Morning Report: Anticipating the end of the foreclosure moratorium

Vital Statistics:

 LastChange
S&P futures4,37816.2
Oil (WTI)71.740.25
10 year government bond yield 1.30%
30 year fixed rate mortgage 3.04%

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

The Biden Administration put out a press release in anticipation of the foreclosure moratorium which will expire at the end of July. Servicers will be required to offer new payment options with the goal of reducing P&I payments by 25%. HUD will offer 40 year terms and silent seconds to help, and FHFA will permit the GSEs to do the same. Missed payments will be tacked on to the end of the mortgage.

The Conference Board’s Index of Leading Economic Indicators rose 0.7% in June, which was below Street expectations. “June’s gain in the U.S. LEI was broad-based and, despite negative contributions from housing permits and average workweek, suggests that strong economic growth will continue in the near term,” said Ataman Ozyildirim, Senior Director of Economic Research at The Conference Board. “While month-over-month growth slowed somewhat in June, the LEI’s overall upward trend—which started with the end of the pandemic-induced recession in April 2020—accelerated further in Q2. The Conference Board still forecasts year-over-year real GDP growth of 6.6 percent for 2021 and a healthy 3.8 percent for 2022.” These numbers compare to the Fed’s estimate of 7% growth in 2021 and 3.3% in 2022.

Speaking of the Fed, the June projections showed 18 members saw no rate increases in 2022, while 7 did see a rate hike. However, if you look at the Fed Funds futures contracts, the market is forecasting a better-than-50% increase in rates.

Author: Brent Nyitray

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

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