Morning Report - Short week, but a lot of data

Vital Statistics:

	Last	Change	Percent
S&P Futures	2003.8	2.4	0.12%
Eurostoxx Index	3182.8	7.8	0.24%
Oil (WTI)	94.79	-1.2	-1.22%
LIBOR	0.234	0.000	0.00%
US Dollar Index (DXY)	82.93	0.186	0.22%
10 Year Govt Bond Yield	2.40%	0.05%
Current Coupon Ginnie Mae TBA	106.5	-0.2
Current Coupon Fannie Mae TBA	105.8	-0.1
BankRate 30 Year Fixed Rate Mortgage	4.08

Markets are higher this morning on no real news. Bonds and MBS are down.

Short week, but a lot of important economic data. Today, we get the ISM Manufacturing Survey and Construction Spending. On Thursday, we get the ISM Non-Manufacturing Index, and on Friday, we get the jobs report. Between the data and European events we could have a volatile week for rates. 

The ISM Manufacturing Index rose than expected, while the ISM prices paid index dropped. Production and New Orders jumped. Employment ticked down slightly. The production and new orders numbers bode well for 3Q GDP.

Construction spending rose 1.8% month-over-month as residential construction increased .7% and non-residential rose 2.5%. Of private residential construction, 52% was single family construction, 12% was multi-fam, and 36% was home improvement. 

The IBD / TIPP Economic Optimism Index rose slightly, but came in a bit light. Note that this Thursday we will be getting same store sales from the retailers and back-to-school shopping numbers. BTS is a good indicator for holiday shopping. We have seen strong consumer sentiment numbers, but so far that hasn't translated into actual spending.

Euro sovereigns are weaker this morning, which means US Treasuries are weaker. Speculation over whether the ECB will start quantitative easing is going to be driving bonds as much, or even more, than US economic data. Note that hedge funds are getting long Treasuries. It finally happened. People are momentum trading bonds. 

Angelo Mozillo has no regrets over what happened with Countrywide. As he puts it: "Countrywide didn't change. I didn't change. The world changed." Compared to other CEOs of that era, Mozillo has not shied away from the public spotlight. The US Attorney's Office in Los Angeles is suing him now. 

Finally, I appeared on Louis Amaya's Mortgage Markets Today show last week and discussed interest rates and the housing market. The full interview is here.