Morning Report: Fed Day

Vital Statistics:

 

Last Change
S&P futures 3139 3.25
Oil (WTI) 58.99 -0.24
10 year government bond yield 1.84%
30 year fixed rate mortgage 3.98%

 

Stocks are flattish as we await the FOMC decision. Bonds and MBS are flat as well.

 

Mortgage applications increased 3.8% from a week earlier, according to the MBA. The purchase index dropped 0.4%, while the refi index rose 9%. Interest rates rose one basis point.

 

The FOMC decision is set for 2:00 pm EST. Given that the Fed is on the sidelines for a while, there shouldn’t be anything market moving in it.

 

Consumer prices rose 0.3% in November, according to the BLS. Higher shelter and energy prices drove the increase. The index was up 2.1% on an annualized basis. Ex-food and energy, the index was up 0.2%. These numbers were a hair higher than street expectations.

 

The first time homebuyer is returning, according to the Genworth First Time Buyer report.  The rebound in the third quarter was driven primarily by falling interest rates and increasing home affordability. Supply constraints, particularly at the affordable price points have been the issue. “The first-time homebuyer market rebounded this quarter and although the rebound was modest compared with the number of first-time homebuyers a year ago, and a quarter behind the broad rebound, it was a strong rebound from the previous quarter allowing first-time homebuyers to make up some lost ground,” said Tian Liu, Genworth Mortgage Insurance Chief Economist.

 

The report noted that repeat buyers (read move-up buyers) have increased as well. The lack of move-up buyers has depressed housing mobility, which may have been driven by lack of home equity from purchases made during the bubble years. Given the change in the house price indices over the past 10 years, negative equity is less of an issue than it was a few years ago.

 

Interestingly,  the number of first-time homebuyers this quarter was comparable to the peak of the last housing boom in 2005 and 2006, and only modestly below the peak levels of 1999 and 2000. Still, the Millennial generation is bigger than Gen X by a large margin, so there should be more room to run here.

 

quarterly sales to first time homebuyers

13 Responses

  1. M-Gen midpoint is 1990 – so it makes historic sense that now is the time when they will start buying homes. My youngest pair are older M-Gens now and both are homeowners, each having become one after the age of 30.

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    • That’s been my experience with the millennials I know. They all started getting married and buying homes after 30. Which is also when they got stable jobs, which I think is the predicate for both.

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  2. Taibbi may be excommunicated for this:

    “‘Corroboration Zero’: An Inspector General’s Report Reveals the Steele Dossier Was Always a Joke

    The report throws water on one “deep state” conspiracy theory of the Russia investigation, but validates complaints about “fake news”

    By Matt Taibbi”

    https://www.rollingstone.com/politics/political-commentary/horowitz-report-steele-dossier-collusion-news-media-924944/

    Liked by 1 person

  3. took a quick look at the Saudi Aramco IPO and the financials.

    They claim to have 31% net income margins.
    Everyone else on the planet – Exxon, Total, Eni, Chevron, has single digit margins.

    that makes no sense.

    Like

  4. Ace, on National Review:

    No but seriously: National Review is covering this to the same extent CNN and MSNBC are. In other words, they’re embargoing a story that hurts their Orange Man Bad feelings.

    They do however proudly feature this important story from liberal chubster Jonah Goldberg: “Trump Defenders Push Ukraine Conspiracy Theories.”

    As regards the incredible corruption disclosed by Horowitz and the dramatic confirmation of his report on live TV: Meh, not so important.

    It is unfortunate, but Ace is right. There is hardly anything over there covering the Horowitz revelations about FBI incompetence/corruption/abuse. There are only two people at NR who can take any pride in their coverage of the whole Russia hoax over the last 3 years, and that is Andrew McCarthy (who has been better than literally anyone else I have read) and Victor Davis Hanson. Lowry has been ok, but the rest have been unserious Never-Trumpers since 2016, and apparently continue to be. I too noticed (and laughed at) Jonah Goldberg’s first contribution to the post-Horowitz news cycle….a critique of Trump defenders! It’s kind of sad, actually, to see someone who I actually had a lot of respect for become so consumed by Trump-hatred that he really can’t see beyond it.

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    • I like National Review. And I still like Jonah Goldberg, but . . . you know . . . the friends you keep. He has called out Jen Rubin several times, but I haven’t heard him mention Bill Kristol once. He now has a significant financial and time investment in the Dispatch, and David French is more of a devout lefty Catholic than a conservative. So.

      I don’t mind that National Review is featuring a number of voices (though their ejection of Chris Buckley now seems a little hypocritical). I think there’s a place for NeverTrumpers and what they have to say. Although, frankly, if McCarthy and Hanson left National Review then I’d write them off completely (I don’t read National Review much as it is–I find the mobile version of their site and they locked articles a huge pain in the ass, and I’m not going to pay them money for their product).

      Not sure what they are going for with The Dispatch. I’ve read the morning reports several times and . . . eh, it’s not awful, IMO, but I’m not paying money to access that kind of content.

      It’s frustrating, but I pick and choose. I still listen to Jonah on GLOP (still excellent, IMO, though they are all NeverTrumpers, as far as I know) and The Remnant.

      I think it’s just a case of what self-identification trumps what. Jonah identifies as a conservative and for a long time identified as a Republican, but his class identification as an intellectual and a cosmopolitan conservative clearly is more important than anything.

      Also, these things become loops. It’s clear Jonah is really frustrated at the AlwaysTrumpers who have turned on him for not liking Trump. So he gets irritated, become more NeverTrumpy and whiny about all his friends and colleagues who are Trump supporters, and they get angrier at him for being NeverTrump and say stuff that makes him angrier and NeverTrumpier and so they get more Never-NeverTrumpier and . . . it’s a vicious cycle!

      When he’s talking rationally about Trump, I tend to agree with him mostly (although I still think he–and a lot of folks–still give the Russia collusion narrative too much credit, and he seems willfully blind to the fact that Trump’s Ukraine conspiracy theory is exactly the same amount of crazy as the Democrats Russian collusion theory, and just as credible). But he gets incensed and has to whine about all the AlwaysTrumpers wanting him the bend the knee or whatever. Why is this any different than it is with crazy liberals? Just disagree and get on with your life.

      Like

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