Morning Report: Slow week coming up

Vital Statistics:

	Last	Change
S&P Futures	2437.0	7.3
Eurostoxx Index	391.4	2.8
Oil (WTI)	44.8	0.1
US dollar index	88.6	0.2
10 Year Govt Bond Yield	2.17%
Current Coupon Fannie Mae TBA	103.31
Current Coupon Ginnie Mae TBA	104.375
30 Year Fixed Rate Mortgage	3.89

Stocks are up this morning on no real news. Bonds and MBS are flat.

Slow news day.

We don't have much in the way of important economic data this week (new home sales on Friday is probably the biggest), but we do have a lot of Fed-speak. Also, the Fed will release the results from its latest stress tests on Thursday afternoon. We will get some more housing data with existing home sales and the FHFA House Price Index. 

Where do the Fed Funds futures stand after the FOMC meeting last week? For the upcoming July meeting, a 97% chance of no changes to rates. For the Sep meeting, an 87% chance of no changes, and for December a 54% chance of no moves. The Fed continues to insist that the weak inflation numbers are transitory, however the markets don't seem to believe them. Note that monetary policy is a partisan issue as well. 

Another reason why inventory is so tight? 10% of the housing starts last year were tear-downs, which means a new structure is replacing an older one, so there is no net change in housing inventory. 

Debt supernova? Bill Gross warns of the possible negative consequences of $9.5 trillion in negative-yielding sovereign debt. The problem with the supernova theory is that most of the buyers of this negative yielding debt are central banks, not retail investors, and central banks are doing it for policy reasons. It is still strange though, Grandpa tell me again about how you had to pay money to lend to the government?

Elizabeth Warren wants the Fed to fire Wells Fargo's Board of Directors.