| Last | Change | Percent | |
| S&P Futures | 2048 | 29.2 | 1.48% |
| Eurostoxx Index | 3141 | -63.0 | -1.73% |
| Oil (WTI) | 37.08 | 0.74 | 1.76% |
| LIBOR | 0.492 | 0.006 | 1.13% |
| US Dollar Index (DXY) | 97.77 | -0.165 | -0.17% |
| 10 Year Govt Bond Yield | 2.27% | 0.05% | |
| Current Coupon Ginnie Mae TBA | 104.2 | ||
| Current Coupon Fannie Mae TBA | 103.4 | ||
| BankRate 30 Year Fixed Rate Mortgage | 3.93 |
Markets are higher this morning as oil and credit markets have an up day. Bonds and MBS are getting whacked.
There is no news in particular driving the rally in oil and other financial assets. Markets don't go up in a straight line and they don't go down in one either. Another possibility is that market participants are positioning themselves ahead of the Fed rate hike.
The problems in the credit markets are centered in distressed credits. The carnage is concentrated in the energy sector. For those keeping score at home, if you want to track how things are going, check out the Ishares high yield ETF HYG. The chart is below. You can see how it has been rolling over. I included the financial crisis years for perspective.
Blackrock believes the problems in the distressed markets are not systemic - in other words, don't look for a repeat of 2008.
In economic data this morning, the consumer price index was flat on a month-over-month basis. Ex-food and energy, it increased 0.2%. On a year-over-year basis, it increased 2% ex- food and energy, which is right in line with the Fed's target. The Bloomberg Real Average Hourly Earnings index increased to 1.6% annualized, up from an upward-revised 2.4% last week. Maybe, just maybe, wage inflation is upon us.
The Empire Manufacturing Index improved to -4.6, indicating that things are still tough in the manufacturing sector. Blame the dollar.
Homebuilder sentiment fell in December to 61 from 62. The index hit a 10 year high in October, so the sentiment is still pretty positive. The builders all reported pretty strong increases in orders and backlog, so it looks like 2016 could be a better year for the builders. The Spring Selling Season is about 2 months away. Note we will get numbers out of Lennar on Friday.
A survey of economists says that mortgage rates are going up. Probably a no-brainer, given the Fed is hiking rates. Does that mean a bad year for the housing sector? Not necessarily. Certainly an increase in rates is going to make lives tough for the refi shops. However if rates are rising because of a strengthening economy, that is probably great news for the purchase business as Millennials leave expensive rentals and buy property.
Mortgage fraud is making a comeback, according to CoreLogic. As credit loosens and purchase activity increases, you are going to see more risk of it.
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