Morning Report: Home prices continue to rise 7/24/18

Vital Statistics:

Last Change
S&P futures 2820.75 8.75
Eurostoxx index 388.15 3.27
Oil (WTI) 68.28 0.39
10 Year Government Bond Yield 2.96%
30 Year fixed rate mortgage 4.56%

Stocks are higher this morning after China instituted measures to stimulate the economy. Bonds and MBS are flat.

Bonds sold off hard (yields rose) in response to news out of Japan that their central bank would adjust their interest rate target for the 10 year bond. The Japanese Central bank targets 0% for the yield on their 10 year, and some market participants believe it would be about 30 basis points if it was allowed to float freely. Japanese yields rose the most in 2 years, dragging Euro yields and US yields with them. Remember this whenever you read these articles in the press about the slope of the yield curve and the forecast for a recession. The yield curve is so manipulated by central banks globally that it is hard to draw any conclusions from prices.

Manufacturing activity increased in July, according the Markit Flash PMI, but we are seeing price pressures – in fact pricing pressures were the highest on record (going back to 2009). Input prices (fuel, staff and metals) drove the increase, although the root cause is mainly tariff-driven. Meanwhile, the Richmond Fed Manufacturing Survey was flat but solidly expansionary.

Foreclosure starts fell to 43,500 in June, which is the lowest number in 17 years. Active foreclosures fell below 300,000 for the first time in 12 years. Total delinquencies edged up, but are down on a YOY basis. The foreclosure crisis is about wrapped up, although the judicial states (especially NY and NJ) still have inventory to clear.

House prices rose 0.2% MOM and 6.4% YOY according to the FHFA House Price Index. Prices are still rising at an unsustainable pace in the West and Mountain regions, although the West Coast is decelerating. The Middle Atlantic (which includes NY and NJ) is bringing up the rear.

The West and the South lead the country in job gains and increases in construction employment. The states where construction employment is increasing the fastest? AZ and MI. AZ fits in with the rest of its neighbors, while MI stands out compared to neighbors like OH and IN. There are a few states decreasing construction employment – OK, SC, and NJ.

19 Responses

    • An interesting admission from Jacobin:

      No one would be happier than me if some smoking gun were to appear proving that Trump and Pence colluded with Moscow and forcing their ignominious resignations.

      Liked by 1 person

      • I appreciate the honesty vs the fake objectivism of the MSM and in the very next sentence the author notes how unlikely it is that is going to happen.

        Liked by 1 person

        • jnc:

          I appreciate the honesty

          Agreed…I’m not complaining. But I do think it is interesting that the author hates Trump even more than he hates “collusion” with Russia.

          Liked by 1 person

        • But I do think it is interesting that the author hates Trump even more than he hates “collusion” with Russia.

          It’s Jacobin. Their only beef with Russia is abandoning Communism.

          Liked by 1 person

  1. Good piece:

    ” Taibbi: Trump’s War on the Media Should Make Us Better at Our Jobs
    The non-Fox press needs to embrace its unwelcome status and get to work”

    https://www.rollingstone.com/politics/politics-features/trump-war-on-media-699734/

    This observation could be applied to a lot of things:

    “The idea of presidents [doing X] is not new; those in power just usually don’t gloat about it in the nakedly reptilian way Trump does.”

    Liked by 1 person

  2. “As the highest-ranking Californian in the U.S. Congress whose district lies within the most productive agricultural region in the nation, we want to reinforce to you that implementation of this bill would devastate food production in our state,” more than 30 California agriculture groups wrote in a letter sent to McCarthy on Monday

    Left unsaid, “at the wages we are paying now .”

    Their objection? Mandatory E-Verify.

    https://apple.news/ABPlklyyYTlyG-9nhkjEQLQ

    Liked by 1 person

  3. This is the first time I can recall evidence mattering in a claim about Russia & US elections:

    “Without evidence, Trump claims Russia ‘will be pushing very hard for the Democrats’ in the midterms”

    https://www.washingtonpost.com/politics/without-evidence-trump-claims-russia-will-be-pushing-very-hard-for-the-democrats-in-2018-midterms/2018/07/24/5ad4cdd2-8f2a-11e8-bcd5-9d911c784c38_story.html

    Liked by 1 person

  4. I wonder what Michi and Yellow’s expectations were from their drive-bys post Helsinki?

    Like

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