Morning Report – Calm before the storm

Markets are lower this morning after some earnings misses. Bonds and MBS are down. Argentina missed a bond payment

Initial Jobless Claims climbed back above 300k last week, however Challenger’s announced job cuts number increased 24%. The ISM Milwaukee index rose to 63.87. However the Chicago Purchasing Managers index slumped by 10 points in July, coming in way below expectations.

The FOMC statement was slightly more hawkish than previous statements as the Fed edges more towards normalization. Bonds rallied slightly on the statement, but gave it back towards the end of the day.

Tomorrow is a big day with the jobs report and the ISM report. Plus, it is a summer Friday, which means thinly-staffed desks and probably some added volatility. I would not want to be floating going into tomorrow’s numbers.

The homeownership rate in the US fell again last quarter, to 64.7%, the lowest rate in almost 20 years. Separately, the rental vacancy rate fell to 7.5%. The Millennial generation is still stuck renting because they are lugging high levels of student loan debt and are facing a tight credit environment for the first time homebuyer.

Chart: Homeownership rate 1965 – Present
homeownership rate bbg

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