Morning Report: Janet Yellen testifies in front of the Senate

Vital Statistics:

 

  Last Change
S&P futures 3813 24.3
Oil (WTI) 53.64 0.64
10 year government bond yield   1.10%
30 year fixed rate mortgage   2.86%

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

 

The MBA reported that mortgage loans in forbearance fell 5.37% compared to 5.46% a week ago. Fannie and Fred loans in forbearance fell to 3.13%, an improvement of 6 basis points. “The week of January 10 saw the largest – and only the second – decrease in the share of loans in forbearance in nine weeks, with declines across almost every tracked loan category,” said Mike Fratantoni, MBA Senior Vice President and Chief Economist. “The rate of exits from forbearance has picked up a bit over the past two weeks but remains much lower than what was seen in October and early November.”

 

The FHFA has extended its foreclosure moratorium until Feb 28. The FHFA projects the COVID-19 foreclosure moratorium and its extension will create an additional $1.4 to $2 billion in expenses for the government-sponsored enterprises.

 

Mortgage Applications decreased 1.9% last week according to the MBA. Purchases increased 3%, while refinances fell 5%. “Market expectations of a larger than anticipated fiscal relief package, which is expected to further boost economic growth and lower unemployment, have driven Treasury yields higher the last two weeks,” said Joel Kan, MBA Associate Vice President of Economic and Industry Forecasting. “After a post-holiday surge of refinances, higher rates chipped away at demand. There was a 5 percent drop in refinance activity, driven by a 13.5 percent pullback in government refinances.”

 

Janet Yellen testified yesterday in front of the Senate Finance Committee. Here were the big takeaways:

  • Higher taxes are coming, but not now.
  • The government needs to get spending under control, but not now.
  • The dollar should be strong
  • Fiscal stimulus needs to be big.
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