Morning Report: Credit scores and debt service 8/14/17

Vital Statistics:

Last Change
S&P Futures 2454.0 14.0
Eurostoxx Index 375.2 3.1
Oil (WTI) 48.7 -0.2
US dollar index 86.2 0.2
10 Year Govt Bond Yield 2.21%
Current Coupon Fannie Mae TBA 103.197
Current Coupon Ginnie Mae TBA 104.068
30 Year Fixed Rate Mortgage 3.92

Stocks are higher this morning as tensions between the US and North Korea seemed to ease a bit over the weekend. Bonds and MBS are down.

Not a lot of data this week (nor is there any Fed-Speak). The highlight should be housing starts on Wednesday.

The St. Louis Fed is forecasting 3.7% GDP growth for Q3, while the Atlanta Fed is forecasting 4% growth. Seems surprisingly high, but we will get an idea of how realistic that is when retailers report same store sales for August, which covers the back-to-school shopping season.

These GDP forecasts (if they end up playing out) should boost rates higher over the near term. This will be offset by international tensions (and a general sense of uncertainty in DC) which will pull rates lower. There is no real way to forecast how things will shake out, but just be aware that this push-pull effect should make for increased rate volatility over the near term.

With the Fed on hold until December, the markets are turning to the debt ceiling, which should hit in late September / early October. You are starting to see a tick up in the yields of 3 month T-bills maturing in late September. The debt ceiling has always been a bit of an annual kabuki dance, this time around the unpredictability of things in DC is making traders a little more worried.

Average credit scores have eclipsed their October 2006 peak, hitting 700 this year. It is interesting to see that US consumer debt levels are at all-time highs, however debt service is at a low. Debt service is one’s mortgage, car, installment, and credit card debt as a percentage of income. Check out the charts below:

Consumer credit:

consumer credit

Debt service:

debt service

These two charts demonstrate just how much interest rates matter (and why owning a home isn’t quite as unaffordable as the home price indices suggest). If you want to see what determines how Fair Issac (of FICO fame) determines your score, here is a handy chart. The single best thing one can do is make timely payments, followed by reducing the amount they owe.

credut scores

24 Responses

  1. I am Frist, for victory is my destiny.


  2. Almost 30 years after the final demise of communism, the NYT continues trying to sell it.

    Some might remember that Eastern bloc women enjoyed many rights and privileges unknown in liberal democracies at the time, including major state investments in their education and training, their full incorporation into the labor force, generous maternity leave allowances and guaranteed free child care. But there’s one advantage that has received little attention: Women under Communism enjoyed more sexual pleasure.

    I thought this was particularly notable:

    In the 1930s, Joseph Stalin reversed much of the Soviet Union’s early progress in women’s rights — outlawing abortion and promoting the nuclear family.

    Interesting that the promotion of the nuclear family is considered to be a “reversal” in progress for women’s rights.


    • “Interesting that the promotion of the nuclear family is considered to be a “reversal” in progress for women’s rights.”

      Predictable. The “smash monogamy” sentiment of 60s radicals remains alive and well. The far left has been direct in explaining that the nuclear family is oppressive and patriarchal, often that kids are better raised by the state, etc.

      NYT has to kind of slip it in. Which that totally is. Also, the association of “outlawing abortion” with the “promotion of the nuclear family” is interesting, as if suggesting that maintaining safe access to abortions requires the end of the nuclear family.

      Which is why it’s called “Planned Parenthood” and not “Planned Families”, I guess.


  3. I’d say this piece perfectly predicted Charlottesville:

    “Antifascists call such actions defensive. Hate speech against vulnerable minorities, they argue, leads to violence against vulnerable minorities. But Trump supporters and white nationalists see antifa’s attacks as an assault on their right to freely assemble, which they in turn seek to reassert. The result is a level of sustained political street warfare not seen in the U.S. since the 1960s.”


  4. Quote of the Day suggestion:

    “Ev’rywhere I hear the sound of marching, charging feet, boy
    Cause summer’s here and the time is right for fighting in the street, boy
    – Rolling Stones”

    Liked by 1 person

  5. Some people don’t understand human psychology.

    “After the news broke that White had been fired, many who had participated tweeted delighted responses. ”Awesome! We must shame them into oblivion,” wrote one user.”

    This isn’t going to make them go away, but rather radicalize them. It’s a road map for how to make a mass shooter.

    Liked by 1 person

    • Well, they are certainly going to wear masks next time around..


    • It’s certainly a map to radicalize them, and provide them with the time to get together, support each other, and use the same social media tools to mine their histories and target them. It’s a kind of Mutually Assured Destruction where the warring parties don’t understand their destruction is, in fact, mutually assured.

      To some extent, the shooters play in their overall narrative. White nationalists and, heck, any right winger (pretty much the same thing) become mass shooters because they are violent and crazy. Sure, people might die, but that narrative works for them.

      What won’t work for them is getting hoisted by their own petard, and having every moment of weakness emailed to their employers, or to the news, or what have you. Or they may find a unique way to use social media to trash their critics personal lives (say, some white nationalist also works for Ashley Madison or that sort of site, decides to check the user rolls . . . ). They are playing with fire, in a bid to accomplish nothing. Because one thing getting that guy fired won’t do is reduce the amount of racism in the world.


  6. If only leftists had the same freedom of speech as conservatives do…

    Liked by 1 person

    • It’s where you fall on the spectrum. If you’re far enough to the left, you feel your speech is abridged, because free speech is nobody with crazy, hateful opinions should be able to state them, if you truly have free speech. Free speech is a kind of “whatever opinion I have must remain unchallenged” sort of thing.


  7. If Garland had been sworn in or if HRC had won and nominated someone else who’d been confirmed, I’d put the odds of a newly discovered Hate Speech exception to the first amendment being discovered at 65%.

    Liked by 1 person



    They are leading us torward a literal civil war. In the name of peace.


  9. The left has lost the ability to debate… They got so used to laughing at comedians demolishing strawmen that they have no answers when conservatives / libertarians go off script.

    Which means they resort to trying to silence people that disagree.

    Liked by 1 person

    • Which explains, I guess, why they don’t want to debate.

      Although I notice generally the ability to debate is getting worse. The modern era, social media, the Internewebz . . . the educational establishment . . . People in their echo chambers. Most of the conservative friends on Facebook are not great debaters. Where is William Buckley (or more Scott C’s?) when you need them?

      What seems true to me is that it’s hard to find a Ben Shapiro on the left. I can’t really think of an example, although (statistically) I’m sure there must be. Just that Ben goes and presents ideas in hostile environments all the time, while that’s not generally true of liberals.

      I think there is something to the argument that “Good intentions means never having to say you’re sorry. Or explain what you’re thinking.” It’s why smart guys like Krugman, who have demonstrated in the far past that they are capable of making cogent arguments, end up lying like a Donald Trump to advance the agenda. The ends justify the means. And clarifying your arguments and backing them up is such hard work.


    • One could also look at the televised political debates as evidence of this. They are all awful and largely free of cogent, well-reasoned arguments.


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