Vital Statistics:
| Last | Change | |
| S&P futures | 4,108 | -23.5 |
| Oil (WTI) | 79.93 | -0.85 |
| 10 year government bond yield | 3.38% | |
| 30 year fixed rate mortgage | 6.26% |
Stocks are lower this morning as they react to Friday’s jobs report. Bonds and MBS are down. Volumes are light overall as many European markets are closed today.
The main event this week will be the consumer price index on Wednesday. The Street is looking for a 0.3 MOM / 5.2% YOY gain in the headline number. It sees the core rate (ex-food and energy) rising 0.4% MOM and 5.3% YOY.
Earnings season kicks off on Friday with a lot of the big mega-banks reporting. The regional banks will be under the microscope and the issue of deposits will loom large, though concerns in the commercial real estate sector (especially office properties) will be a focus as well.
The calendar will be somewhat light on Fed-speak as well.
The Fed Funds futures turned a bit more hawkish after Friday’s jobs report, with the May contracts now seeing a 70% chance for a rate hike, which would take the rate to 5%. So far, that seems to be the peak and the end-of-year contracts see the Fed Funds rate at 4.25%.
I discussed Friday’s jobs report in this week’s Substack piece. Check it out and please consider subscribing. The report wasn’t all bad news for the Fed – in fact there were some positive things in that report.
The Atlanta Fed’s GDP Now tracker sees Q1 GDP coming in at 1.5%. This is a pretty hefty decelerations after the banking crisis began.
Net production income for independent mortgage bankers fell to a $301 loss, according to the MBA. This is a series low for the index, which began in 2008.
“For the first time since the inception of MBA’s report in 2008, net production income was in the red in 2022, with losses averaging 13 basis points. The rapid rise in mortgage rates over a relatively short period of time, combined with extremely low housing inventory and affordability challenges, meant that both purchase and refinance volume plummeted,” said Marina Walsh, CMB, MBA’s Vice President of Industry Analysis. “The stellar profits of the previous two years dissipated because of the confluence of declining volume, lower revenues, and higher costs per loan.”
Added Walsh, “Production revenues declined in 2022, but the bigger story was that production expenses ballooned to a study high of $10,624 per loan. Companies could not adjust their capacity fast enough. The number of production employees declined, but not at the same pace as origination volume. As a result, productivity in 2022 fell to a low of 1.5 closed loans a month per production employee.”
The Daily Tearsheet 