Morning Report: Possible deal on funding the government 1/17/18

Vital Statistics:

Last Change
S&P Futures 2791.8 9.5
Eurostoxx Index 398.3 0.0
Oil (WTI) 63.6 -0.2
US dollar index 84.6 0.0
10 Year Govt Bond Yield 2.55%
Current Coupon Fannie Mae TBA 102.375
Current Coupon Ginnie Mae TBA 103.25
30 Year Fixed Rate Mortgage 4.03

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

Slow news day.

Builder sentiment fell somewhat last month, but is still strong, according to the NAHB.

Mortgage Applications increased 4% last week as purchases rose 3% and refis rose 4%. This is a bit of a surprise given that bond yields moved up aggressively on stronger economic data and speculation that China would reduce its Treasury purchases. The 30 year fixed rate mortgage rose 10 basis points to 4.33%.

The deadline to fund the government is fast approaching, and it looks like we will only get another temporary (one-month) deal. The deal won’t include anything on immigration, however it will fund the Children’s Health Insurance Program for 6 years, and delays some Obamacare taxes. Bond Traders are not so sanguine on a deal, and are selling Treasuries maturing in early March.

Rising input costs are the biggest challenges to homebuilding. 84% of all builders surveyed said that rising labor costs and rising material costs are going to be a problem this year. High land prices are also an issue. Affordable housing is one of the nation’s biggest problems right now, and it is extremely difficult to build at price points that are affordable for the entry-level homebuyer.

Industrial Production rose 0.9% in December and manufacturing production rose 0.1%. Capacity Utilization jumped to 77.9% from 77.3%. Utilization is still relatively low, and indicates that we still have plenty of unused capacity. High utilization rates (85%-ish+) are usually associated with increasing inflation.

Bitcoin is now trading below $10,000. Easy come, easy go.

%d bloggers like this: