Morning Report: Mortgage rates continue to lag Treasuries.

Vital Statistics:

 

Last Change
S&P futures 3217 -17.25
Oil (WTI) 63.87 0.74
10 year government bond yield 1.78%
30 year fixed rate mortgage 3.89%

 

Stocks are lower as the markets continue to digest the Iranian strike last week. Bonds and MBS are up.

 

Friday’s rally in the bond markets left some LOs disappointed, as mortgage backed securities barely moved. This is typical behavior to big shocks in the bond markets – mortgage backed securities (and therefore mortgage rates) invariably lag. We are seeing the same effect again this morning with bond yields falling and MBS barely moving.

 

Senior central bankers saw a possibility that interest rates could go even lower in the future, driven by changing demographics (in other words, an aging population). This is precisely the issue that has been dogging Japan for the past 30 years.

 

There was nothing earth-shattering in the FOMC minutes which were released on Friday. The Fed did nothing at the December meeting, so no new revelations were really expected. Officials “discussed how maintaining the current stance of policy for a time could be helpful for cushioning the economy from the global developments that have been weighing on economic activity.” Note that the latest NY Fed forecast has Q4 GDP coming in at 1.1%, which seems far below the other forecasts out there. This was largely due to the weak December ISM survey which showed manufacturing continue to decline. New orders, production, and employment all were contracting. The report was actually the weakest since 2007. It is probably too early to tell if this is a temporary blip or the new Phase 1 deal with China will make a difference. Punch line: No rate hikes for a while

 

 

18 Responses

  1. I’m not sure if “white supremacy” is really the appropriate term for this.

    “The “white panic” over the United States becoming a majority-minority nation by 2044 drives a lot of Trump’s support. But what has made white supremacy so potent is that it will do anything to stay at the center of American political and cultural life, including bestowing whiteness upon those once excluded in order to maintain majority numbers. And one of the reasons it is impossible to squash is the willingness of the once-excluded to accept the invitation to join the fold.”

    https://www.washingtonpost.com/opinions/2020/01/06/three-things-trump-is-doing-that-should-scare-hell-out-democrats/

    I really don’t see the KKK relaxing the membership standards to grow the ranks.

    Liked by 1 person

    • It’s like the Fletch comment, “Come on guys! It’s all [white supremacy]now!”

      And there is a tremendous amount of gook on this windshield.

      Like

    • IMO, the widespread white supremacy the left thinks it sees is largely a figment of its imagination.

      Edit. It is capehart, so par for the course.

      Like

    • “The “white panic” over the United States becoming a majority-minority nation by 2044 drives a lot of Trump’s support.

      While no doubt true for some minority of people, I think there’s a more “Cultural American” panic–people always worried that the hippies are about to take over and try and turn American into Cuba. Or Venezuela.

      Because I think most folks don’t care so much about skin color of ethnic background as much as they do what they consider American culture and values. That’s the demographic switch people are actually worried about.

      including bestowing whiteness upon those once excluded in order to maintain majority numbers

      I would think the cognitive dissonance causes by such thinking would give the author migraines. They are taking evidence they are apparently observing that the people they call “white supremacists” are in fact embracing like-minded people other other ethnicities and skin colors and nationalities and calling that “white supremacy”–when it clearly isn’t. It’s “political-views-I-don’t-agree-with-supremacy”.

      Do they ever get to a point where they become sufficiently uncomfortable with their own mangling of the language, or decide they have descended to sufficient incoherence, that they at least *try* to make their terminology somewhat correspond with reality?

      Because you can say traditionalism or American-Exceptionalism or Assimilation-Culture are bad things, but also not try and label them White Supremacy.

      Like

      • KW:

        Do they ever get to a point where they become sufficiently uncomfortable with their own mangling of the language, or decide they have descended to sufficient incoherence, that they at least *try* to make their terminology somewhat correspond with reality?

        Seemingly not.

        Liked by 1 person

    • Trump is raising tons of money from aggrieved supporters and he’s making a serious play for African American and Latino votes.

      Or, the progressive left and the Democrats care so little about alienating African Americans and Latino they are potentially leaving a lot of votes on the table because they feel entitled to all non-white and non-male support just because of their super wokeness.

      Despite high job disapproval ratings and the tarnish of being the third president in American history to be impeached

      I’ve always said this about political advertising, and it’s now something I’ve also observed in the media and the opinion page: more isn’t always better. I’ve never worried about money in politics because it’s often counter-productive. If I had seen 100 times more Jeb Bush on the airwaves, it wouldn’t have made Jeb bush more attractive a candidate, just 100 times more annoying.

