be livestreamed on their site. Find out what sins we are apparently committing in the closing process.

32 Responses

  1. Ally Financial opens up in the hole… Amazing how crappy IPOs have been priced these days. I guess that is price you pay for free trading – bankers don’t care if the customers lose money on IPOs – they aren’t making any money from sales and trading anyway…

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  2. Singer is a huge Republican donor, but he supports gay marriage. Full disclosure, I worked for Singer for 7 years.

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  3. I am totally perplexed at why some WaPo pages load properly for me (including comments) and others just don’t anymore, including PL. Bizarre.

    Mark, interesting anecdote about your wife’s decision to turn the treadmill down a few notches. Anyone who works in a profession and doesn’t observe that on average men and women make different calculations and tradeoffs … I’d like to know what they do observe, cuz it isn’t the world I live in. On top of that, we make huge accomodations and give special treatment to women for those choices. I’m not complaining about it, just observing that that is reality, not this bogus bs from the Admin. I have multiple women on all my case and client teams; most of the good ones are on some kind of reduced schedule, coming off, on, or going on leave. It’s just how the world works.

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    • Agree, QB, especially in the professions, as I see them from the same vantage point as you. I read somewhere that if you correct for choices made voluntarily there is still a gap of about 5%. Barely outside statistical noise, if you ask me. Perhaps explained by KW’s thought that women do not push as hard as men when demanding raises or perhaps there is a wee bit of vestigial discrimination. In any case, it’s no biggie and not worth the effort the Ds lavish upon it.

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  4. I’d love to get a Progressive male’s take on this posting about the Federal govt and functionality.

    http://m.nationalreview.com/article/375453/coases-tortoise-kevin-d-williamson/page/0/1

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  5. I suppose we could say these decisions are more accurately decisions of families, but it is the same thing.

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  6. ” In any case, it’s no biggie and not worth the effort the Ds lavish upon it.”

    Assuming we’re talking policy, I’d agree with that.

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  7. “accurately decisions of families”

    WFT are those?

    /progressive policy wonk.

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  8. I am still amazed at how the Democrats have morphed completely into a party explicitly representing noncitizens, and viciously so.

    Why am I still amazed, that’s the real question.

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  9. “I read somewhere that if you correct for choices made voluntarily there is still a gap of about 5%. Barely outside statistical noise, if you ask me.”

    That’s my take as well for the current employment market, but course that makes me just another run of the mill IGMGFY WMP guy.

    My biggest issue with the various legislation that’s been proposed isn’t things like the statute of limitations changes in the Ledbetter act, which I actually think is fair or even the provisions on no retaliation for sharing salary information, but the specific disallowing of certain defenses against discrimination lawsuits via legislative fiat. That’s just a sop to the trial bar, pure and simple.

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  10. “I’m Now Kevin’s Biatch, on April 10, 2014 at 12:44 pm said:

    Fuck yeah!

    http://www.nationaljournal.com/congress/pelosi-republicans-are-stalling-on-immigration-reform-because-of-racial-issues-20140410

    Gettin’ my Bull Connor(D) on!”

    Ted Kennedy was too:

    “During debate on the Senate floor, Senator Kennedy, speaking of the effects of the act, said, “…our cities will not be flooded with a million immigrants annually…. Secondly, the ethnic mix of this country will not be upset….”. The act’s supporters not only claimed the law would not change America’s ethnic makeup, but that such a change was not desirable.”

    http://en.wikipedia.org/wiki/Immigration_and_Nationality_Act_of_1965

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  11. Teddy undoubtedly “supported” women. IYKWIMAITYD😈

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  12. “but course that makes me just another run of the mill IGMGFY WMP guy.”

    I say we own it:

    hope this works: https://www.dmv.virginia.gov/dmvnet/plate_purchase/select_plate.asp?PLT=&PLTNO=

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  13. “True, from a certain point of view.”

    #Thatwizard’sjustacrazyoldman

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  14. Nova, meaning have the personalized plate read IGMGFY?

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  15. yep.

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  16. it’s because of your White Male Privilege that you don’t know what that is.

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  17. Regarding the Heartbleed security vulnerability, this is a nifty SSL testing site:

    https://www.ssllabs.com/ssltest/index.html

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  18. @qb: “Mark, interesting anecdote about your wife’s decision to turn the treadmill down a few notches. Anyone who works in a profession and doesn’t observe that on average men and women make different calculations and tradeoffs … I’d like to know what they do observe, cuz it isn’t the world I live in.”

    My wife works as hard as any man (though stepped out of the work world for several years, or just worked part time, while rearing young children). However, as they get older, she’s trying to get back in, and I think she’d like to turn the treadmill down a bit but won’t, and she certainly works harder than most people I know. But she doesn’t insist she gets paid for it. Which in a lot of jobs means you get paid less, no matter how hard you work and no matter what you do. You don’t get paid the most for working harder or being a guy, per se, you get paid the most or more for asking for it or negotiating for it. Which, collectively, I think women aren’t as prone to do.

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    • Kev, could be I suppose. I’m not convinced that hard negotiating creates too many differences, although it is probably true that in my firm, for example, men are bigger gunners and make more extreme demands. (I just don’t think it makes any difference for us or not much.). It be interesting to see some studies, although I don’t know how they could be designed.

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  19. I just saw your note, Scott. was going to pick BC. do’h

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    • nova:

      was going to pick BC. do’h

      Did you watch it? Horrible. The way BC gave away the puck to let Union get up by 2 in the third period…ugh. Still, the 2 desperation goals in the final 2 mins were pretty good. Too bad for the empty netter.

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  20. http://www.nationalreview.com/campaign-spot/375384/medicaid-patients-realize-they-cant-find-doctor-jim-geraghty

    This can’t be true. It can’t be true b/c I said it, repeatedly.

    Like

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