Morning Report: Personal incomes rise

Vital Statistics:

S&P futures3291-10.6
Oil (WTI)35.75-0.49
10 year government bond yield 0.84%
30 year fixed rate mortgage 2.87%

Stocks are lower this morning as big tech earnings report fail to excite investors. Bonds and MBS are down.

Pending home sales declined 2.2% according to NAR. Despite the decline, it is still the second highest reading on record.

“The demand for home buying remains super strong, even with a slight monthly pullback in September, and we’re still likely to end the year with more homes sold overall in 2020 than in 2019,” said Lawrence Yun, NAR’s chief economist. “With persistent low mortgage rates and some degree of a continuing jobs recovery, more contract signings are expected in the near future.”

“Additionally, a second-order demand will steadily arise as homeowners who had not considered moving before the pandemic begin to enter the market,” Yun said. “A number of these owners are contemplating moving into larger homes in less densely populated areas in light of new-found work-from-home flexibility.”

Personal incomes rose 0.9% in September, much higher than the consensus estimate of 0.3%. Personal spending rose 1.4%, higher than the 1% estimate, which is good news for the economy. Inflation (at least as the Fed measures it) remains well under control with the personal consumption expenditures index only up 1.4% on an annual basis.

It sounds like the flight out of urban areas is beginning to be felt for landlords. Apartment REIT Equity Residential reported a big decline in earnings, driven by concessions and turnover in its NYC, SF and Boston markets. Suburban apartments are holding up reasonably well however.


Author: Brent Nyitray

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

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