Morning Report: Wholesale inflation running at 10%.

Vital Statistics:

S&P futures4,72812.2
Oil (WTI)82.42-0.23
10 year government bond yield 1.73%
30 year fixed rate mortgage 3.59%

Stocks are higher this morning despite more hawkish comments out of Federal Reserve officials. Bonds and MBS are up.

Inflation at the wholesale level rose 0.2% MOM and 9.7% YOY, according to the Producer Price Index. Petroleum products accounted for about a quarter of the increase. Ex-food and energy, the index rose 0.5% MOM and 8.3% YOY.

Initial Jobless claims ticked up last week to 230k.

Guaranteed Rate is shutting down Stearns Lending’s wholesale channel. This is just a year after it acquired the business from Blackstone. “Guaranteed Rate will continue to thrive and win market share by having a laser focus on leveraging our industry-leading purchase platform augmented by the best loan officers in the business,” Guaranteed Rate CEO Victor Ciardelli wrote.

Redfin purchased Bay Equity Home Loans for $135 million to build up its mortgage operations. Redfin paid 2.2x tangible book value per share, which is a pretty hefty premium to where mortgage originators are currently trading in the market. As volumes begin to shrink we should see more M&A activity in the mortgage banking space.

Foreclosure inventory fell to to an all-time low in 2021, according to data from ATTOM. Of course the COVID foreclosure prevention rules put in place by the government is driving it, however home price appreciation and wage inflation will probably work to keep down foreclosures. Given how long it takes for foreclosures to work through the system, we probably will see depressed levels for this year before returning to normal.

Inflation is going to be here a while, according to a survey of corporate executives. “Inflation is here,” Honeywell International Inc. Chief Executive Officer Darius Adamczyk said in an interview. “We have to be very, very careful how it gets solved, too, because it’s a little bit like driving your vehicle. If you slam on the brakes too hard, we could see the other side of inflation, which is a recession.”

%d bloggers like this: