Morning Report: FOMC day 4/27/16

Stocks are lower this morning after some tough earnings reports, especially out of Apple. Bonds and MBS are up.

Last night 5 primaries were run in the Northeast. Bernie is pretty much done and Trump is declaring himself the presumptive nominee.

Mortgage Applications fell 4.1% last week as purchases fell 2.4% and refis fell 5%.

Pending Home Sales rose 1.4% month-over-month and increased 2.9% year-over-year, according to the NAR. This is the highest level in a year. Only the West reported a decline in contract activity. The surprise drop in rates is easing some of the affordability issues caused by higher prices.

The FOMC decision should be released around 2:00 pm today. Be careful locking loans around that time. If the Fed intends to raise rates at the June meeting, they will probably telegraph it in the statement. Financial conditions have definitely improved since earlier this year. Here is the latest analysis of the situation.

For anyone who is on the fence about renting versus buying, show them this poll: Renters are twice as likely as owners to worry about not being able to pay housing costs. Given the tight inventory for housing, you are seeing mid single-digit increases in rents. Granted, house price appreciation has been in the same neighborhood, however that has been offset by falling rates. Many younger renters are still under the impression that they need 20% down to buy a home.

Venezuela is in such bad shape that it doesn’t have the money to pay for its money. Like Weimar Germany, citizens need a wheelbarrow to buy a loaf of bread: the largest note is a 100 bolivar note, which is worth about one cigarette. Making all that cash isn’t cheap, and Venezuela doesn’t have the money to pay the firms that make it.

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