Vital Statistics:
Last
|
Change
|
Percent
|
|
S&P Futures
|
1721.8
|
4.0
|
0.23%
|
Eurostoxx Index
|
2940.7
|
31.7
|
1.09%
|
Oil (WTI)
|
108.2
|
0.1
|
0.07%
|
LIBOR
|
0.25
|
-0.002
|
-0.89%
|
US Dollar Index (DXY)
|
80.2
|
-0.042
|
-0.05%
|
10 Year Govt Bond Yield
|
2.70%
|
0.01%
|
|
Current Coupon Ginnie Mae TBA
|
105
|
1.3
|
|
Current Coupon Fannie Mae TBA
|
104.2
|
0.0
|
|
RPX Composite Real Estate Index
|
200.7
|
-0.2
|
|
BankRate 30 Year Fixed Rate Mortgage
|
4.42
|
Markets are
higher this morning after yesterday's furious rally on the Fed's decision to
keep asset purchases in place. The 10 year had a trading range of over 30 basis
points in yield yesterday. Initial Jobless Claims increased to 309,000. Bonds
and MBS are up small.
The FOMC
statement was obviously a
surprise, and it is clear from the reaction in the markets that a LOT of people
were leaning short heading into the announcement. What does that mean for rates
going forward? The markets will now begin to fret about the December meeting,
which isn't going to be bond bullish. I think if you are considering locking
right now, you do it. 2.7% seems to be resistance on the 10 year, and we could
be looking at a 2.7% - 3.0% trading range. At these levels, take the money and
run.
The Fed's
decision certainly provides support for the theory that the Fed was really
targeting leverage with its announcement last Spring. The economic data has
never supported a reduction of stimulus, and the Fed has been consistently too
high with its economic forecasts. The thing is, they can't un-ring the bell -
so people are not going to be piling into levered curve flattening trades.
REITs have significantly de-leveraged. Mission Accomplished.
The Fed took down
its forecasts again, with the 2013 GDP range now
2.0% - 2.3% from 2.3% - 2.6% in June. Unemployment's forecast ticked down as
well, from a range of 7.2% - 7.3% to 7.1% to 7.3%. Ben Bernanke was asked in
the press conference about the labor force participation rate and how it seemed
to be driving unemployment. Bernanke acknowledged that there is more to the
labor picture than simply the headline unemployment number, and also stressed
that these are guideposts, not thresholds. In other words, if unemployment gets
to their 7% target, but it is due to the wrong reasons (a drop in the
participation rate), then the Fed may decide to remain accomodative.
The beatdown goes
on... Wells
Fargo is cutting 1,800 jobs
in its mortgage unit, in addition to the 3,000 announced earlier this year.
Brent Nyitray, CFA
iDirect Home Loans
1010 Washington St, 6th floor
Stamford CT 06901
T: 203-817-3614
C: 917-841-4938
AIM bnyitray
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