Morning Report: Reprieve from volatility

Vital Statistics:

 

Last Change
S&P futures 2891 10.5
Oil (WTI) 52.40 1.34
10 year government bond yield 1.75%
30 year fixed rate mortgage 3.83%

 

Markets are stronger this morning after China fixed the yuan stronger than expected. Bonds and MBS are down.

 

Mortgage credit availability decreased in July, according to the MBA’s Mortgage Credit Availability Index. Conventional credit increased by 0.1%, while government credit decreased. Credit increased primarily in the jumbo space. The drop in government credit availability was seen primarily in the high balance and streamline buckets.

 

Foreclosures filings are down 18% in the first six months of the year, according to ATTOM. Most MSAs fell, and it looks like any increases were concentrated in Florida. 177k properties entered the foreclosures process in the first 6 months of the year, down from 1.07 million in the first 6 months of 2009, which was the peak.

 

One strategist is out with a call for a “Lehman-like” sell off in the stock market, beginning as early as this month. Note this is a call based on market technicals, not fundamentals, which means it is looking at sentiment indicators and volatility. Note that the crash of 1987 happened in a similar environment, with trade and currency tensions between the US and Japan. Note another technical analyst is out with a call saying the US 10 year yield will eclipse the prior low of 1.36%. It is important to keep in mind that the US economy is not driving the action right now, nor is trade. This is being driven by overseas bond markets, and the actions of foreign central banks. The Fed is following the markets, not driving them.

 

Initial Jobless Claims fell to 209k last week, while consumer credit fell in June.

 

 

Author: Brent Nyitray

Why do you need new bands? Everyone knows rock attained perfection in 1974. It's a scientific fact. - Homer Simpson

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