Morning Report - It's Janet

Vital Statistics:

	Last	Change	Percent
S&P Futures	1654.3	3.9	0.24%
Eurostoxx Index	2917.5	14.1	0.49%
Oil (WTI)	103.3	-0.2	-0.19%
LIBOR	0.246	0.002	0.82%
US Dollar Index (DXY)	80.39	0.329	0.41%
10 Year Govt Bond Yield	2.65%	0.01%
Current Coupon Ginnie Mae TBA	105.4	0.0
Current Coupon Fannie Mae TBA	104.5	0.2
RPX Composite Real Estate Index	200.7	-0.2
BankRate 30 Year Fixed Rate Mortgage	4.27

Markets are up small after Alcoa kicked off earning season with good numbers. Bonds and MBS are down small.

Mortgage Applications increased last week by about a percent, according to the Mortgage Bankers Association. The refi index was up about 2.5%, while the purchase index fell small.

The FOMC minutes will be released at 2:00 pm EST. In the absence of economic data this will undoubtedly take on more importance.

In a move that surprised exactly no one, Obama is expected to name Janet Yellen to replace Ben Bernanke when his term expires in January. Basically it means Alan Greenspan's third term. Yellen is a dove, a bigger dove than Bernanke, who was a bigger dove than Greenspan. Expect fawning support from the media due to the groundbreaking nature of the nomination. (If only Janet Yellen had been running the Fed, we wouldn't be in this mess - never mind that while Ben Bernanke just spiked the punch bowl, Janet will be adding oxycontin to it.) The extra juice will have the Street singing Dammit Janet.

The shenanigans regarding the debt ceiling are not being felt in the 10-year, but they are being felt in the 1 month T-bill. The yield has increased from almost zero in mid September to 29 basis points currently. Any sort of default will wreak havoc in the repo market as defaulted securities are ineligible to be used for collateral. That has the makings of a credit crunch and bears watching. If there is one thing that is sure to get the market's attention it would be liquidity problems somewhere because someone can't roll over their repo lines.

Completed Foreclosures increased to 48,000 in August (up 1.3% month over month, but down 34% on an annualized basis), according to CoreLogic. Shadow inventory was 1.9 million units. Note: The MBA and Corelogic have different methodologies for calculating shadow inventory - The MBA's estimate is about 50% higher.