Morning Report

Vital Statistics:

	Last	Change	Percent
S&P Futures	1542.1	-3.6	-0.2%
Eurostoxx Index	2546.3	-15.0	-0.61%
Oil (WTI)	86.65	-.02	-0.0%
LIBOR	0.278	0.001	0.18%
US Dollar Index (DXY)	82.45	-0.302	-0.25%
10 Year Govt Bond Yield	1.69%	-0.007%
Current Coupon Ginnie Mae TBA	106.1	0.2
Current Coupon Fannie Mae TBA	104.06	-0.3
RPX Composite Real Estate Index	190.426	-0.4
BankRate 30 Year Fixed Rate Mortgage	3.51

Markets are weaker this morning after some disappointing economic data. Initial Jobless Claims camea at 352k, slightly higher than expectations and the prior week was revised upward. Philly Fed and Leading Economic Indicators were also disappointing.  Bond and MBS are up.

Freddie Mac released their April Economic and Housing Outlook yesterday which does a decent job of going over the latest and greatest economic statistics. They are predicting that GDP will come in at +3% for Q1, dip to +1.3% for Q2 and then rebound into the mid 2s for the final half of the year. For 2013, they are predicting growth above 3%. They believe that construction employment will drive the recovery. Of the 5.5 million jobs lost since bust, 2.2 million (or 40%) were in construction. Since then we have added only 330k construction jobs. If you count the half a million jobs lost in financial services, real-estate related jobs accounted for 50% of the jobs lost in the Great Recession.

The Fed's Beige Book survey contains the words "moderate" and "modest" a lot. The Cleveland, Richmond, St. Louis, Minneapolis, and Kansas City districts were growing at a "moderate" pace, while Boston, Philadelphia, Atlanta, Chicago, and San Francisco noted "modest" growth. Increases in auto and residential construction were offset by cuts in defense-related weakness. The labor markets were generally unchanged, although the Fed noted wage pressures in IT, construction, and engineering.

Minneapolis Fed Head Kocherlakota says that low interest rates will probably generate signs of financial instability, but it is a necessary evil. He noted that QE has helped the housing market and said it would be nice if they could do even more along those lines.