Morning Report: Retail Sales Rebound

Vital Statistics:

  Last Change
S&P futures 3489 11.6
Oil (WTI) 40.42 0.39
10 year government bond yield   0.74%
30 year fixed rate mortgage   2.91%

Stocks are higher this morning on positive economic news. Bonds and MBS are down.

Retail Sales increased 1.9% in September, which was well above what the Street was looking for. The control group, which strips out autos, gas and building products rose 1.5%.

Meanwhile, industrial production fell 0.6% last month and capacity utilization inched up to 71.5%. The numbers were below expectations, however July and August numbers were revised upward. We are still about 7% below pre-COVID numbers.

It is looking more and more like any sort of stimulus package isn’t going to happen before the election. The Republican Senate is going to put through a $500 billion package, which will go nowhere in the House because it is too small.

New home sales are outpacing housing starts, which is depressing inventory and increasing prices, according to the NAHB. Given the demand out there, housing and home construction should be a big driver of the economy for the next few years. Housing was the missing link in the post Great Recession recovery.

This image has an empty alt attribute; its file name is starts-versus-sales.jpg

About 8.5% of renters missed their September payment, according to the MBA. “Rent and mortgage payment collections improved over the summer as more people went back to work, but high unemployment continues to place hardships on millions of U.S. households,” said Gary V. Engelhardt, Professor of Economics in the Maxwell School of Citizenship and Public Affairs at Syracuse University. “There is growing concern that absent a slowdown in the number of coronavirus cases and another round of much-needed federal aid, millions of renters in the coming months face the prospects of falling further behind. With the current eviction moratorium expiring in January, the situation could be even more challenging. Many renter households across the country could find themselves with no place to live and no means to repay missed payments.” Student loans are even worse; 40% of student loan borrowers did not make their payment.

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