Vital Statistics:
Last | Change | |
S&P futures | 2560 | 22.25 |
Eurostoxx index | 342.07 | 1.61 |
Oil (WTI) | 46.54 | 0.3 |
10 year government bond yield | 2.82% | |
30 year fixed rate mortgage | 4.62% |
Stocks are higher this morning ahead of the FOMC decision. Bonds and MBS are flat.
The FOMC decision will be announced at 2:00 pm EST. While the actual decision will be important, the focus will be on the dot plot, which will feed 2019 forecasts. The Fed Funds futures have been a bit more dovish than the previous Fed forecasts, so the market will be expecting a bit of a downward shift in forecasts. The Fed will also release its forecasts for GDP, unemployment, and inflation as well. The Fed has been consistently low in its GDP estimates and consistently high in its inflation and unemployment forecasts since 2016, which is the mirror image of its pre-2016 forecasts. Powell will have a press conference after the release, so the 2:00 pm – 3:00 pm EST timeframe could see some market volatility.
Speaking of inflation, we are in some ways going back to the 1970s. Manufacturers (especially in food) are coming up with ways to raise prices while not “officially” raising prices, by offering new products. For example, Nabisco’s new “thin” Oreos cost almost double per ounce than traditional Oreos. We saw this in the 1970s, when potato chip bags were mainly air, and companies would keep packaging sizes (and costs) the same while reducing the amount in the package.
Housing starts came in at 1.26 million, a bit higher than what the Street was looking for. Building permits rose 1.33 million, which was an upside surprise as well. The increases were driven by multi-fam, which can be extremely volatile. SFR was more or less unchanged.
Mortgage applications fell 5.8% last week despite a big drop in rates. Purchases fell 2% while refis fell 7%. We are in the seasonally slow period, so seasonal adjustments can lead to surprising results. Perhaps the volatility in the stock market was leaving people on the sidelines, but it appears lower rates didn’t have an impact.
There is talk that the Senate might be able to scrape together enough votes for a short term funding bill that will take us into the new year. Trump appears to be softening his stance on the wall, so a deal is a possibility. Otherwise, we are in store for a partial shutdown, whatever that means. No word on how it will or will not affect markets / origination.
Filed under: Economy, Morning Report |
US disengaging in Syria…
https://www.wsj.com/articles/u-s-military-preparing-for-a-full-withdrawal-of-its-forces-from-northeastern-syria-11545225641?mod=hp_lead_pos1
About time we started disengaging from the whole stinking part of the world. Let China / Russia keep the place in line…I am sick and tired of it.
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Good. I further suggest we cede the rest of the shithole, er, Middle East to China.
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fine with me. we are energy independent and israel doesn’t need our help with security…
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And everyone from Lindsay Graham on down is freaking out. Graham tweeted that this was a “Obama like mistake”.
Worth a read from a few days ago:
https://www.washingtonpost.com/graphics/2018/world/syria/us-troops-in-syria/
and the latest:
https://www.washingtonpost.com/graphics/2018/world/syria/us-troops-in-syria/
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Two serious questions, does anyone really believe this? And, does anybody really give a fuck?
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The media honestly believes it is the only bulwark preventing Literally. Hitler. from establishing the Fourth Reich.
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It’s my guess that deep down they don’t really believe it, they’re LARPING. I’d bet money they secretly wish that a Trump supporter would kill some journalists though, just not them. Or better yet, that Trump jails a couple of reporters for a couple of days (again, just not them).
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Unfortunately, it’s hard to argue the point.
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