Morning Report: Online Black Friday sales surprisingly strong

Vital Statistics:

 

Last Change
S&P futures 3145 2.25
Oil (WTI) 56.39 1.24
10 year government bond yield 1.84%
30 year fixed rate mortgage 3.88%

 

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

 

A surprise election result in Germany over the weekend has pushed the German Bund yield up 8 basis points to negative 28 bps. Since global sovereign debt generally trades together, this will put some upward pressure on rates in the US.

 

We have quite a bit of economic data this week, with the ISM reports, construction spending and the jobs report. Given that the Fed is on hold, it probably won’t be that dramatic to the markets.

 

The FHFA lifted its conforming limits last week to $510,400 for a single family home. For high cost areas, the limit for a single family residence is now $765,500.

 

Pending Home Sales fell 1.7% in October, according to NAR. Lawrence Yun, NAR’s chief economist, noted the decline in inventory and a small rise in mortgage rates in October from September to, in part, explain this month’s signings drop. “While contract signings have decreased, the overall economic landscape remains favorable,” Yun said. “Mortgage rates continue to be low at below 4% – which will attract buyers – employment levels are strong and many recession claims have dissipated.”

 

Retailers are optimistic about the holiday shopping season after record online spending on Black Friday. The National Retail Federation estimates nearly 69 million Americans will scour the web for deals on everything from iPads and homeware to kids’ toys, and Adobe’s estimate of $9.4 billion would be a 19% increase on the same day a year ago.

 

Personal incomes were flat in October, while personal spending rose 0.3%. The PCE inflation indices were up 1.3%. The personal income number was a surprise, as wages and salaries have been growing, but falling interest income and rental income pulled down the number.