Morning Report - FOMC minutes calm the markets

Vital Statistics:

	Last	Change	Percent
S&P Futures	1863.6	-1.2	-0.06%
Eurostoxx Index	3168.4	-14.4	-0.45%
Oil (WTI)	103.3	-0.3	-0.33%
LIBOR	0.227	-0.001	-0.22%
US Dollar Index (DXY)	79.52	0.036	0.05%
10 Year Govt Bond Yield	2.67%	-0.02%
Current Coupon Ginnie Mae TBA	105.8	0.1
Current Coupon Fannie Mae TBA	104.4	0.1
RPX Composite Real Estate Index	200.7	-0.2
BankRate 30 Year Fixed Rate Mortgage	4.44

Markets are flattish after initial jobless claims came in lower than expected and import prices rose. Bonds and MBS are up small.

Stocks and bonds took off on the release of the FOMC minutes yesterday. The Fed considered a more explicit commitment to keep rates low until inflation reaches their target. This additional hurdle for raising rates cheered the markets and stocks went out on their highs. "A few" members (probably Plosser) thought the Fed Funds rate should increase soon, but the rest of the Committee disagreed, saying that the evidence the hawks cited was inappropriate to focus on at the zero bound. The takeaway is that the forecast of a June 2015 rate hike is looking more and more like an outlier and if inflation stays below the target rate of 2%, the Fed may consider holding rates at zero until inflation its 2%. Which, if China indeed hits the wall and its real estate bubble bursts, could be a long time. Start thinking about where the next bubble is going to be. 

Remember Greece? The fiscal ne'er-do-well of Europe that got cut off from the bond market? Well, guess what? They just raised 4 billion euros of 5 year paper, with a bid to cover ratio of 5:1. The rate they paid? 4.75%. People have such short memories..... Or it is just the fact that since rates are so low, people have to reach for yield. Either way, once rates start going up, it is going to be a bumpy ride, IMO. 

One other point about Greece - they did clean up its public spending issues a bit and trimmed its debt (the dreaded austerity that liberal economists love to hate). That is the difference between not being able to finance your government at all and being able to borrow at under 5%. Note to Paul Krugman. The bond market always gets the last word. Always.

Unintended consequence of Dodd-Frank? Turning non-judicial states into judicial ones anyway. Lenders are choosing to go through the court process, even if it takes more time, in order to reduce the potential liability under the new foreclosure laws (especially in states like California).

The CFPB is holding a forum on the mortgage closing process on April 23. It will be livestreamed on their site. Find out what sins we are apparently committing in the closing process.