Morning Report: Irma does less damage than expected 9/11/17

Vital Statistics:

Last Change
S&P Futures 2472.5 11.5
Eurostoxx Index 379.0 3.5
Oil (WTI) 47.7 0.2
US dollar index 84.8 0.3
10 Year Govt Bond Yield 2.10%
Current Coupon Fannie Mae TBA 103.33
Current Coupon Ginnie Mae TBA 104.21
30 Year Fixed Rate Mortgage 3.73

Stocks are higher this morning after Hurricane Irma does less damage than predicted. Bonds and MBS are down.

The week should be relatively quiet for the bond market: there isn’t much in the way of market-moving data, and there won’t be any Fed-Speak as we have entered the quiet period before next week’s FOMC meeting.

Hurricane Irma did less damage than expected, and is weakening as it heads northward. Damage estimates have been cut by as much as $150 billion.

Equifax’s hacking has some people livid. The hack potentially affected 143 million people compromising social security numbers, addresses, drivers’ licenses, birthdays and more. Equifax’s initial site to check if you were affected had issues as well, which added insult to injury. If you have been affected by this hack, Equifax is offering a free year of credit monitoring (TrustedID), however if you accept the deal, you waive your right to sue. Equifax claims the arbitration waiver would only affect damages from TrustedID, not the cybersecurity incident. A class action lawsuit was filed on Thursday. Note several executives sold $1.8 million worth of stock after the hack (they supposedly didn’t know yet). Here is what you need to know.

The NAHB took a look at where the building activity was in 2016. Unsurprisingly, the activity was concentrated in the South and West, while the Northeast lagged. Between New York, New Jersey, and Pennsylvania there were less than 38,000 units started in 2016. This is less than a third of what Texas, Arkansas, Louisiana, and Oklahoma did.

Rising rates have taken a bite out of refinancing volume, which hit a 16 year low in the second quarter. Overall, volumes were up 20% from Q1 to Q2, to $467 billion, but were down 16% on a YOY basis. Purchases have been driving the increase, however they remain 30% below pre-crisis levels (and this doesn’t even take into account population growth and home price inflation). To give you an idea of how much credit standards have tightened, 720+ FICOs accounted for 3/4 of all loans in Q2. Pre-crisis, they were under half. Delinquencies did tick up 2.8% in the second quarter, to 3.9% of all mortgages. Hurricane Harvey could push up DQs by 300k.

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