Morning Report: Iranians protest the government

Vital Statistics:

 

Last Change
S&P futures 3277 12.25
Oil (WTI) 59.13 0.04
10 year government bond yield 1.85%
30 year fixed rate mortgage 3.88%

 

Stocks are higher this morning as we anticipate a phase 1 trade deal with China this week. Bonds and MBS are flat.

 

Earnings season kicks off this week with the major banks all reporting. JP Morgan, Wells, and Citi all report tomorrow. We will get inflation data, retail sales and housing starts this week as well. With the Fed on hold for the moment (and probably through the election), economic data will become less of a market-mover unless it is way out the expected range. Neel Kashkari thinks the next move for the Fed could be a rate cut. “If I were to guess the next rate move, my guess (on) the balance of risks, is that it will be down and not up.” The Fed funds futures agree, handicapping a better-than-50% chance that rates will get cut this year.

 

fed funds futures

 

Iran admitted shooting down an airliner by mistake over the weekend, which has shifted the focus from the US killing a military leader. It looks like there are major protests in Tehran right now. So far, we are not seeing any big effects in the oil market, although North America uses a different benchmark than the rest of the world.

 

HousingWire lays out some predictions for 2020. One big one refers to recruiting. As of 11/24, originators could officially move from a bank to a non-bank or another state and keep originating mortgages while they wait for the new license. This will almost certainly make recruiting for non-banks easier.

 

Mortgage credit availability decreased in December by 3.5%, according to the MBA. “Credit availability fell in December after three months of expansion, driven by drops in both conventional and government supply,” said Joel Kan, MBA Associate Vice President of Economic and Industry Forecasting. “Perhaps most noteworthy was a 6 percent drop in government credit supply because of changes to the Veterans Administration loan program, which eliminated loan limits for certain borrowers as of Jan 1, 2020. This likely prompted many investors to remove VA programs in high cost counties from their offerings. There was also a reduction in streamline refinance programs, as slightly higher rates slowed the refinance market at the end of 2019.”

Author: Brent Nyitray

In the physical sciences, knowledge is cumulative. In the financial markets, it is cyclical

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