Morning Report: Fannie Mae takes up their estimates for 2020

Posted on December 19, 2019 by Brent Nyitray

Vital Statistics:

 

Last Change
S&P futures 3195 -3.25
Oil (WTI) 60.88 -0.04
10 year government bond yield 1.93%
30 year fixed rate mortgage 3.96%

 

Stocks are flat this morning on no major news. Bonds and MBS are down.

 

Initial Jobless Claims fell to 234k last week. The prior week had a big jump to over 250k, which really didn’t comport with other labor market data. 234,000 is still above where we were a couple weeks ago, though. As of now, assume this is just noise but it there is going to be a turnaround in the labor market, initial jobless claims is where it first shows up.

 

Fannie Mae has taken up their estimates for housing in 2020. Tuesday’s strong housing starts numbers, combined with what we are hearing out of the homebuilders, indicate that the US housing market will be an “engine of growth” for the economy in 2020. All of the talk about a trade-driven recession was more partisan wishful thinking than anything else. Fannie expects new home sales to increase 12% in 2020, and has taken up their forecast for GDP growth from 2% to 2.2%. “We now expect single-family housing starts and sales of new homes to increase substantially, aided by a large uptick in new construction as builders work to replenish inventories,” Duncan said. “Despite the expected increase in the pace of construction, the supply of homes for sale remains tight and strong demand for housing is continuing to drive home prices higher.”

 

Separately, Fannie is offering early retirement to 25% of its workforce as the company readies itself for sale. “As is common in many American companies, Freddie Mac is offering employees who meet certain age and tenure requirements a voluntary opportunity to retire early. As we prepare for our next chapter, we anticipate this will help realign our workforce to create a company attractive to outside investors as well as current and future employees,” a spokesman for Freddie Mac said in an email statement.

 

Shades of things to come? Sweden is ending its 5 year experiment with negative interest rates. Their central bank expects rates to remain at 0% for the next few years. Global interest rates are rising as a result, with the German 10 year Bund trading at negative 22 basis points, and the Japanese Government Bond trading at a hair under 0%.

 

Home prices rose 5% in November, according to Redfin. Listings fell by 5.9%, while sales increased 3%. “Given that inventory is falling quickly, we’d expect to see even stronger price growth, especially when compared to last year’s soft market,” said Redfin chief economist Daryl Fairweather. “The fact that homes are selling faster indicates that there are buyers ready to pull the trigger and take advantage of low interest rates. If lack of inventory and high demand continues, buyers who take a wait-and-see approach could face less favorable conditions in the spring season like bidding wars and faster price growth.” Note that the biggest gains were in the areas hardest hit by the real estate bust: Detroit, Camden and Bakersfield.

Filed under: Economy, Morning Report |

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12 Responses

  1. Brent Nyitray, on December 19, 2019 at 12:59 pm said:

    Re the impeachment.

    If it was Chuck Schumer’s kid, or Jeb Bush’s kid who had been given a job at Burisma and same set of circumstances applied, would it have been an impeachable crime? Was it an impeachable offense to hold up aid to investigate a non-political rival?

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  2. jnc4p, on December 20, 2019 at 10:28 am said:

    If Obama really believes this, then it begs the question of why he didn’t step aside for HRC in 2008.

    “During Thursday’s Democratic debate, former Vice President Joe Biden and Sen. Bernie Sanders were confronted with statements recently made by former President Barack Obama about gender. And both of them missed a major opportunity.

    At a recent event on leadership in Singapore, Obama made two points. He argued that women are “indisputably” better leaders than men and he said that individuals, “usually old men,” need to recognize when they should step aside to enable new ideas and leadership to flourish, BBC reports.”

    https://www.vox.com/2019/12/19/21030885/bernie-sanders-joe-biden-amy-klobuchar-elizabeth-warren-gender-gap-politics-barack-obama

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    • Kevin S. Willis, on December 23, 2019 at 9:49 am said:

      Uh-huh. “Indisputably”. I dispute that. I’ve experienced numerous competent and incompetent male and female leaders. I don’t think leadership is gender-specific.

      And the answer there is that Obama could not afford to step out of the way, because of the importance of electing the first black president. Now that’s out the way, it should be women from here on out.

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  3. Let the mutherfuker burn!, on December 20, 2019 at 2:30 pm said:

    Someday maybe somebody could explain to me how this somehow leverages McConnell?

    https://m.dailykos.com/stories/1906974

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  4. jnc4p, on December 21, 2019 at 3:39 pm said:

    The whole NYT 1619 project gets called out:

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    • Kevin S. Willis, on December 23, 2019 at 9:25 am said:

      I don’t think the call out will dissuade the NYT and the contingent of East coast white liberals advocating this narrative to pull back.

      we disagree with their claim that our project contains significant factual errors and is driven by ideology rather than historical understanding

      While we welcome criticism, we don’t believe that the request for corrections to The 1619 Project is warranted.

      So, shut up, historians!

      The project was intended to address the marginalization of African-American history in the telling of our national story and examine the legacy of slavery in contemporary American life.

      That’s one of the problems with that project. And the kind of new, sublimated white supremacy that drives it (IMO): African-American history is not synonymous with slavery. It’s a reduction of African-Americans to almost nothing but slaves, one way or another. The legacy of slavery in contemporary American life (much more interesting to the NYT than actual slavery, going on right now, on our planet) is not the only aspect of African-American history. Nor is every African-American in history completely defined by slavery. Nor is focusing on slavery as the primary component of your identity, historically or contemporary, necessarily positive.

      Then they go on to defend the position that the American Revolution happened in order to preserve slavery. Ugh.

      The NYT is, much like the WaPo, becoming the place where facts go to die.

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