Morning Report: 2019 best year since 2006?

Vital Statistics:

 

Last Change
S&P futures 3033 12.25
Oil (WTI) 56.61 0.04
10 year government bond yield 1.84%
30 year fixed rate mortgage 4.00%

 

There is definitely a risk-on feel to the tape as strong earnings continue to come in, and some positive trade developments over the weekend. Bonds and MBS are down after the UK was granted an extension to achieve an orderly Brexit.

 

We have a big week ahead, with a lot of important data and the Fed meeting. We will get the advance estimate for Q3 GDP on Wednesday, the FOMC decision on Wed afternoon, the jobs report on Friday, along with construction spending and the manufacturing ISM. We will also get Case-Shiller and pending home sales on Tuesday, and personal income / spending on Thursday. So definitely, a big week.

 

In other economic data, the Chicago Fed National Activity Index fell to -.45 on weakness in the manufacturing sector. Retail inventories rose 0.3%, while wholesale inventories fell 0.3%. Not sure how the inventory numbers will affect Q3 GDP, but it can be sensitive to inventory builds and liquidations. The forecasts for Q3 GDP seem to be in a range of +1.5% to +1.9%.

 

What a difference a year makes. Lenders extended $700 billion in mortgage loans in the second quarter as falling rates improved refinance activity. This was the highest quarter since the bubble years, and 2019 could be the best year since 2006. I think many people imagined 2019 was going to be good, but not that good. Note that HELOCs have lagged.

 

mortgage originations

 

Ellie Mae has agreed to acquire Capsilon, which makes AI-powered automation software. “With the delivery of our next generation lending platform, we are accelerating our mission to automate everything automatable for the residential mortgage market. This includes making strategic acquisitions of best-in-class solutions to bring more value to the platform and the ecosystem faster,” said Jonathan Corr, president and CEO of Ellie Mae. “This is a significant day for the mortgage industry, as with the acquisition of Capsilon we are bringing together two market-leading companies and adding to our platform the pioneer of AI-powered intelligent automation leveraged by some of the largest lenders and servicers in the industry. As lenders and servicers continue to shift toward data-driven automation, we are excited to provide automated document recognition, classification and data extraction to further drive down costs and time of loan origination, acquisition and servicing.”

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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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