Morning Report: More dovish talk out of the Fed

Vital Statistics:

	Last	Change
S&P Futures	2468.5	-5.8
Eurostoxx Index	374.4	0.2
Oil (WTI)	48.1	0.8
US dollar index	85.4	-0.2
10 Year Govt Bond Yield	2.13%
Current Coupon Fannie Mae TBA	103.33
Current Coupon Ginnie Mae TBA	104.21
30 Year Fixed Rate Mortgage	3.86

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

There isn't a much in the way of market-moving economic data this week, but we will have a bit of Fed-speak. Despite the weak-ish jobs report on Friday, the Fed Funds futures are handicapping a bigger chance of a hike in December. We are now at at 43% chance of a rate hike versus 38% last week. 

Historically, September has been a bad month for stocks. Here are some of the things that could upset the apple cart. Geopolitical risk is probably the biggest, followed by a government shutdown. The Fed is out of the picture. Note that the dividend yield on the S&P 500 is higher than Treasuries. 

Factory orders fell 3.3% in July, more or less in line with expectations. The drop was expected due to a big order from Boeing in June. 

Fed governor Lael Brainard said the Fed should slow rate hikes if inflation remains below 2%, where it has been for the past 5 years. Brainard is one of the doves on the FOMC, and the one who probably most resembles Janet Yellen's thinking.

Home prices rose 0.9% MOM and are up 6.7% YOY, according to the CoreLogic Home Price Index. Home prices rose the most in the Pacific Northwest and the mountain states. About a third of the MSAs CoreLogic covers are overvalued. 28% were considered undervalued. 

The Trump Administration is backing off threats to shut down the government over funding the border wall. Given the continuing rebuilding efforts in Houston and the potential for Hurricane Irma to hit Florida, a government shutdown over the debt ceiling isn't going to happen. Trump also said he will rescind the Obama Administration's executive order on immigration in 6 months, which gives Congress time to handle this legislatively. Funding for the wall in exchange for some protection for the Dreamers is probably the deal that will get done. 

Speaking of hurricanes, CoreLogic estimates that about 70% of the flood damage in Houston was uninsured.