Morning Report: Incomes up, spending flat 9/30/16

Vital Statistics:

Last Change
S&P Futures 2150.0 1.0
Eurostoxx Index 340.9 -2.0
Oil (WTI) 47.9 0.0
US dollar index 86.6 0.4
10 Year Govt Bond Yield 1.55%
Current Coupon Fannie Mae TBA 103.3
Current Coupon Ginnie Mae TBA 104.2
30 Year Fixed Rate Mortgage 3.47

Stocks are lower this morning as the markets fret about Deutsche Bank. Bonds and MBS are up on the risk-off trade.

Deutsche Bank, which is being fined by the US government for $14 billion is starting to see some hedge fund clients back away from it. While it probably doesn’t really pose any systemic risk (the US government isn’t about to bankrupt German’s biggest bank) it will cause a flight to safety, which will push down Treasury yields. If this snowballs, look for more easing out of the ECB, and potentially another excuse for the Fed to stand pat.

Personal Incomes rose 0.2% last month while personal spending was flat. The core personal consumption expenditure index (the Fed’s preferred inflation measure) rose 1.7% YOY, which is below the Fed’s 2% inflation target. Larry Summers says income inequality is depressing spending by about 3%.

The Chicago Purchasing Manager Index rose in September.

Consumer confidence improved in September.

Janet Yellen mused about the Fed buying corporate bonds and stocks in order to respond to a downturn after they have hoovered up all the government debt out there.

Seriously delinquent loans fell to 1.24% in August, the lowest level since April 2008. Pre-crisis it was below 1%.

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