Stocks are higher this morning as tech stocks rebound. Bonds and MBS are flat.
The upcoming week doesn’t have much in the way of market-moving data, however we will get housing starts, NAHB homebuilder sentiment, and ISM data. We are in the quiet period ahead of the FOMC meeting next week, so there won’t be any Fed speakers.
Earnings season gets into full swing with numbers from AGNC Investment, Western Alliance, BOK Financial, Annaly, M/I Homes, Pulte, NVR, and Rithm.
The mREITs will be interesting given how much spreads have blown out. AGNC will be a bellwether on the buy-side interest for conforming mortgages, while Annaly and Rithm will shine some light on non-QM. Everything out there about new home sales indicates homebuilder earnings will be soft, with gross margins under pressure.
Industrial Production rose 0.7% in September. It was up 2.2% compared to a year ago. Manufacturing production rose 0.3% MOM and 1.1% YOY. Capacity Utilization ticked up to 76.9%.
The upper hand has shifted to home buyers, who have the most negotiating power since 2008. There are 63% more home sellers than buyers. The shift over the past 4 years is dramatic:
“This is a buyer’s market born out of caution, not strength,” said Asad Khan, a senior economist at Redfin. “Buyers have tremendous negotiating power in most of the country because so many other would-be buyers have been priced out of the market, or scared off by economic uncertainty. For house hunters who have the budget and job security to purchase a home in today’s market, that creates a unique opportunity: They can be picky, negotiate and even walk away if the deal doesn’t make sense financially or they find something they like better. The irony is that in terms of supply, these are some of the best conditions for buyers in many years–but they have arrived at a time when costs are so high that fewer people can afford to take advantage of them.”
