Morning Report: More dovish talk out of the Fed 9/5/17

Posted on September 5, 2017 by Brent Nyitray

Vital Statistics:

Last Change
S&P Futures 2468.5 -5.8
Eurostoxx Index 374.4 0.2
Oil (WTI) 48.1 0.8
US dollar index 85.4 -0.2
10 Year Govt Bond Yield 2.13%
Current Coupon Fannie Mae TBA 103.33
Current Coupon Ginnie Mae TBA 104.21
30 Year Fixed Rate Mortgage 3.86

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

There isn’t a much in the way of market-moving economic data this week, but we will have a bit of Fed-speak. Despite the weak-ish jobs report on Friday, the Fed Funds futures are handicapping a bigger chance of a hike in December. We are now at at 43% chance of a rate hike versus 38% last week.

Historically, September has been a bad month for stocks. Here are some of the things that could upset the apple cart. Geopolitical risk is probably the biggest, followed by a government shutdown. The Fed is out of the picture. Note that the dividend yield on the S&P 500 is higher than Treasuries.

Factory orders fell 3.3% in July, more or less in line with expectations. The drop was expected due to a big order from Boeing in June.

Fed governor Lael Brainard said the Fed should slow rate hikes if inflation remains below 2%, where it has been for the past 5 years. Brainard is one of the doves on the FOMC, and the one who probably most resembles Janet Yellen’s thinking.

Home prices rose 0.9% MOM and are up 6.7% YOY, according to the CoreLogic Home Price Index. Home prices rose the most in the Pacific Northwest and the mountain states. About a third of the MSAs CoreLogic covers are overvalued. 28% were considered undervalued.

The Trump Administration is backing off threats to shut down the government over funding the border wall. Given the continuing rebuilding efforts in Houston and the potential for Hurricane Irma to hit Florida, a government shutdown over the debt ceiling isn’t going to happen. Trump also said he will rescind the Obama Administration’s executive order on immigration in 6 months, which gives Congress time to handle this legislatively. Funding for the wall in exchange for some protection for the Dreamers is probably the deal that will get done.

Speaking of hurricanes, CoreLogic estimates that about 70% of the flood damage in Houston was uninsured.

Filed under: Economy, Morning Report |

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30 Responses

  1. jnc4p, on September 5, 2017 at 9:38 am said:

    “Trump also said he will rescind the Obama Administration’s executive order on immigration in 6 months, which gives Congress time to handle this legislatively. Funding for the wall in exchange for some protection for the Dreamers is probably the deal that will get done.”

    It’s amazing how the prospect of reverting to the pre- June 2012 status quo is treated as the greatest evil known to man by progressives. Was first term Obama the equivalent of Hitler too?

    Liked by 1 person

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  2. markinaustin, on September 5, 2017 at 12:02 pm said:

    I’m pretty sure there will be a bipartisan DACA extension of some sort.

    I don’t know what it will look like.

    Will it only survive for DACA who have served or who are serving honorably in the military?

    Will it survive for DACA who have become well skilled in needed skills?

    “A” students?

    Will a condition be that once a DACA is in the work force his parents must leave?

    The “electric fence, drones, and more Border Guards” are easy. The hard choices are what to do with DACAs who didn’t turn out well, and their undocumented parents, once the parental role is diminished to a limit approaching zero.

    I am in favor of having a border, and at the same time understand the argument that kids are “different” from adults in the law, in terms of assigning responsibility. So I think a bill with better border security and a measure of security from deportation for DACAs is OK. But as with immigrants in general, I would like to pick good ‘uns and return bad ‘uns.

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  3. jnc4p, on September 5, 2017 at 12:43 pm said:

    How did Trump & the Republicans manage to co-opt Hillary Clinton to help with the mid-terms and his reelection campaign?

    “In the passage that was tweeted out Monday evening by Tom Watson, Clinton attacks some of Sanders’s supporters for being “sexist” and suggests the Vermont senator doesn’t have the Democratic Party’s true interests at heart. Most notably, she also intimates that he may not have even cared that his underhanded (in her opinion) attacks on her helped Donald Trump become president.

    “When I finally challenged Bernie during a debate to name a single time I changed a position or a vote because of a financial contribution, he couldn’t come up with anything,” she wrote. “Nonetheless, his attacks caused lasting damage, making it harder to unify progressives in the general election and paving the way for Trump’s ‘Crooked Hillary’ campaign.

    “I don’t know if that bothered Bernie or not.””

    https://www.washingtonpost.com/news/the-fix/wp/2017/09/05/hillary-clintons-subtly-savage-take-on-bernie-sanders/

    Edit: The gifts keep coming

    https://newrepublic.com/minutes/144685/peter-daou-continues-embarrass-hillary-clinton

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    • Kevin S. Willis, on September 5, 2017 at 1:42 pm said:

      “The reason we need sites like @verrit is BECAUSE the media acts like these voters don’t exist. Hell, they ignored us DURING the election.”

      Except when they kept telling us Hillary was totally going to win and Donald Trump was a racist.

      “The media acts like these voters don’t exist” . . . self-awareness not a strong suit.

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    • Kevin S. Willis, on September 5, 2017 at 1:46 pm said:

      “If I were to rank purely on performance, I would probably only take 1 of them. Should I take 2? All three? None have mock trial experience,” Abigail Graber wrote. “The mediocre one is extremely involved in community activism/organizing (she’s the one I would probably take no matter what, what she lacks in skill she makes up in confidence, although she may be too busy for this commitment).”

      This whole description of “mediocre” and “pretty bad” seems to read as entirely about their quality as participants in a mock trial.

      I don’t understand why the professor didn’t clarify that, and then immediately blame UoMD for not getting in enough minority students so they had greater diversity options when staging a mock trial.

      Clearly, these are fellow travelers. But they had to fall on their swords.

      The left will eat itself. At least, the purity-insisters will.

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  5. Kevin S. Willis, on September 5, 2017 at 1:53 pm said:

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  6. Kevin S. Willis, on September 6, 2017 at 7:10 am said:

    Gender is fluid and men and women are the same and interchangeable until they aren’t, because women are in All Ways superior to men.

    http://acecomments.mu.nu/?post=371432

    Has there been any other identity group that so wants to have its cake and eat it, too?

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