Morning Report: Mortgage credit eases in October

Vital Statistics:

	Last	Change
S&P Futures	25109.8	30.0
Eurostoxx Index	333.4	4.0
Oil (WTI)	44.5	0.5
US dollar index	88.0	0.4
10 Year Govt Bond Yield	1.82%
Current Coupon Fannie Mae TBA	103
Current Coupon Ginnie Mae TBA	104
30 Year Fixed Rate Mortgage	3.61

Stocks are higher this morning after the FBI absolved Hillary Clinton of her email woes. Bonds and MBS are down. 

Tomorrow we will go to the polls to vote in our fearless leader. Here is a cheat sheet for how markets should react based on the consensus of strategists. Punch line: Trump is negative for stocks, and positive for bonds. Hillary is the opposite. The effect will be only short-term as well. That said, IMO the black swan event is a D sweep. 

Meanwhile, the fast money is hiding in gold. 

Consumer spending increased in October, according to Gallup. A poll of consumers indicated that they spent on average $93 a day in October from $91 in September. 

Credit eased somewhat in October, according to the MBA's Mortgage Credit Availability Index. The jumbo end of the market drove the increase. Since the depths of the real estate bust, mortgage credit has increased tremendously, however compared to the bubble days it is extremely tight. 

The labor market improved in October, according to the Labor Market Conditions Index. It rose to 0.7 from -0.2 in September. The LMCI is a composite index of various leading and lagging labor market indices, so it shouldn't have much of an effect on markets. 

55+ housing had a strong 3rd quarter, according to the NAHB. 

Realtors have a huge influence of a borrower's lender decision, according to a new survey out of Freddie Mac. The biggest factors are ease of doing business, reputation and the strength of their relationship with the realtor. From the article: "Eighty-four percent of real estate professionals have a select group of lenders to which they generally refer their clients. Of these, 73 percent have 1-3 lenders in their network and 24 percent work with 4-6 lenders. More than three-quarters (76 percent) say their clients always or often use their recommended lender referrals. This figure climbs to 87 percent among those who sell more than 20 properties per year."

Morning Report: Conflicting signals in the labor markets

Vital Statistics:

	Last	Change	Percent
S&P Futures	1984.1	-14.4	-0.87%
Eurostoxx Index	3029.0	16.1	0.54%
Oil (WTI)	34.96	0.4	1.13%
LIBOR	0.635	0.003	0.51%
US Dollar Index (DXY)	97.37	-0.224	-0.23%
10 Year Govt Bond Yield	1.82%	-0.09%
Current Coupon Ginnie Mae TBA	105.4
Current Coupon Fannie Mae TBA	104.6
BankRate 30 Year Fixed Rate Mortgage	3.70

Stocks are lower this morning on bad export numbers out of China. Bonds and MBS are up.

The US Labor Market Conditions Index fell in February, This is a relatively new index created of 19 different labor market indicators. Not sure what caused the recent drop in the index, as most of the big indicators are positive. Perhaps the disappointing wage growth in the last jobs report is causing it. Certainly the labor market does not seem to be the worst in four years..

Consumer credit rose by $10.5 billion in January, the lowest in a year. Lower levels of credit card debt drove the deceleration. 

Small Business Optimism hit a 2 year low, according to the NFIB. Worryingly, job creation fell for the first time in quite a while, as small businesses shed about .12 workers per firm. The difficulty in finding qualified workers also fell in importance, although it is still elevated. Washington remains the biggest impediment, with taxes and red tape occupying the #1 and #2 concerns for small business. The report summed it up this way: "Overall, a “ho hum” outcome, confirming that the small business sector is not headed up with any strength, just treading water waiting for a good reason to invest in the future."

The big drop in interest rates has bumped up the refinanceable population to 6.7 million borrowers from 5.2 million last month, according to Black Knight Financial Services.   An additional 15 basis point drop in rates would add another 2.1 million borrowers. This data is based on mid-February numbers, with a FHLMC 30 year rate of 3.65%. Just another reason why 2016 might be a little better than expected.

Foreclosure activity continues to fall, according to CoreLogic. Foreclosure inventory is down 21.7% to 456,000 homes, and completed foreclosures fell 16% in January. Serious delinquencies also fell to 1.2 million mortgages, the lowest since 2007. Foreclosure activity is making the home price recovery more durable: “The improvement in distressed properties continues across the country in every state which is contributing to the lack of stock of available homes and resulting price escalation in many markets,” said Anand Nallathambi, president and CEO of CoreLogic. “So far the trend toward lower delinquency and foreclosures has been immune from shocks from such things as the collapse in oil prices attesting to the durability of the housing recovery.”