Morning Report: Some perspective on job losses

Vital Statistics:

 

  Last Change
S&P futures 3905 -17.3
Oil (WTI) 62.88 -0.34
10 year government bond yield   1.45%
30 year fixed rate mortgage   3.12%

Stocks are lower this morning as global sovereign yields continue to sell off. Bonds and MBS are down big again.

 

In terms of sovereign yields, we are seeing the German Bund up to -25 basis points, and the Japanese Government Bond yields 15 basis points. The quick rise in European bonds has the European Central Bank worried about hobbling any recovery before it gets off the ground. Jerome Powell is more sanguine, saying the rise in yields is a sign of confidence in the economy.

 

The second estimate for fourth quarter GDP came in at 4.1%, which was unchanged from the first estimate. Personal consumption expenditures were revised downward from 2.5% to 2.4%. Durable Goods orders rose 3.4%, which capital goods expenditures rose 0.5%.

 

Initial Jobless claims fell to 730k last week. You can see just how elevated they are compared to pre-COVID, when 200k was the usual print. To put these numbers into perspective, the worst weekly reading during the Great Recession was 665k, and the average for most of 2009 was around 575k or so. The average weekly number over the past year has been 1.5 million. IMO the stock and bond market is in denial over just how bad the carnage has been.

 

The CFPB is reconsidering new rules for non-QM loans. Here is the letter written yesterday.

 

Pending Home Sales fell 2.8% in January, according to NAR. “Pending home sales fell in January because there are simply not enough homes to match the demand on the market,” said Lawrence Yun, NAR’s chief economist. “That said, there has been an increase in permits and requests to build new homes.”

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