      Leading every opinion piece or news article with whatever the author considers the most negative aspects of Trump–which everybody already knows–becomes trying to hard. Even to a lot of people predisposed to agree with them. Stick to your point.

      Despite kids in cages, siding with Russian President Vladimir Putin over U.S. intelligence, flouting the rule of law by defying subpoenas, and coddling and hiring white supremacists, to name a few of Trump’s many legal and moral offenses, Republicans really support the president

      I’m not going to be sending the GOP or Trump any money. But if I was on the fence and would consider such a thing, this sort of thing would literally make me want to write the Trump campaign a check.

      What was noteworthy was where the president did the rally. Ministerio Internacional El Rey Jesús is a megachurch with a predominantly Latino congregation whose leader, Guillermo Maldonado, is an ally and adviser to Trump. If you think the president’s open xenophobia and scapegoating of Latinos over immigration make him a nonstarter for that voting bloc, you have two blind spots.

      That reference to “blind spots” is what I would call “projection”. Someone has a serious blind spot in this scenario, and it’s not Trump supporters.

      It also goes into that weird assumption the Democrats and the left seem to make that (a) Mexicans kind of hate America and are just coming to America to make a few more bucks and then hate America with them and (b) that legal immigrants all love illegal immigration and think anybody trying to stem the flow of illegal immigration is bad.

      For some Latinos, who otherwise would have been excluded from whiteness

      The left is literally going full circle and becoming 19th century level racists.

      That being said, I’ll be interested in seeing if they have anything to worry about. I suspect Trump will do better with both black Men and Hispanics in 2020 than he did in 2016. Whether it’s enough to make a difference will be another question.

      Like

      • KW:

        For some Latinos, who otherwise would have been excluded from whiteness…

        The primary thing that determines whether a Latino is “excluded” from “whiteness” is the narrative that those on the left seek to tell. If they want the person to appear sympathetic, they are “excluded” from whiteness. If they want the person to appear unsympathetic, then they are “included” in whiteness. That’s why Latina AOC is a “woman of color” even though she is white, while George Zimmerman is a “white Hispanic”, even though he is Latino.

        Liked by 1 person

        • Yet another example of how classifying people as being white or not has nothing at all to do with whether or not they are, in fact, white.

          Colin Kaepernick on the killing of Qasem Soleimani:

          “There is nothing new about American terrorist attacks against Black and Brown people for the expansion of American imperialism.”

          This is a picture of Soleimani:

          He is so white that if he worked for Trump instead of being killed by him, they’d be accusing him of being part of the Klan.

          Liked by 1 person

        • Of course he’s white, Iran is the origin of Aryan.

          Like

        • And Ted Cruz, of course, is a Canuck.

          Liked by 1 person

        • The primary thing that determines whether a Latino is “excluded” from “whiteness” is the narrative that those on the left seek to tell.

          That’s a really good point. I’ve observed that too.

          The whole idea seems absurd to me. The idea of recruiting Latinos and African-Americans into “white supremacy” has moved from shaping the narrative to completely losing the narrative, depriving the narrative of any potential meaning.

          And when there are so many tribal and identity-politics inspired ways to attempt to shape the narrative, they simply cannot get past race as their fundamental and sometimes only weapon of choice. It has been common to criticize groups because of ideologies, religions, and cultural-affiliation forever. It’s not unusual to construct a group association based on arbitrary qualities and then mark that group as bad or evil.

          The whole idea of Republicans being the “party of the rich” and in opposition to the poor and middle class is simplistic and rife with exceptions and inaccuracies, but is at least sustainable without devolving into incoherence.

          The idea of “white supremacists” recruiting minorities into “white supremacy” for votes–essentially giving them some sort of mythical “white status” in exchange for votes–is structurally incoherent and also racist and also, IMO, deeply insulting to everybody involved. It may not be the worst tactic they could take, facing the possibility that Trump is enjoying some increase in support amongst minorities according to some polls, but I can’t think of a worse one off the top of my head.

          I don’t know that much of anything will change, or if it does the change will last, but I will say I think the Democrats have potentially painted themselves into a very small corner with their “Demographics is Destiny” narrative.

          Like

      • Well, Democrats have always supported the One Drop philosophy.

        Like

      • The true idiocy of that journalistic assumption is that there is a Latino “voting bloc.”

        Chicanos in TX voted well over 40% for GWB and I think McC as well. Cubanos in FL tend to favor Rs in many elections.

        The variety of “Latinos” in the USA is actually quite well known and accepted by persons with Spanish surnames. So assuming that a Spanish last name implies a voting preference is a dumb sort of ethnic profiling.

        Liked by 1 person

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