| Last | Change | Percent | |
| S&P Futures | 1803.5 | 0.4 | 0.02% |
| Eurostoxx Index | 2973.6 | 12.7 | 0.43% |
| Oil (WTI) | 98.27 | -0.2 | -0.24% |
| LIBOR | 0.244 | 0.002 | 0.83% |
| US Dollar Index (DXY) | 79.98 | 0.014 | 0.02% |
| 10 Year Govt Bond Yield | 2.82% | 0.02% | |
| Current Coupon Ginnie Mae TBA | 104.8 | -0.2 | |
| Current Coupon Fannie Mae TBA | 103.7 | -0.2 | |
| RPX Composite Real Estate Index | 200.7 | -0.2 | |
| BankRate 30 Year Fixed Rate Mortgage | 4.42 |
Markets are flattish on no real news. Bonds and MBS are down small. In spite of rising rates, mortgage applications rose 1% last week as refis rose 2% and purchases rose 1%
Mel Watt was confirmed by the Senate yesterday to lead FHFA. Ed DeMarco slipped in one last G-fee increase before he left - it will be interesting to see if Watt maintains it. Exhibiting his droll sense of humor, President Obama said that Mel Watt is "just the type of regulator to make sure the kind of crisis we just went through never happens again." Regardless of anyone's free-market inclinations, a Mel Watt FHFA is probably better for originators than Ed DeMarco was. He wants credit loosened, he wants more mortgage activity. Watt is a CRA guy to the bone.
The other possible effect (and I'm not thoroughly convinced it will happen) is that higher coupon MBS get hit as the market factors in new prepayment assumptions. Of course that isn't relevant for new issues, but there is a relative value trade between TBAs and existing MBS. If existing MBS get hit, TBAs probably will as well. To a LO, what this means is that your borrower won't be able to gain as much benefit going higher up in rate as before. Again, may not happen, but is something to watch over the next few months.
The new Volcker rule is out, and it is not as harsh as the banks had feared. Principal trading in a market-making context is still allowed, although the devil is in the details and it will depend on how the regulators enforce it. The main point is that liquidity in the MBS markets should remain the way it is and not contract, which would have had the effect of raising interest rates.
It is looking like a budget confrontation isn't happening in the new year. Paul Ryan and Patty Murray came up with a deal that weakens the sequester, and cuts the deficit by raising fees in other places. Extended unemployment benefits were not part of the deal, which means that unemployment checks will stop for millions of Americans at the beginning of the year. Also, I don't know if the debt ceiling was addressed. So we have a couple big issues still aren't resolved.
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