Morning Report: The refinanceable population grows

Vital Statistics:

	Last	Change
S&P Futures	2160.8	-4.0
Eurostoxx Index	337.1	-3.0
Oil (WTI)	40.5	0.5
US dollar index	86.3	-0.5
10 Year Govt Bond Yield	1.56%
Current Coupon Fannie Mae TBA	103.3
Current Coupon Ginnie Mae TBA	104.2
30 Year Fixed Rate Mortgage	3.51

Stocks are lower this morning on no real news. Bonds and MBS are down.

Construction spending fell 0.6% last month as both private and public spending fell. Homebuilding was down 0.1% MOM and is up 2.4% YOY. The prior 3 months were revised downward as well. This at least partially explains why the Q2 GDP print was so low. 

Personal Incomes rose 0.2% in June while personal spending rose 0.4%. Just more evidence that the consumer is holding this economy together. The core PCE rate (the inflation measure preferred by the Fed) rose 1.6% YOY. 

The Fed Funds futures have been slowly taking down the probability of a September rate hike - it is now below 20%. Between the weak GDP numbers, the weakness in manufacturing, etc it is hard to make a case that the Fed needs to move in September. 

Governments worldwide are looking at policies intended to inflict capital punishment on investor portfolios. Whether the result is protectionism, Keynsian spending, or expropriation, look to own real assets (like real estate) versus financial assets. In terms of relative value, real assets are at their lowest ever. The world's central banks are on a mission to create inflation, and eventually they will succeed. Note that policies that attack corporate profitability are also inflationary - in fact that is the end the line for socialist economies like Venezuela: everyone has money in their pockets, but there is nothing to buy. 

Brexit has created a massive opportunity for lenders. According to Black Knight Financial Services, the refinanceable population is the highest since 2012. Below are charts of the number of candidates that are refinanceable, and the other is a histogram of mortgage rates.