| Last | Change | Percent | |
| S&P Futures | 1996.2 | 8.4 | 0.42% |
| Eurostoxx Index | 3136.9 | 38.4 | 1.24% |
| Oil (WTI) | 93.71 | 0.1 | 0.06% |
| LIBOR | 0.238 | 0.004 | 1.49% |
| US Dollar Index (DXY) | 82.54 | 0.206 | 0.25% |
| 10 Year Govt Bond Yield | 2.39% | -0.01% | |
| Current Coupon Ginnie Mae TBA | 106.4 | 0.0 | |
| Current Coupon Fannie Mae TBA | 105.8 | 0.1 | |
| BankRate 30 Year Fixed Rate Mortgage | 4.28 |
Markets are higher this morning on no real news. Bonds and MBS are up small.
Lots of economic data this week: Tomorrow we get durable goods, the FHFA Home Price Index and Case-Shiller. Thursday, we get the second revision to second quarter GDP, and Friday we get Personal Income and Personal Spending.
On GDP, note that the Street is forecasting the advance estimate of +4.0% gets revised downward to +2.4%. If that ends up being the case, we will have had almost no GDP growth for the first half of 2014.
Why have the strategists gotten it so wrong with their bond market predictions? (Mea Culpa - include me in that camp). One explanation is that they are looking only at the US and ignoring the weakness emanating out of Europe. The second explanation is that inflation just cannot be found - the rally in the dollar has depressed commodity prices and there is little to no upward pressure on wages. This also might help explain why the Fed is considering hitting some bids with its paper once QE ends.
Another corporate inversion story: Burger King is apparently in talks to buy Canadian-based Tim Horton's. Note Walgreen's decided to scrap their plans for moving their headquarters and the stock got demolished.
The takeaway from Jackson Hole? Labor markets need to heal more before the economy can weather higher interest rates. Wage growth is flat right now. In order to get to the Fed's 2% target on inflation, we would need to see wage growth of around 4%, because productivity-driven increases are non-inflationary. This just goes to show how far we have to go. That said, the economic staff at the Fed has taken down its estimate of the potential non-inflationary GDP growth, so there might not be as much slack as people think.
Think home flipping is dead? Think again.
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