Morning Report: Judy Shelton heads to the Fed

Vital Statistics:

  Last Change
S&P futures 3614 32.6
Oil (WTI) 41.73 0.41
10 year government bond yield   0.91%
30 year fixed rate mortgage   2.9%

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

The upcoming week doesn’t have much in the way of market-moving news, however we will get a lot of housing news, with housing starts, NAHB housing market index, and existing home sales.

The Biden transition team will focus heavily on what they see as systemic racism in the financial sector. Expect to see a flurry of fair lending suits once the new CFPB leadership is in place. The government will also focus like a laser on forbearance servicing.

Better Mortgage, a digital platform which connect homebuyers with lenders just raised capital which values the company at $4 billion. This is about the market cap of Lending Tree.

The CEO of Freddie Mac just stepped down. I am not sure what that means with housing reform, but my guess is that nothing will change for the time being. While we won’t know which party will control the Senate until the Georgia runoff election, chances are that Republicans will hold the chamber and we will be looking at divided government. True housing reform will have to be accomplished legislatively, and with COVID front and center it probably won’t have the urgency to get considered, at least in the near future. Given the new administration’s focus on perceived systemic racism in lending, the government will want to keep F&F on a short leash in order to push affordable housing goals.

Judy Shelton looks like she will be joining the Fed, assuming a vote on her this week. The left absolutely despises her for the apparent thoughtcrime of having positive things to say about the gold standard. Ron Wyden of Oregon said: “Her ideas are so wacky and outdated, giving her authority over the dollar would be like putting a medieval barber in charge of the CDC.”

Note to Senator Wyden: The Fed doesn’t have any authority over the dollar, that would be Treasury. Regardless, with global central banks in the midst of the most ambitious experiment in financial engineering, groupthink is a risk.

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