Vital Statistics:
Last | Change | |
S&P Futures | 2707.0 | 10.3 |
Eurostoxx Index | 377.0 | 2.5 |
Oil (WTI) | 60.4 | -0.2 |
US dollar index | 82.9 | -0.2 |
10 Year Govt Bond Yield | 2.90% | |
Current Coupon Fannie Mae TBA | 103.591 | |
Current Coupon Ginnie Mae TBA | 103.688 | |
30 Year Fixed Rate Mortgage | 4.44 |
Stocks are higher this morning on no real news. Bonds and MBS are flat.
Inflation at the wholesale level came in higher than expected as the Producer Price Index rose 0.4% MOM and 2.7% YOY. Ex-food and energy, the index was up 0.4% / 2.2% and the core rate was up 0.4% / 2.5%. The US dollar is weaker on the data, which adds to inflationary pressures. I suspect at some point dollar weakness will feed higher rates, but we aren’t there yet. Treasuries look like they want to test the 3% level we reached after the taper tantrum. The 10 year yield hit 2.94% overnight, so we aren’t all that far away. Goldman is forecasting 3.5% on the 10 year within the next 6 months on monetary tightening. Other strategists are raising their forecast for Fed tightenings as well, based on the additional stimulus of the budget deal and tax cuts.
FWIW, after the inflation data, the Fed Funds futures are now predicting a 83% chance of a hike at the March meeting, and sentiment is coalescing for a total of 3 hikes this year, to take the Fed Funds rate to 2.0% – 2.25%.
In other economic data, Initial Jobless Claims rose to 230k last week, while the Philly Fed rebounded to 25.8. The Empire State Manufacturing survey slipped. Industrial Production fell a tenth of a percent while Manufacturing Production was flat. Capacity Utilization fell 20 basis points to 77.5%. So, between the higher than expected inflation data and weaker manufacturing data, bonds are pretty much flattish.
Donald Trumps proposed 2019 budget contemplated an 18% cut in HUD’s budget, with the cuts largely coming from the end of the Community Development Block Grant program. At the end of the day, this budget is a messaging document and has 0% chance of becoming law as-is.
Builder Sentiment was flat in February according to the NAHB.
Filed under: Economy, Morning Report |
No wage inflation broken out in the report?
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News you might have missed during the Winter Olympics and DACA and Porter:
I am fascinated with how this litigation will proceed under tight rules of evidence regarding “junk science”.
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Finally, someone with the courage to tackle the big issues! Sasquatch rights has long needed to be addressed.
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Good read.
https://www.wired.com/story/inside-facebook-mark-zuckerberg-2-years-of-hell/
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That’s something else. Yet it all makes perfect sense.
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I think we may have reached peak Russia hysteria:
“Russia used mainstream media to manipulate American voters
By Craig Timberg
February 15 at 10:50 AM”
https://www.washingtonpost.com/business/technology/russia-used-mainstream-media-to-manipulate-american-voters/2018/02/15/85f7914e-11a7-11e8-9065-e55346f6de81_story.html
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It’s a form of mass hysteria!
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If you have ever played Steve Jackson’s old Illuminati game it makes perfect sense how Putin & the KGB could use orbital mind control lasers to take over both the NRA and the NYT.
https://en.wikipedia.org/wiki/Illuminati_(game)
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Is that a shotgun in your pants or are you just happy to see me?
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Absurd.
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Well, the, if guns are so easy to get in Florida, shouldn’t everybody there be dead?
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Once again, the comments are fascinating. Two points that are constantly repeated are that the only motivation to change the current immigration system is racism, full stop. The other issue is that there is no deal Trump would sign.
One thing I see that also interests me is the beleif that Trump keeps changing his mind and/or won’t say what he will accept. That’s patently false in this instance and secondly, when Trump won’t explicitly say what he wants, it’s more a negotiating tactic, as is, the first person to speak, loses. He talks about it in his book for anybody to see.
https://m.dailykos.com/stories/1741662
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If we change to a merit system, which I have favored through thick and thin for twenty years, we could get every doctor and nurse and mathematician in Africa. And their spouses and minor children, but not their parents and siblings out to infinity. So much for racism.
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I understand, it’s certainly a valid point. What’s happens to Africa in that scenario?
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Some good folks don’t come, some stay here for awhile and come back. Like anywhere else. Africa won’t be any worse for wear.
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Gotta admire the ballsiness.
https://twitter.com/davidsirota/status/964163128878514176
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A case can be made that necessary political and social changes have not occurred in Mexico because of mass immigration. It’s interesting to ponder.
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