Morning Report - Spinning the Fed's losses

Vital Statistics:

S&P Futures	1836.9	4.4	0.24%
Eurostoxx Index	3119.8	9.1	0.29%
Oil (WTI)	92.79	0.5	0.50%
LIBOR	0.242	0.001	0.52%
US Dollar Index (DXY)	81.05	0.026	0.03%
10 Year Govt Bond Yield	2.97%	-0.02%
Current Coupon Ginnie Mae TBA	104.5	0.0
Current Coupon Fannie Mae TBA	103.3	0.0
RPX Composite Real Estate Index	200.7	-0.2
BankRate 30 Year Fixed Rate Mortgage	4.52

Markets are up this morning as initial jobless claims drop to 330k. Of course last week contained the New Year's holiday so it is tough to read too much into this number. Alcoa kicks off fourth quarter earnings season after the bell. Bonds and MBS are up small.

There was nothing earth-shattering in the FOMC minutes which were released yesterday afternoon (the bond market basically yawned at the whole thing). Things were more or less characterized as expanding "moderately", with a few "modests" thrown in as well. Manufacturing expanded "briskly" which was a first. The Fed did mention the issue of possible capital losses on its portfolio, and particularly how that would affect the reputation of the Fed. They talk about how spin the losses - basically telling people that you need to look at the whole picture, not just the Fed's p/l. In other words, the Fed may end up passing losses to Treasury, which will increase the deficit, but you have to take into account the fact that this process helped the economy, which increased tax revenues. Guess dynamic scoring is permitted for the Fed but not for anyone who proposes a tax cut.

Retailers are reporting same-store sales this morning, so far it looks looks like a mixed bag with Costco and Macy's beating estimates, while apparel retailers like Limited Brands missing. 

It is official: the FHFA has delayed the increase in G-fees and the new new LLPAs. Luckily for lock desks, the FHFA will give 120 day's notice if they decide to change things. Borrowers are probably going to save 3/8 of a point with this. The NAR is onboard with this move.