All Things in Moderation

Markets are lower this morning after IBM withdrew its 2015 forecast. Bonds and MBS are up small.

Earnings will dominate the week. Tonight we will hear from mortgage REIT CYS investments. Later this week homebuilder PulteGroup will report, along with more regional banks. Apple will report after the close today.

The Mortgage Bankers Association Conference will be going on today and tomorrow. Secondary desks and dealers will probably be understaffed until Thursday.

Mel Watt is expected today to unveil new measures to increase access to credit in the mortgage market this week. The biggest one is a new Fannie Mae product for the first time homebuyer with a 3% down payment. Another is a program which gives the first time homebuyer a break on mortgage insurance if they go through a counseling program. FHFA is also expected to make some clarifications regarding buyback risk.

Why were US stocks rocked so violently last week on European weakness? Remember the old adage – during a crisis, you sell what you can, not what you want to. US stocks remain the most liquid risk asset. On a side note, almost $1 trillion worth of Treasuries traded on Wednesday last week, a record. That is looking more and more like the big capitulation trade and should be the top of the bond market for a while.

Left wing Jared Bernstein on how the Fed can reduce income inequality. Proving once again that the left learned absolutely nothing from the real estate bubble. It still thinks it can prevent asset bubbles by regulating Wall Street.