Morning Report - Judicial vs. non-judicial home price appreciation

Vital Statistics:

	Last	Change	Percent
S&P Futures	2068.9	-7.2	-0.35%
Eurostoxx Index	3254.3	-23.1	-0.70%
Oil (WTI)	64.6	-1.2	-1.88%
LIBOR	0.236	0.000	0.11%
US Dollar Index (DXY)	89.37	0.039	0.04%
10 Year Govt Bond Yield	2.29%	-0.01%
Current Coupon Ginnie Mae TBA	104.5	0.0
Current Coupon Fannie Mae TBA	103.8	0.0
BankRate 30 Year Fixed Rate Mortgage	4.14

Markets are lower this morning on no real news. Bonds and MBS are up.

The week after the jobs report is typically data-light, and this week is no exception. The highlights from a bond market perspective will probably be the JOLTS job openings on Tuesday and retail sales on Thursday. We will also hear from luxury home builder Toll Brothers on Wed morning. 

The latest Black Knight Mortgage Monitor is out. Foreclosure starts dropped by 10.5% to 81,400 and the foreclosure inventory dropped to 3.6MM homes, which is down 18% year-over-year. They have a cool chart that illustrates the difference between the judicial and non-judicial states in terms of home price appreciation, both in terms of decline and rebound. You can see how the judicial states have experienced much lower rebounds off the bottom than the non-judicial states. It would be interesting to see compare the peak to trough price declines of judicial vs. non-judicial states. I suspect we would find that having tougher foreclosure requirements did not help support house prices. 

S&P lowered the ratings on Italy's sovereign debt to BBB- from BBB, which is one level above junk status. Yet, Italian sovereigns are trading at 1.97%, 33 basis points lower than AA+ rated US Treasuries. This is all about the ECB and QE, but it shows again that all of this central bank manipulation of global sovereign bond markets has created some major dislocations. Of the 5 PIIGS, only Portugal and Greece have higher yields than the US 10-year. Strange times.

There were no changes in the federal limits on conforming loans for 2015.

San Francisco is looking at using eminent domain to steal from bondholders help people in who are in foreclosure keep their homes. The city is also trying to issue about $400 million in GO munis, and something like this cannot help.