Morning Report: Personal Incomes and Spending rise 3/29/18

Vital Statistics:

Last Change
S&P futures 2609 5
Eurostoxx index 370.62 1.36
Oil (WTI) 64.88 -0.37
10 Year Government Bond Yield 2.77%
30 Year fixed rate mortgage 4.45%

Stocks are higher this morning on end of month / quarter window dressing. Bonds and MBS are up.

Stocks are set to break a 9 quarter winning streak. The market leaders – the FAANG stocks – have been taking a beating as Facebook gets hit on data issues, and Amazon finds itself in the Administration’s doghouse.

The bond market will close early today, at 2:00 pm EST. Get your locks in early, as secondary marketing types will probably build in a margin cushion to protect themselves over the long weekend.

Personal Income rose 0.4% in February, while personal spending rose 0.2%. The Personal Consumption Expenditure Index rose 0.2% MOM and 1.8% YOY. The core PCE index (the Fed’s preferred measure of inflation) was up 0.2% MOM and 1.6% YOY. The core PCE numbers were a touch higher than the Street was looking for, and everything else was in line. The savings rate rose. Bonds are rallying a bit on the report.

Initial Jobless Claims fell to 215,000 last week, barely missing the late February number of 210,000. We haven’t seen these levels since the early Carly Simon’s “Your’e So Vain” topped the charts. When you take into account population growth the number is even more dramatic.

The FHFA announced that Fannie and Freddie will be issuing a new uniform mortgage backed security beginning in June of 2019. “The transition to the new, common security requires planning, investment, and preparation by a wide variety of market participants,” said FHFA Director Melvin L. Watt. “We have now set the specific date that the Enterprises will start issuing the UMBS and I urge the industry to get ready now to ensure smooth, successful implementation.” This will help bring Fannie and Freddie pricing more in line with each other.

Is fintech reaching parts of the market that have not been fully served by traditional banks and lenders? The Philly Fed finds some evidence that it does, particularly in areas where there is high lender concentration (i.e. only a few banks) and areas that don’t have much in the way of banks.

Barclay’s Bank agreed to pay $2 billion in civil penalties to settle an investigation concerning RMBS issued during the bubble years. “In general, the borrowers whose loans backed these deals were significantly less credit-worthy than Barclays represented,” the Justice Department said in a statement Thursday. Barclay’s had committed to keep the settlement under $2 billion in 2016, but the Obama Justice Department balked.

A Reuters poll of 75 bond strategists suggests that fears of oversupply in the Treasury market are overblown. They are looking for an increase of 40-50 basis points in the 10 year bond yield in 2018. Considering that we are already up 30 basis points this year, we probably aren’t looking at major increases from here – maybe we will find a range of 2.8% to 3% and bounce around.

26 Responses

  1. Nothing to worry about.

    The Social Security Administration (SSA) has estimated that 3 out of every 4 illegal aliens possess an SSN that belongs to somebody else.

    Calm down you racist hick!

    https://m.washingtontimes.com/news/2018/mar/27/how-obama-sacrificed-social-security-benefits-to-m/?utm_campaign=shareaholic&utm_medium=twitter&utm_source=socialnetwork

    Like

    • Some people still got balls.

      Like

    • The vegan’s actions are akin to blocking traffic. Any goodwill you may have earned is spent. Before I may have been indifferent. Now I’m opposed. That’s not how you build a political coalition.

      Liked by 2 people

      • I’d say they are more akin to extortion:

        “Ugar has offered to reduce the frequency of protests to once a month if the restaurant displays a sign in its window saying “Attention, animals’ lives are their right. Killing them is violent and unjust no matter how it’s done.”

        The offer mirrors one made to a butcher shop in Berkeley, Calif., whose owners agreed to post the sign in a window after four months of protest by an animal rights group.”

        Liked by 2 people

      • The left is not in the sales business. It is in the power business. Comply, or else..

        Liked by 2 people

        • Brent:

          The left is not in the sales business. It is in the power business. Comply, or else..

          Authoritarians, every last one.

          Liked by 2 people

  2. This thread is great, the theories are fantastic!

    My current favorite,

    That iceberg has tentacles.
    * Nunes’ bizarre behavior
    * House “investigation” openly a cover up operation
    * lawyers quitting left and right
    * McConnell’s threat to Obama about Russian interference before the election
    * Ryan’s “keep it in the family” blurt
    * NRA money laundry
    * Cambridge analytica/Faceborg nexus
    * coordinated blitz by Republican lawmakers to discredit Mueller
    * RW media deeper than ever into looney land to offer competing theories of the crime
    and so much more i can’t keep it all in RAM.
    Please log in or sign up to continue.
    kamarvt Mar 29 · 06:42:26 AM

    https://m.dailykos.com/stories/1752858#comment_69714857

    Liked by 2 people

  3. If true, this bodes ill for the current strategy for Democrats:

    Liked by 1 person

    • In sum, Pew’s more precise survey methods reveal that when Democrats are broken down by education, race and ethnicity, the white working class is the largest bloc of Democratic voters and substantially larger than the bloc of white college-educated Democratic voters.

      Heh. The deplorables.

      Liked by 2 people

  4. It’s hard not to read this article and come to the conclusion that the Union should dissolve itself. If we do it now I think there will be less violence.

    https://www.politico.com/magazine/story/2018/03/30/red-blue-america-clinton-trump-country-217760

    Liked by 1 person

  5. Wonder what all the other people convicted of the same crimes but not pardoned cause they’re citizens think of this.

    http://www.sacbee.com/news/nation-world/article207534389.html

    Liked by 1 person

    • Were the other 51 he pardoned citizens? Were the 5 here unlawfully or were they here as refugees whose status could be revoked if they were convicted of a crime? The lawyer seems to think they could still be deported back to Cambodia but that they now have an argument to stay.

      My educated guess is that CA Board of Pardons and Paroles recommended these 5 along with the others for parole. I have worked this procedure in TX, and it isn’t as hard a pull as a trial, but it also isn’t go get the governor to sign up for this. Has to go through BPP and can be a little like a trip to the dentist.

      Like

  6. It’s about fucking time and has stuck in my craw since I was 18. Why the US Military cuts itself off from the overwhelming majority of people that join the service because of a credential (and the least informative one there is) has never made sense to me. It’s pure snobbery.

    https://www.military.com/daily-news/2018/03/31/air-force-may-approve-enlisted-pilots-first-time-75-years.html

    Liked by 1 person

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