Morning Report: The Fed stands pat 7/28/16

Posted on July 28, 2016 by Brent Nyitray

Vital Statistics:

Last Change
S&P Futures 2159.5 -1.0
Eurostoxx Index 341.6 -1.2
Oil (WTI) 42.0 0.1
US dollar index 87.5 -0.2
10 Year Govt Bond Yield 1.56%
Current Coupon Fannie Mae TBA 103.3
Current Coupon Ginnie Mae TBA 104.2
30 Year Fixed Rate Mortgage 3.52

Stocks are lower this morning after the FOMC statement yesterday. Bonds and MBS are down small.

The FOMC statement from yesterday was relatively upbeat about the economy, but gave none of the signals that a September rate hike would be in the cards. They noted that May’s exceptionally weak jobs report was offset by the improvement in June. There was none of the “risks to the economy balanced” “risks to the economy tilted to the upside” language that would have been taken as a signal that they were contemplating a September hike. Note historically the Fed has tried to stay out of the way during election years, particularly in September, for fears of appearing political. With inflation well contained, they will probably maintain that posture. No reason not to.

There wasn’t much reaction to the statement yesterday. Stocks had been down on the day, rallied on the announcement and then suffered a late day sell-off that took them right back to where they were pre-announcement. The two year bond yields fell 2 basis points and the 10 year fell 4. The Fed Funds futures are now pricing in a 100% chance of a rate hike by next year this time.

Initial Jobless Claims rose to 266k last week. Consumer comfort was flat.

Where is the most expensive place to buy a starter home? Honolulu, where the income required to buy a starter home is over 6 figures and the median income is somewhere around $75k. Unsurprisingly, the West Coast dominates the unaffordable area. On the other side of the coin, if you make just over minimum wage, you can afford a starter home in Pittsburgh.

Meanwhile, here are the top 20 hottest real estate markets in July this year, according to Realtor.com. Interesting mix of West Coast high flyers and Rust Belt bottom fishing..

Filed under: Economy, Morning Report |

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20 Responses

  1. Brent Nyitray's avatar
    Brent Nyitray, on July 28, 2016 at 9:22 am said:

    Homeownership rate falls to 62.9%, lowest since 1965

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  2. novahockey's avatar
    novahockey, on July 28, 2016 at 9:46 am said:

    Click the map to create your own at 270toWin.com

    Flip PA and MI. Win Florida and hold serve. and that’s that.

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  3. ScottC's avatar
    ScottC, on July 28, 2016 at 10:17 am said:

    Great Kevin Williamson line today:

    In the great contest between the House of Trump and the House of Clinton, sensible patriots are rooting for casualties.

    http://www.nationalreview.com/article/438429/american-royalty-trumps-clintons-kennedys-wannabees-all

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  5. jnc4p's avatar
    jnc4p, on July 28, 2016 at 1:30 pm said:

    I see Hillary Clinton as the Democrats’ Nixon:

    Hard working, intelligent, cynical, and utterly unscrupulous. She’s probably going to be the one to bury the last of the post-Watergate constraints on the executive.

    http://www.vox.com/2016/7/28/12307994/hillary-clinton-obama-difference

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  6. jnc4p's avatar
    jnc4p, on July 28, 2016 at 2:14 pm said:

    Worth a read. I had missed this in the DNC E-mail dump stories.

    “A joint fundraising committee called the Hillary Victory Fund, ostensibly designed to funnel money from rich donors to local party committees, had in fact been used as a cut-out to funnel money back to the national party and the Clinton campaign.”

    http://www.rollingstone.com/politics/features/dnc-leak-shows-mechanics-of-a-slanted-campaign-w430814

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  7. novahockey's avatar
    novahockey, on July 28, 2016 at 2:17 pm said:

    This brand obviously endures. A few months ago, I had the pleasure of buying a new truck. My salesman happened to be a hard-core Trump supporter, and I asked him why he supported the man who subsequently became the GOP nominee. He gave a version of the same answer I’ve heard again and again from friends and neighbors: “Because he won’t apologize for America, and he kicks ass.” Sure, he’d heard of a Trump gaffe or two, but he felt like he’d known Trump for years. Trump had defined himself, and it was going to take more than a few controversial comments to undo the work of a celebrity lifetime.

    Read more at: http://www.nationalreview.com/article/438467/donald-trump-hillary-clinton-celebrity-candidates-damage-american-politics

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    • Brent Nyitray's avatar
      Brent Nyitray, on July 28, 2016 at 3:09 pm said:

      Good point in the article about defining the candidate. The democrats and their media have been successful in defining Republican politicians in general, and are going to have the same difficulty in defining Trump as they did defining Reagan..

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    • jnc4p's avatar
      jnc4p, on July 28, 2016 at 3:25 pm said:

      “Who cares what celebrities think? Americans care. And so long as they care, we will need a better class of celebrity in politics. Trump and Clinton just won’t do.”

      A nation turns it’s lonely eyes to Kanye 2020.

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