Morning Report: Markets optimistic as Britain votes

Vital Statistics:

	Last	Change	Percent
S&P Futures	2104.1	18.5	0.87%
Eurostoxx Index	2852.4	33.1	1.17%
Oil (WTI)	47.21	1.0	2.16%
LIBOR	0.656	0.002	0.24%
US Dollar Index (DXY)	94.4	-0.169	-0.18%
10 Year Govt Bond Yield	1.72%	0.03%
Current Coupon Ginnie Mae TBA	105.9
Current Coupon Fannie Mae TBA	105
BankRate 30 Year Fixed Rate Mortgage	3.72

Markets are higher this morning as the Brexit vote happens in the UK. Bonds and MBS are down.

Last night, the Sporting Index Brexit Markets were tilted towards Remain at 53-47. If the UK leaves, it probably won't have much of an effect on the US economy, however it will probably cause a flight to safety, meaning US Treasury yields would fall.

New Home Sales fell to an annualized pace of 551k in May. This is down on a sequential basis but is still up 9% YOY. April was revised lower as well. The median new home price was $290,400 and the average sale price was $358,900. At the end of May there were 244,000 new homes for sale, which represents a 5.3 month supply. I plotted new home sales going back to the early 1960s, and put a trend line in so you can see how much of a deficit we have, and where that number should be (about 50% higher)

Tight supply of starter homes are pushing prices up 9% per year in that segment, more than double the price appreciation at the high end. This is a combination of lower foreign demand for luxury homes and increasing demand by Millennials who want to buy. 

Initial Jobless Claims fell to 259k last week. For all the talk about a slowdown in the labor markets, you aren't seeing any evidence of layoffs.

The Chicago Fed National Activity Index turned negative last month, while the Kansas City Fed Index turned positive. 

Finally, the Index of Leading Economic Indicators turned negative last month.

The 20 hottest real estate markets, according to Realtor.com. No, it isn't Phoenix, Palm Springs, Vegas, and Orange County. Note how many are in the Rust Belt! The D is supposedly a hot market - I thought they were going to abandon about 1/3 of the city and turn it back into farmland.