Morning Report

Vital Statistics:

	Last	Change	Percent
S&P Futures	1437.0	-2.5	-0.17%
Eurostoxx Index	2546.8	-18.0	-0.70%
Oil (WTI)	97.32	0.3	0.32%
LIBOR	0.389	-0.006	-1.40%
US Dollar Index (DXY)	79.67	-0.071	-0.09%
10 Year Govt Bond Yield	1.73%	-0.02%
RPX Composite Real Estate Index	193.4	0.3

Markets are lower this morning after initial jobless claims ticked up to 382k and the Producer Price Index showed inflation in check. All eyes turn to the FOMC decision scheduled for 12:30 est. Here is the summary of what to look for. Bonds and MBS are both stronger.

Fannie Mae's latest issue of Housing Insights does a deep dive into the latest employment statistics. While average weekly earnings have rebounded from the recession, aggregate weekly earnings have not. What did Keynes say about "sticky wages?"  What this means is that wages have recovered for the people that have jobs, but is you add up everyone's salaries, that number has not. Which pretty much tells us what we already know - wages are flattish and unemployment is high. They blame the construction sector for the weakness.  As I have said before, we have under-built housing for the past 10 years. Tight credit and temporarily depressed housing formation has masked the effect on housing demand. That won't last forever.

Census points out that median income fell 1.5% in the last two years. Interestingly 2010 was the peak of average or median wages and they have been falling ever since. The two reports do disagree somewhat - Fannie has average wages up about 2% since the recession began, while census shows them 8.1% lower. Both adjust for inflation, and I cannot imagine the difference between median and average would be that great, so I am not sure what is going on there.  Census also notes the income gap is widening, so expect the study to be political fodder.

Rob Chrisman dissects the recent G-fee increase and its effect on the mortgage market. RTWT.

Is the rental boom reaching the end of the line? Maybe in Manhattan.