Morning Report: Fed week

Posted on December 14, 2020 by Brent Nyitray

Vital Statistics:

 

  Last Change
S&P futures 3680 26.3
Oil (WTI) 46.97 0.44
10 year government bond yield   0.93%
30 year fixed rate mortgage   2.78%

Stocks are higher this morning on no real news. Bonds and MBS are down.

 

The Fed will meet this week on Tuesday and Wednesday. No changes in interest rates are expected, however we will get a new round of economic projections and future rate forecasts. The big question will concern whether the Fed intends to increase MBS purchases. Several Fed speeches have alluded to the possibility, which has probably explained much of the disconnect between Treasuries and mortgage rates. The 10 year keeps inching upwards, while mortgage rates keep hitting record lows. I still think the US 10 year cannot continue to ignore what is happening to sovereign yields overseas and the path of least resistance will continue to be down.

 

Aside from the Fed meeting, we will get some housing data this week with the NAHB Housing Market index and housing starts. We will also get retail sales and industrial production this week as well.

 

Congress is still trying to hammer out some sort of stimulus bill. The big sticking point is aid to state and local governments.

 

Retention rates dropped to 18% last quarter, according to data from Black Knight.

Filed under: Economy, Morning Report | 18 Comments »

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