Stocks are higher this morning as talks resume in the Middle East. Bonds and MBS are up. Note that bonds are not taking the new talks too seriously. There is a Lucy and the football element to the whole thing.
The upcoming week will be dominated by the jobs report on Friday. We will also get ISM data, construction spending and productivity.
Next week is probably the biggest for earnings in general. In the real estate sector, we will get earnings from LGI Homes, Loan Depot, Zillow, MFA Financial, Rocket, Ellington Financial, United Wholesale, and Cherry Hill Mortgage.
We will also get comments from Lisa Cook, Alberto Musalem and Thomas Barkin.
Consumer sentiment improved in July according to the University of Michigan Consumer Sentiment Survey. The index improved 12% compared to June, however it is down 11% compared to a year ago. Pocketbook issues were more of an issue than the war.
Year-ahead inflation expectations decreased from 4.6% to 4.2%. Long run inflation expectations remained steady at 3.3%.
Minneapolis Fed President Neel Kashkari explained his dissent from last week’s FOMC meeting. He agrees that generally the Fed should “look through” supply shocks that temporarily trigger inflation. “But to manage against the risk that high inflation could become entrenched, I would rather tighten policy incrementally as we gather more data on the path of inflation and employment. If inflation remains elevated, in my view, a potential series of small policy moves would be better than waiting and eventually concluding that even bolder actions were necessary. On the other hand, if inflation durably fades, a strategy of small policy steps would allow the FOMC to slow or pause subsequent adjustments without unnecessary impact on the real economy.”
Non-QM continues to grow as lenders are finding investor demand insatiable for non-QM paper . For evolving originators/lenders, are you ready to move from non-delegated to delegated / bulk delivery?
If you’re prepared to take the next step , hedge your production with Eris SOFR Swap futures (“Eris SOFR”). Eris SOFR is being used to hedge non-QM pipelines so that mortgage companies can accumulate loans
while reducing interest rate risk and selling bulk for greater pay-ups.
Eris SOFR is the most efficient, cost-effective, and liquid way to hedge non-QM loans. Trading volume in June topped $100bn for the month, averaging around
50,000 contracts ($5bn) per day. July 8th featured an Eris SOFR “Royal Flush,” with trades recorded in every actively-quoted tenor on the swap curve from 1-year to 30-years.
CME Group launched Eris Options – Options on Eris SOFR Swap futures – for CFO’s and Capital Markets teams that want to address volatile pull-through expectations.
Reach out to John Douglas, Eris innovations Sales Director, at john.douglas@erisfutures.com for more information.
New condo lending rules take effect today for loans guaranteed by Fannie and Freddie. The new rules require greater scrutiny for maintenance (especially deferred maintenance), the financial stability of the condo association, and reserves. The net effect will make condo loans harder to get and they may take more time to get through the process.
