Morning Report: Second quarter GDP comes in at 2%

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S&P futures 2916 26.5
Oil (WTI) 56.17 0.34
10 year government bond yield 1.48%
30 year fixed rate mortgage 3.78%

 

Stocks are up this morning after China said it wouldn’t immediately retaliate on tariffs set to take effect this weekend. Bonds and MBS are down.

 

The second revision to Q2 GDP was unchanged at 2.0%. Consumption drove the increase in GDP as durable goods consumption was up 13% and non-durables were up 7%. Core PCE inflation was unchanged at 1.7%. Despite the chronic housing shortage, residential investment was down again for the sixth straight quarter. Investment and trade made negative contributions to the index.

 

GDP

 

Initial Jobless Claims came in at 215,000 right in line with expectations.

 

The MBA reported that net gains per loan increased to $1,675, compared to $285 in the first quarter. This was the best number since the third quarter of 2016. “With anticipated increases in prepayment activity, we saw hits to servicing profitability resulting from mortgage servicing right markdowns and amortization,” Walsh said. “Nonetheless, the profitability on the production side of the business generally outweighed servicing losses.” Average pretax production profit rose to 64 basis points, while secondary marketing income fell to 287 basis points, down from 308 in the first quarter.

 

Treasury is looking at the idea of ultra-long term government bonds, with 50 or 100 year terms. “If the conditions are right, then I would anticipate we’ll take advantage of long-term borrowing and execute on that,” Mnuchin said in the Bloomberg News interview on Wednesday.

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