| Last | Change | Percent | |
| S&P Futures | 2070.3 | 3.2 | 0.15% |
| Eurostoxx Index | 3161.8 | 20.5 | 0.65% |
| Oil (WTI) | 56.17 | -1.0 | -1.68% |
| LIBOR | 0.252 | 0.005 | 2.02% |
| US Dollar Index (DXY) | 89.54 | -0.058 | -0.06% |
| 10 Year Govt Bond Yield | 2.18% | 0.02% | |
| Current Coupon Ginnie Mae TBA | 104.9 | 0.1 | |
| Current Coupon Fannie Mae TBA | 104.1 | -0.1 | |
| BankRate 30 Year Fixed Rate Mortgage | 4.12 |
This week is for all intents and purposes a two day week. Markets will close early on Christmas Eve and many will take off Friday.
The big deluge of data is tomorrow, with GDP, personal income, personal spending and a host of other indicators.
The risk-on trade continues this morning, with stocks up small and bonds down a tad. Oil continues to fall.
Existing Home Sales fell 6.1% to a seasonally adjusted annual rate of 4.93 million, according to NAR. Housing inventory was tight and bad weather didn't help things either. The median existing home price was 205,300, which is 5% above November 2013. According to Sentier Research, the median income in the US was $53,700 as of the end of October. This makes the median home price to median income ratio just over 3.8, which is above its historical range of 3.15x - 3.55x. This means home price appreciation is probably going to be hard to come by until wage inflation begins to pick up.
The Chicago Fed National Activity Index hit +.73 in November, which is a very strong reading. Production and employment drove the increase. Housing and Consumption remained small headwinds.
The strength in the US bond market is likely to continue into 2015 as global bond investors see (relatively) high yields underpinned by a strong dollar. The punch line is that even if the Fed starts hiking rates, global demand for the 10 year bond means that mortgage rates could pretty much stay where they are for the time being. In other words, the Fed could hike rates and we could simply see the yield curve flatten. That is good news for the real estate industry, obviously.
One other thing to keep in mind: a flattening yield curve is a classic "tell" that the economy is slowing down, and by all accounts, it looks like the economy is accelerating. This will be another situation where the classic investing playbook isn't going to help you all that much. In other words, if the Fed starts hiking rates and mortgage rates stay where they are, don't all of a sudden dump your portfolio and pile into defensives like Proctor and Gamble or General Mills.
No comments:
Post a Comment