Morning Report: Job openings rebound

Vital Statistics:

S&P futures34066.6
Oil (WTI)37.81-0.24
10 year government bond yield 0.71%
30 year fixed rate mortgage 2.92%

Stocks are flattish this morning on no real news. Bonds and MBS are down.

Initial Jobless Claims were flat last week at 884k. Separately, there were 6.2 million job openings in the US, according to the JOLTs report. This was a big improvement which is at least one bright spot in the labor economy.

Inflation remains well below the Fed’s target according to the producer price index. The headline PPI rose 0.3% MOM and fell 0.2% YOY. The core numbers were up 0.3% MOM and 0.3% YOY. The Fed is sweating bullets about the low inflation numbers as they fear the US slipping into a Japanese-style deflationary stagnation.

New listings are up 7%, according to Redfin. Pending home sales are up 21% YOY and the median price is up 12% to $318,473. 47% of homes had an offer within two weeks – the fastest pace since 2012. What is going on? People are ringing the register as home prices rise. The demand was always there – the persistent issue in the housing market has been limited supply. The sale=to-listing ratio is 99%, and bidding wars are becoming the norm.

Problems for landlords: The National Multifamily Housing Council reported that only 75% of renters had made their September rent payment so far. In August, that number was 79%.

“The initial rent payment figures from September have begun to demonstrate the increasing challenges apartment residents are facing. Falling rent payments mean that apartment owners and operators will increasingly have difficulty meeting their mortgages, paying their taxes and utilities and meeting payroll,” said Doug Bibby, NMHC President. “The enactment of a nationwide eviction moratorium last week did nothing to help renters or alleviate the financial distress they are facing. Instead, it only is a stopgap measure that puts the entire housing finance system at jeopardy and saddles apartment residents with untenable levels of debt. Federal policymakers would have been better advised to continue to provide support as they successfully did through the CARES Act.”

It is possible that the Labor Day weekend is introducing some noise into these numbers, but the trend is a worrisome sign.

Mortgage Credit Availability continues to move south as originators find little appetite for jumbo loans. I wonder if the surprise 50 basis point LLPA affected things as well.

“Mortgage credit supply fell to its lowest level since March 2014, driven by a reduction in supply from both conventional and government segments of the market,” said Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting. “Additionally, both conforming and jumbo sub-indexes fell by almost 9 percent each, with the conforming index declining to the lowest reading since MBA’s series began in 2011. Credit continues to tighten because of uncertainty still looming around the health of the job market, even as other data on loan applications and home sales show a sharp rebound. A further reduction in loan programs with low credit scores, high LTVs, and reduced documentation requirements also continued to drive the overall decline in credit availability.”


Author: Brent Nyitray

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

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