Morning Report – Terrible revision to Q1 GDP 5/29/14

Vital Statistics:

Last Change Percent
S&P Futures 1911.2 2.1 0.11%
Eurostoxx Index 3240.5 -5.7 -0.18%
Oil (WTI) 102.9 0.2 0.19%
LIBOR 0.227 0.000 -0.11%
US Dollar Index (DXY) 80.45 -0.121 -0.15%
10 Year Govt Bond Yield 2.44% 0.00%
Current Coupon Ginnie Mae TBA 106.8 -0.1
Current Coupon Fannie Mae TBA 106 0.0
BankRate 30 Year Fixed Rate Mortgage 4.13


Markets are higher after some mixed economic data. Bonds and MBS continue their rally.
First quarter GDP was revised downward to -1% (the Street was at -.5%). Obviously the Street is happy to accept the weather excuse and give the market a mulligan. Personal consumption rose 3.1%, and initial jobless claims fell to 300k.
Pending Home Sales increased .4% month-over-month, but fell 9.4% year, over year. They rose .5% in the Northeast, 4.7% in the Midwest, fell .7% in the South and fell 2.6% in the West.
What is going on with bond yields? The economic data has been “meh,” not weak, so why are we below 2.45%? Not sure, most explanations feel like justifications, not reasons. It could be nothing, but keep in the back of your mind that the bond market is telling you something, and you’ll find out the reason for the strength later on. For LOs, this is a good time to wake up borrowers that missed out on refinancing last fall, or buyers who were hoping for a better rate.

Freddie Mac has a new housing index (similar to the NAHB’s Improving Market Index) which shows strength in housing markets. They call it the Multi-Indicator Market Index, and it uses 4 indicators to create the index: purchase applications, payment to income rations, percent of borrowers current on their mortgage, and employment. Nationally, the index shows that the recovery has largely stalled. According to Freddie Mac Chief Economist Frank Nothaft: “Less than half of the housing markets MiMi covers are showing an improving trend, whereas at the same time last year more than 90 percent of these same markets were headed in the right direction.” Since we know that delinquencies have been dropping and the job market has been improving, the culprit is purchase applications. Between higher prices and higher mortgage rates, buyers, especially first time homebuyers, are getting sticker shock. That said, the index ignores cash purchases, and you have to take that into account, so the index is undoubtedly overstating the weakness. Here is an example of the index for Miami and the National MiMi:

There were 48,000 completed foreclosures in March 2014, up 5.9% month-over-month but down 10% year-over-year, according to CoreLogic. Approximately 720,000 homes in the U.S. are in some state of foreclosure, compared to 1.1 million a year ago. The foreclosure inventory is largely concentrated in the judicial states of Florida, New York and New Jersey. Over the past year, the number of seriously delinquent homes fell from 2.33 million to 1.86 million.


7 Responses

  1. NoVA – I kind of wish that Aletheia was still participating at PL just to see what sort of defense would be offered for the VA scandal.


  2. lack of funding, i’m sure.

    or — well, those bad apples were paid salaries, so they were corrupted by a profit motive.


    • nova:

      or — well, those bad apples were paid salaries, so they were corrupted by a profit motive.

      Did Aletheia have a job? Anyone who works for a living is “corrupted” by the profit motive. (And anyone who doesn’t work for a living is corrupted by free money.)


  3. Unclear. but he/she was big into everyting being communally shared. so there would be no scarcity, so there wouldn’t be a need for $. jnc can correct me. but i think that’s the jist of it.


  4. Based on the posts yes. I believe he had a graduate degree or a doctorate and claimed to work in IT, although that was somewhat belied by the claim that the PPACA website issues could have been easily avoided by utilizing WordPress as the platform for it.

    No, I’m not making that up or misquoting.

    It would be amusing to see the gymnastics necessary to continue to defend the proposition that government inherently does everything better than the private sector.


  5. That moron Cefy believes the same thing.


  6. It’s funny that increases in I durance premiums will always be blamed on Obamacare.

    First, Choke.On.It. Premiums go up all the time but because this piece of shit corrupt legislation is in effect it gets all the blame making it even more unpopular and it’s dismantling even more unlikely.

    God, how any rational person could have supported this thing is beyond me.

    Still, < SP, AmIRight?


Be kind, show respect, and all will be right with the world.

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: