Vital Statistics:
| Last | Change | |
| S&P futures | 3691 | 15.3 |
| Oil (WTI) | 47.41 | 0.24 |
| 10 year government bond yield | 0.95% | |
| 30 year fixed rate mortgage | 2.78% |
Stocks are higher this morning on no real news. Bonds and MBS are down small.
President Trump has indicated dissatisfaction with the stimulus bill passed by Congress. He wants higher payments and much of the extraneous stuff pulled out. He didn’t expressly say whether he would veto the bill as-is. There are all sorts of things in there that have nothing to do with stimulus (new penalties for illegal streaming, funds to Pakistan for gender studies, etc), and my guess is that stuff is going to have to go.
Mortgage applications increased by 1% last week as purchases fell 5% and refis rose 4%. “The 30-year fixed rate – at 2.86 percent – is a full percentage point below a year ago,” said Joel Kan, MBA Associate Vice President of Economic and Industry Forecasting. “Last week’s increase in refinance applications was driven by FHA and VA activity, while conventional refinances saw a slight decline. Overall refinance activity was 124 percent higher than in 2019, as borrowers continue to seek lower monthly payments or different loan terms.” Despite the drop in purchases they are still up 26% on a YOY basis.
Personal incomes fell 1.1% in November, and personal spending fell 0.4%. Inflation as measured by the personal consumption index came in at 0% on a MOM basis and 1.1% on a YOY basis. Inflation is way below where the Fed wants to see it, and unless we see a dramatic shift in these numbers, the Fed will keep the pedal to the metal with asset purchases and 0% interest rates.
Home Prices rose 1.5% MOM and 10.2% YOY according to the FHFA House Price Index. “U.S. house prices rose for the fifth straight month since states re-opened their local economies,” said Dr. Lynn Fisher, FHFA’s Deputy Director of the Division of Research and Statistics. “The 12-month gain of 10.2 percent in October is the highest annual appreciation observed since the 2004-2005 period. Extremely low mortgage rates and a limited supply of homes for sale continue to propel price gains. The data do not yet reflect renewals of some local and state COVID-19 restrictions.”
New Home Sales fell 11% MOM to 841,000. This is still up 21% on a YOY basis. The median sales price of new houses sold in November 2020 was $335,300. The average sales price was $390,100. I suspect that new home sales will be the big surprise of 2021.
In other economic news, durable goods rose 0.9%, while initial jobless claims fell to 800k last week. Consumer sentiment fell.
The Daily Tearsheet 