Morning Report: Capping off a terrible week for bonds 7/15/16

Vital Statistics:

Last Change
S&P Futures 2160.0 3.0
Eurostoxx Index 337.5 -1.0
Oil (WTI) 46.1 0.4
US dollar index 87.0 0.1
10 Year Govt Bond Yield 1.57%
Current Coupon Fannie Mae TBA 103.3
Current Coupon Ginnie Mae TBA 104.2
30 Year Fixed Rate Mortgage 3.49

Markets are higher this morning in spite of a massive terrorist attack in France. Bonds and MBS are down.

Lots of stronger-than-expected economic data this morning

The Consumer Price index rose 0.2% versus expectations of 0.3%. On an annualized basis, it rose 1%. Ex food and energy, it is up 2.3% YOY. Note the Fed prefers the Personal Consumption Expenditure index and not the CPI.

Retail sales came in stronger than expected – up 0.6% versus expectations of 0.1%. Retail sales had a sluggish start to the year, which partly drove the lousy 1.1% Q1 GDP growth rate. I wouldn’t be surprised to see some strategists and the Fed take up Q2 GDP estimates on this number.

Industrial Production rose 0.6% last month and manufacturing production rose 0.4%. Both numbers beat estimates. Capacity Utilization rose to 75.4%, again better than expectations.

It is hard to believe, but the 10 year bond has picked up 20 basis points in yield since Monday morning. This is the biggest weekly loss in a year.  Whether that was “the top” remains to be seen: markets can have ferocious sell-offs in the context of a bull market. At the end of the day, the US is going to be driven by foreign bond trading. The German Bund went from -18 basis points on Monday to nearly 0% this morning.

Larry Fink of Blackrock says that a .75% 10-year yield wouldn’t surprise him.

Wells Fargo reported a 4% YOY increase in net income for the second quarter. Mortgage origination was up 2% YOY. Citi beat numbers.

8 Responses

  1. Who publishes the “Personal Consumption Expenditure”?

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  2. “Markets are higher this morning in spite of a massive terrorist attack in France. Bonds and MBS are down.”

    Does this suggest something about how France is regarded (or not) as an economic power?

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  3. Coup underway in Turkey.

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    • Fucking global warming

      Liked by 1 person

    • WRT recent mass shootings, including of police, these events must occur faster.

      There are over 100,000,000 gun owners in America. Everyone on my block. Probably everyone in my neighborhood.

      I suspect there are no more than 10,000 crazy assholes with semi-automatic rifles. None are on my block. We are good, here, and armed.

      If these events occur twice a week, it will take 100 years for the cops to kill all the crazy assholes. If you think there are more than 10,000 crazy assholes it will take longer.

      So – speed it up, crazy assholes, we need you to come out your burrows, cause mass shootings, and get killed by the cops. Better of course, join a group with other crazy assholes, get on the internet, and let us know when you plan a mass shooting, so that the police can take you down early in your revelry, or perhaps arrest you before you kill anyone.

      Like

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