Morning Report - No expanded HARP for you

Vital Statistics:

	Last	Change	Percent
S&P Futures	1828.6	-10.0	-0.54%
Eurostoxx Index	3145.5	-5.8	-0.18%
Oil (WTI)	96.92	0.2	0.20%
LIBOR	0.239	0.002	0.63%
US Dollar Index (DXY)	80.64	-0.528	-0.65%
10 Year Govt Bond Yield	2.81%	-0.05%
Current Coupon Ginnie Mae TBA	105.3	0.3
Current Coupon Fannie Mae TBA	104	0.3
RPX Composite Real Estate Index	200.7	-0.2
BankRate 30 Year Fixed Rate Mortgage	4.41

Stocks are lower on overseas weakness. Initial Jobless Claims came in at 326k, a little better than expected. The Markit PMI and the Chicago Fed National Activity Index came in lower than expected. Bonds and MBS are up

Existing home sales increased to 4.87 million in December, below the 4.93 million expectation. The median price increased 9.9% year-over-year to $198,000. All cash buyers remained steady at 32%, and just over 1/4 were first time homebuyers. Days on market jumped from 56 to 72. 

The FHFA House Price Index rose .1% in November, which was lower than expected. Year-over-year, prices are up 7.6% and we are within 8.9% of the April 2007 peak. Home prices are at roughly the same level they were in April 2005. This index looks at houses with conforming mortgages only, so it tends to be a little less volatile than Case Shiller, etc which include distressed / cash sales as well as jumbos.

Fifth Third reported that origination volumes fell 46% quarter-over-quarter and 67% year-over-year. 

A senior Treasury official spoke at the asset backed securities conference in Vegas and gave some insight as to the government's thinking regarding the mortgage market. Key takeaways:

• Treasury does not support changing the cut-off date for HARP
• Treasury  would like to extend HARP to non-conforming loans as a way to deal with the eminent domain issue.
• Fannie and Fred loans will probably trade in the same MBS at some point
• The administration thinks mortgage standards are too inflexible, and wants to see more CRA lending.
• The administration wants to restart private mortgage securitization, but doesn't know how.

The WSJ has a good article on why hiring is still sluggish in the manufacturing sector, even as production increases. We still have some slack in the system and we probably won't see a big hiring push until utilization levels are in the low / mid 80s.