Morning Report: Fed Day

Vital Statistics:

 

Last Change
S&P futures 3210 4.1
Oil (WTI) 38.34 -0.39
10 year government bond yield 0.80%
30 year fixed rate mortgage 3.32%

 

Stocks are flattish as we await the FOMC decision. Bonds and MBS are up small.

 

The FOMC decision is set for 2:00 pm EST. No changes in policy are expected, and the main item will be the economic forecasts.

 

Small business optimism improved in May, according to the NFIB. “As states begin to reopen, small businesses continue to navigate the economic landscape rocked by COVID-19 and new government policies,” said NFIB’s Chief Economist Bill Dunkelberg. “It’s still uncertain when consumers will feel comfortable returning to small businesses and begin spending again, but owners are taking the necessary precautions to reopen safely.” Needless to say, profits and employment were depressed in May, and few businesses are looking at expansion right now.

 

Job openings fell to 5 million at the end of April according to the JOLTs jobs report. The quits rate fell to 1.4%.

 

Inflation decreased slightly in May, with the headline and core CPI indices down 0.1%. Ex-food and energy the CPI is up about 1.1% YOY. This is below the Fed’s target rate, so they will be in no hurry to raise rates.

 

Mortgage Applications increased 9.3% last week as purchases rose 5% and refis rose 11%. “Fueled again by low mortgage rates, pent-up demand from earlier this spring and states reopening across the country, purchase mortgage applications and refinances both increased,” said Joel Kan, MBA Associate Vice President of Economic and Industry Forecasting. “The recovery in the purchase market continues to gain steam, with the seasonally adjusted index rising to its highest level since January. Purchase activity increased for the eighth straight week and was a notable 13 percent higher than a year ago. Refinances moved higher for the first time in nearly two months, with both conventional and government applications rising and the overall index coming in 80 percent above year-ago levels.”

 

 

23 Responses

  1. And the march of revisionism continues on:

    “Merriam-Webster has a new definition of “racism”

    The revised definition will include systemic oppression.
    By Fabiola Cineas
    Jun 10, 2020, 3:10pm EDT ”

    https://www.vox.com/identities/2020/6/10/21286656/merriam-webster-racism-definition

    Liked by 1 person

  2. Liked by 1 person

  3. https://www.nycdetectives.org/news/urgent-message/
    it’s happening. FIDO … Fuck it, Drive On

    Liked by 1 person

    • Great article, NoVA.

      Two days ago, on the JAMA Youtube channel, three MDs from different parts of the world [Milan, Pittsburgh, and SF] discussed what they knew from their own crashtest [my word] experiences. They said exactly what Osterholm articulates in your link.

      They did go further afield because they also talked about treatments they had tried in extreme circumstances. Having first said a paraphrase of We know that there’s a condition called antibody dependent enhancement, which is a condition where you make just a little bit of antibody, but not enough to protect yourself. There’s also an immune enhancement phenomena where your body goes out of whack in terms of immune response.[Osterholm} they said for treatment purposes they had to guess who needed antibody encouragement and who did not. And sometimes they guessed right and saved someone and sometimes they guessed wrong and killed someone. So it would be important going forward to identify types of persons who would benefit from white blood cell boost or steroids or what have you in advance of treatment. There were some attempts to collate worldwide data to get a clue, but that had not gone very far yet. The Italian doc said we would reach 70% and herd immunity at some point either through viral spread or vaccine, but he hoped it would be through vaccine.

      They were all in agreement that after old age, obesity was the biggest risk factor. They mused that it was unfortunate that nursing homes could not let their patients be somewhere else, physically isolated, because that whole system of nursing homes doesn’t work for this virus. They agreed there was no real choice there, except to try to isolate better in place and do more test and trace.

      They were slightly less critical of Sweden then Osterholm, but only slightly – the Italian gave his Swedish colleagues the benefit of the doubt because at the inception they made a reaiistic guess from the then available information.

      Like

  4. Liked by 1 person

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