All Things in Moderation

Vital Statistics:

Stocks are higher this morning after the US and China agreed to a 90 day trade truce. Bonds and MBS are down.

China and the US agreed to halt further tariffs against each other, and agreed to fresh talks to try and end the trade war. This has sent stocks up sharply in Europe and Asia, and emerging markets are especially strong. Whether this actually turns out to be the end is anyone’s guess, but at least dire trade warnings will be off the headlines for a while.

The stock markets will be closed in observance of a day of mourning for George H.W. Bush, who passed away over the weekend. SIFMA has recommended that the bond markets close on Wednesday as well.

We have a lot of data this week, which will probably be dominated by the Employment Situation Report on Friday. Jerome Powell will be speaking on Wednesday and we will get productivity as well as the ISM reports.

The typical mortgage originator made $480 on each loan (all-in) in the third quarter, a drop from $580 in the second quarter. Declining volumes are driving the drop, which is being offset somewhat from servicing income gains. “These are very challenging times for independent mortgage bankers, with the average pre-tax net production income per loan reaching its lowest level for any third quarter since inception of our report in 2008,” said Marina Walsh, MBA’s Vice President of Industry Analysis. “Profitability continues to be hindered by high costs and low productivity. We expect fixed costs to remain elevated, and competitive pressures will continue to hamper production revenues in the winter months. Therefore, mortgage banker profitability will likely remain challenged.” It won’t get any better as we enter the seasonally slow period.

Filed under: Economy, Morning Report | 37 Comments »