Morning Report: Fed Nominee Judy Shelton probably is done.

Vital Statistics:

 

Last Change
S&P futures 3384 6.25
Oil (WTI) 52.06 0.65
10 year government bond yield 1.60%
30 year fixed rate mortgage 3.68%

 

Stocks are higher this morning after some strong earnings reports out of the tech sector. Bonds and MBS are flat.

 

Retail Sales came in at 0.3% as expected.

 

It looks like Judy Shelton may not make it through the nomination process as the business press gangs up on her and a couple Republicans voice concerns. The issue with Shelton is that she hasn’t rejected the gold standard and she casts doubt that the conventional wisdom of central banking is correct. This may be unfortunate, as global central banks are prone to groupthink. Given the strength of the US economy (strongest labor market in 50 years) why would the Fed be increasing its balance sheet? I wouldn’t be surprises to see her withdraw her name over the long President’s Day weekend.

 

Inflows to bond funds could hit $1 trillion again in 2020. Investment dollars are flowing to high grade corporate bonds and Treasuries. This wall of money will keep a ceiling on bond yields, and should continue this process of rates slowly grinding lower throughout the year. Good news for the mortgage banking business.

 

The homeownership rate increased to 65.1% in Q4, the highest in six years. The millennial cohort rate increased by 1.1% to 37.6%. Note that the rental vacancy rate at 6.4% is the lowest in 34 years.

 

Fannie Mae reported net income of $14.2 billion in 2019. Under an agreement with Treasury, Fannie will be allowed to keep it as they build up their capital to eventually go for sale.

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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