Morning Report: FOMC minutes mildly dovish

Vital Statistics:

	Last	Change
S&P Futures	2407.0	5.0
Eurostoxx Index	391.9	-0.5
Oil (WTI)	50.7	-0.7
US dollar index	88.7
10 Year Govt Bond Yield	2.25%
Current Coupon Fannie Mae TBA	102.6
Current Coupon Ginnie Mae TBA	103.81
30 Year Fixed Rate Mortgage	4

Stocks are higher after the FOMC minutes came in a little more dovish than expected. Bonds and MBS are up as well.

The FOMC minutes were mildly bond-positive, as they introduced doubts as to the scope and timing of fiscal stimulus: "Many participants continued to view the possibility of expansionary fiscal policy changes in the United States as posing upside risks to their forecasts for U.S. economic growth, although they also noted that prospects for enactment of a more expansionary fiscal program, as well as its size, composition, and timing, remained highly uncertain." One member (probably Neel Kashkari) also wanted to wait until inflation was closer to 2% before making any further moves. Bonds rallied a few basis points on the minutes, and the implied probability of a June hike dropped from 83% to 78% briefly before returning to 83%. 

Initial Jobless Claims rose slightly to 234k from 233k last week, which is still extraordinarily low. This is 4 straight weeks below 240. The last time that happened was 1973. When you consider that (a) we still had the Vietnam draft at that point, and (b) population growth since then (52%) it is an extraordinary number. 

Delinquencies rose in April, according to Black Knight Financial Services. The calendar may have played a part however as April ended on a Sunday, and most of the DQs were early-stage. The number fell to 4.08%, a drop of 3.58% YOY. 

Given the big increase in home price appreciation, many FHA loans done at a 97 LTV might have enough new equity to refinance into conventional loans with no PMI. Loan officers, take a look at your past deals, and if you have a FHA loan, take a look to see if you can save some money.