Morning Report: Some perspective on job losses

Vital Statistics:

 LastChange
S&P futures3905-17.3
Oil (WTI)62.88-0.34
10 year government bond yield 1.45%
30 year fixed rate mortgage 3.12%

Stocks are lower this morning as global sovereign yields continue to sell off. Bonds and MBS are down big again.

In terms of sovereign yields, we are seeing the German Bund up to -25 basis points, and the Japanese Government Bond yields 15 basis points. The quick rise in European bonds has the European Central Bank worried about hobbling any recovery before it gets off the ground. Jerome Powell is more sanguine, saying the rise in yields is a sign of confidence in the economy.

The second estimate for fourth quarter GDP came in at 4.1%, which was unchanged from the first estimate. Personal consumption expenditures were revised downward from 2.5% to 2.4%. Durable Goods orders rose 3.4%, which capital goods expenditures rose 0.5%.

Initial Jobless claims fell to 730k last week. You can see just how elevated they are compared to pre-COVID, when 200k was the usual print. To put these numbers into perspective, the worst weekly reading during the Great Recession was 665k, and the average for most of 2009 was around 575k or so. The average weekly number over the past year has been 1.5 million. IMO the stock and bond markets are in denial over just how bad the carnage has been.

The CFPB is reconsidering new rules for non-QM loans. Here is the letter written yesterday.

Pending Home Sales fell 2.8% in January, according to NAR. “Pending home sales fell in January because there are simply not enough homes to match the demand on the market,” said Lawrence Yun, NAR’s chief economist. “That said, there has been an increase in permits and requests to build new homes.”

Author: Brent Nyitray

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

2 thoughts on “Morning Report: Some perspective on job losses”

  1. Very Informative šŸ‘šŸ‘. Do you believe that if mortgage rates continue to rise at their current paces, and demand becomes dampened, by a lack of supply – driving prices even higher – a correction could occur in housing?

    Like

    1. Thanks for the kind words, IMO the supply / demand imbalance in housing is SO stark that a correction isn’t in the cards.

      IMO the most likely effect will be intensified competition between mortgage bankers and margins will fall. Once the 10 year finds a level and MBS prices stabilize, we will see a price war between all the big players.

      Liked by 1 person

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