Morning Report – Humphrey Hawkins 7/15/14

Vital Statistics:

Last Change Percent
S&P Futures 1972.8 1.8 0.09%
Eurostoxx Index 3180.1 -5.8 -0.18%
Oil (WTI) 99.69 -1.2 -1.21%
LIBOR 0.233 0.001 0.21%
US Dollar Index (DXY) 80.21 0.018 0.02%
10 Year Govt Bond Yield 2.55% 0.01%
Current Coupon Ginnie Mae TBA 106.3 -0.1
Current Coupon Fannie Mae TBA 105.4 0.0
BankRate 30 Year Fixed Rate Mortgage 4.24

Markets are higher this morning on decent earnings reports out of JP Morgan, Goldman, and Johnny John. Bonds and MBS are up small.

Retail Sales increased .2% month-over-month in June. Ex autos and gas, they increased .4% versus a .5% estimate. The numbers were generally below the Street’s lofty expectations. May’s numbers were revised upward across the board. There is tremendous pent-up demand and we are finally seeing it get released.

JP Morgan announced that mortgage originations were $16.8 billion, down 66% from the prior year and 1% from the prior quarter. They expect Q3 to be flat to below Q2. Jamie Dimon, who has been diagnosed with throat cancer, said that he will be involved in the business during his treatment and that JPM is in “great shape” regarding succession. He also lobbed in a warning against “moralizing” against tax inversion trades, a comment sure to infuriate the left. For a glimpse of how the left hates these things, check out this column.

Janet Yellen is scheduled to testify in front of the Senate Banking Committee at 10:00 am. Bonds rallied small on the dovish language in the prepared remarks. As I said yesterday, Humphrey-Hawkins is more for the benefit of politicians to posture about their pet concerns, not for the benefit of investors to gain insight into the Fed’s thinking. Punch line: QE ends in October, there is still a lot of slack in the labor market, inflation remains low, and just because the Fed is talking about “normalization” doesn’t mean a rate hike is imminent.

The latest Black Knight Financial Services (formerly Lender Processing Services) Mortgage Monitor is out. Total DQs were flat at 5.62% in May, while foreclosure starts ticked up a hair to 86k. This is the fifth consecutive month with foreclosure starts below 100k. Purchase originations through April are on par with 2013, so the increase in rates isn’t affecting the purchase market. Refis, however are way down. Credit scores are falling as originators are reaching out of the credit curve.

purch and refi

Feel Good Poll of the Day 7/15/14


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