Morning Report - Government shutdown looms

Vital Statistics:

	Last	Change	Percent
S&P Futures	1670.9	-15.5	-0.92%
Eurostoxx Index	2882.4	-36.9	-1.26%
Oil (WTI)	101.7	-1.2	-1.15%
LIBOR	0.249	0.001	0.20%
US Dollar Index (DXY)	80.14	-0.382	-0.47%
10 Year Govt Bond Yield	2.61%	-0.02%
Current Coupon Ginnie Mae TBA	105.7	0.1
Current Coupon Fannie Mae TBA	104.9	0.1
RPX Composite Real Estate Index	200.7	-0.2
BankRate 30 Year Fixed Rate Mortgage	4.33

Markets are lower as participants contemplate a government shutdown. The Street has viewed this issue as a kabuki dance, but we are now getting to the short strokes. Bonds and MBS are rallying.

Aside from the government shutdown issues, this week also contains the all-important jobs report. The Street is at an increase of 182k and an unemployment rate of 7.3%. St Louis Fed Head James Bullard raised the possibility of tapering at the October meeting. I think if we have any sort of shutdown, tapering will be off the table until the Dec meeting at the earliest. Of course if there is a shutdown, we won't be getting any economic data this week.

One potential issue coming down the pike is the fee limit on mortgages starting Jan 1. The cap makes sub $100k loans uneconomic for originators. I wonder how the CFPB will handle the sudden unavailability of loans below 100k. Not sure if they thought this through or they just plan on hitting everyone with fair lending / CRA lawsuits.

Housing equity rose 30% or more than $2 trillion over the past year, according to NAR. 

Another interesting data point on the manufacturing renaissance in the US - low value added industries like textiles are onshoring. The problem is finding people.