Morning Report: Retail Sales and Sentiment falls

Vital Statistics:

S&P futures4,13929.8
Oil (WTI)64.590.77
10 year government bond yield 1.63%
30 year fixed rate mortgage 3.20%

Stocks are higher this morning on no real news. Bonds and MBS are flat.

Retail Sales were flat in April after a big rise in March. Ex-autos they fell 0.8%. The control group, which excludes autos, gas and building products fell 1.5%.

In other economic data, industrial production fell 0.4% in April, while manufacturing production rose 0.4%. Capacity Utilization rose to 74.9%.

Consumer confidence fell in May, according to the University of Michigan Consumer Confidence survey. Consumer sentiment came in well below expectations. Both current and expectations indices fell.

Home purchase applications decreased 9% MOM, but were up 31% YOY, according to the MBA. “Purchase applications for new homes, unadjusted for typical seasonal patterns, declined in April, but the average loan size increased to its highest level in MBA’s survey,” said Joel Kan, MBA Associate Vice President of Economic and Industry Forecasting. “The purchase market remains strong overall, but low housing inventory and accelerating home prices have started to adversely impact purchase activity. Additionally, homebuilders have reported significantly higher input prices, which is contributing to the ongoing rise in sales prices and average loan sizes.” 

There are 17.8 million homes that have more than 50% equity, according to the latest ATTOM data. This is about a third of the 55.8 million mortgaged properties in the US. On the other side of the coin, about 2.6 million are seriously underwater which they take to mean a LTV of 125% or more.


Author: Brent Nyitray

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

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