Morning Report: Fannie Mae cuts housing forecast.

Vital Statistics:

			Last	Change
S&P futures			2855.5	3.8
Eurostoxx index			383.49	2.43
Oil (WTI)			65.92	0.02
10 Year Government Bond Yield				2.84%
30 Year fixed rate mortgage				4.58%

Stocks are higher this morning on optimism of a deal with China. Bonds and MBS are up small. 

Late August is a generally dull time to begin with, and this week promises more of the same. We will get some housing data (Existing home sales, new home sales, FHFA price index) and one possible market-moving report (durable goods) but that is about it. We will get the FOMC minutes on Wednesday as well. 

Liquidity is drying up in the bond market as it usually does this time of year. Note that the short bond position is one of the biggest on the Street, so we could see some quick rallies in the 10 year. 

Flagstar has been released from special oversight that limited its corporate options to pay dividends, make acquisitions, etc. 

Luxury apartments in NYC are falling in price, after years of torrid growth. Some are blaming the new tax laws, however some could be from falling foreign demand. We are seeing the same thing in London. Note that luxury properties in the suburbs of NYC are doing the same thing. You can't give away properties priced at $1MM + 

Fannie Mae cut their housing forecast for 2018 for the 4th time this year. They are looking for $1.67T in originations this year and $1.7T next year. The 30 year fixed rate mortgage is expected to average 4.5% this year and 4.7% next year. They are also forecasting a major slowdown in GDP growth, from 3% this year to 2.3% next year.