Morning Report: Treasury and FHFA disagree on the GSEs 5/19/17

Vital Statistics:

Last Change
S&P Futures 2370.5 6.8
Eurostoxx Index 390.7 1.5
Oil (WTI) 50.0 0.6
US dollar index 88.8 -0.4
10 Year Govt Bond Yield 2.24%
Current Coupon Fannie Mae TBA 103.27
Current Coupon Ginnie Mae TBA 104.21
30 Year Fixed Rate Mortgage 4.03

Stocks are up this morning on no real news. Bonds and MBS are down small.

Slow news day.

No economic data this morning, but we have Fed-speak at 9:45 and 1:40.

Treasury Secretary Steve Mnuchin and FHFA Head Mel Watt disagree on what to do with Fannie Mae’s dividends to Treasury. A week ago, Watt suggested that Fannie and Freddie may have to retain some of their earnings in order to build / maintain their capital base. Yesterday, Mnuchin said that he expected the dividend payments to continue. Despite a Republican president, Mel Watt is going nowhere – his term expires in 2019 and he can only be removed for cause.

Ellie Mae’s Origination Insight Report is out, and it shows that fallout increased, along with the purchase share of mortgages. Cycle times improved by a day across the board.

St. Louis Fed Head James Bullard believes that the unemployment rate could fall further without igniting inflation. He seems to think the new normal is about 2% GDP growth and sees that sort of pace for the immediate future. That will probably be the case until wage inflation picks up, and who knows when that will be?

Guess who’s back? Ex-NJ governor, MF global collapse Jon Corzine, who is apparently fundraising for a new hedge fund

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