Morning Report: Odds of a June hike fading 5/18/17

Vital Statistics:

Last Change
S&P Futures 2350.5 -7.0
Eurostoxx Index 387.6 -3.5
Oil (WTI) 48.5 -0.5
US dollar index 89.0 0.1
10 Year Govt Bond Yield 2.19%
Current Coupon Fannie Mae TBA 103.27
Current Coupon Ginnie Mae TBA 104.21
30 Year Fixed Rate Mortgage 4.03

Stocks are following through on yesterday’s sell-off. Bonds and MBS are up again.

Initial Jobless Claims came in at 232k last week which shows that firms are hanging onto their employees. Claims are at a 28 year low. Meanwhile, the Philly Fed Manufacturing Index put in another strong showing.

The index of leading economic indicators increased 0.3% in April after a 0.3% increase in March.  “First quarter’s weak GDP growth is likely a temporary hiccup as the economy returns to its long-term trend of about 2 percent. While the majority of leading indicators have been contributing positively in recent months, housing permits followed by average workweek in manufacturing have been the sources of weakness among the U.S. LEI components.”

The DOJ named ex-FBI Director Robert Meuller to conduct the Russia / DJT investigation. This should (in theory) quiet things down for a while, as it satisfies a key demand from Democrats that someone independent of the White House conduct the investigation. The key question: Is this Watergate or Whitewater?

The DJT turmoil has affected the market’s handicapping of the next FOMC meeting. The odds of a June hike have slipped from 80% to 60%.

Meanwhile, The Bernank finds it strange that markets ignore political risk until the last moment. He also thinks DJT should re-nominate Janet Yellen and downplayed the market risk from the Fed tapering its reinvestment policy.

Household debt has surpassed its 2008 peak, according to the Fed. It came in at $12.7 trillion as mortgage debt and student loan debt increased. Of course the difference between 2008 and today is that home equity is much higher, so it isn’t necessarily a huge cause for alarm.

10 Responses

  1. The Republicans should have let the PPACA run for one more year with no changes to make their case to replace it.

    “Insurers want to raise Obamacare rates as much as 53 percent
    Updated by Sarah
    May 17, 2017, 4:20pm EDT ”


  2. Near the end of Nixon’s Presidency, SecDef Schlesinger and SecState Kissinger took over FP and also, IIRC, the launch codes from Nixon, because they were worried about his emotional state. Someone could dig for this, but they may have gone behind Nixon’s back to the JCs to get an understanding there would be no nuke launch on the word of the POTUS if not signed off on by both State and Defense.

    After seeing DJT play victim in his address at the US CGA – how fucking inappropriate is that? – I hope Kelly, McMaster, Mattis, and Rex have reached a similar understanding among themselves and with the JCs. Perhaps these are early days, but that victim mentality is becoming ever more obvious and consuming.

    Liked by 1 person

    • it’s interesting and something i’ve been thinking about. the ad absurdum argument re: guns is, well, could somebody own a nuke?

      i think someone already does. you can’t buy one. you just have to be the president of the US or Russia (and a few others). congrats. you own a nuke.


    • Mattis is in the direct chain, and I expect he would stop any first strike order cold.


  3. Household debt has surpassed its 2008 peak, according to the Fed. It came in at $12.7 trillion as mortgage debt and student loan debt increased.

    Analysis I heard yesterday (?) morning speculated that this is also wealthier people carrying the household debt than previously, so it’s actually a good sign.


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