I speculated in May last year that the introduction of the taper concept was in large part due to what Jeremy Stein articulated in February 2013, namely the idea that certain “markets” were becoming overheated in the “reach for yield.” In essence, it amounted to an attempt to “talk down” assets, chief among them the raging price appreciation once again [...]
The US Dollar index exhibits the classic characteristics of a downtrending asset: Declining 50 and 200 day moving averages with the 50 solidly below the 200. Momentum indicators (MACD, PMO) both on sell signals. A longer term view shows the index on the edge of support: A break of the 78-79 support level would open the way to a return [...]
Mortgage rates have swung back to a 2-month high, a unfortunate concurrent timing to Janet Yellen’s recent assurance that the FOMC remains in full support of the mortgage market. Taper is not tightening to her, so the 53% decline in the monthly issuance of MBS and agency securities in February against May 2013 (before the taper word was released) must [...]
Not much new commentary is needed with the new home sales data from the Census Bureau since analysis of the NAR home sale data last week also applies in full part here. It does bear repeating, however, that the turn in housing is obvious and coincides with the dawn of 2013. No doubt the rapid appreciation in prices played a [...]
I quoted Janet Yellen’s statement from her first press conference yesterday, but it bears repeating: These sizable and still increasing holdings will continue to put downward pressure on longer‐term interest rates, support mortgage markets, and make financial conditions more accommodative, helping to support job creation and a return of inflation to the committee's objective. We saw new home construction data [...]
There is, of course, an intermediate step between mortgage finance and home construction – new home sales. So it stands to reason that given the collapse in mortgage finance (demand) and the correlated slide in construction that home sales would be of a similar pattern. The latest figures from the Census Bureau thus contain no surprising information, unless one was [...]
Following up on the previous post about the state of mortgage and finance post-tightening, we are beginning to see the first vestiges of a full reversal in housing. Construction activity has leveled off, and may even be declining depending on the individual measure. There has been hope that the collapse in mortgage demand would be “contained” in refis, but, as [...]
Barclays results were somewhat unexpected, mostly because the size of the declines in revenues across investment banking (-37% Y/Y profits) were much weaker than first estimates. It was very much expected that fixed income “trading” would see broadly lower results, and that was confirmed, but the scale of the reactionary “cost management” efforts seems a bit disproportionate. The bank indicated [...]
As we ponder 2014’s headwinds and reminisce about the bubble/not bubble in stocks, there is one more factor to add to my note from yesterday about the time value of assets. For simplicity’s sake I kept all the calculations as nominal; no need to introduce complexity when the elegance of simple math made the point very nicely. Despite record highs [...]
Finally, after several months of delays, the Census Bureau has obtained enough survey information to publish the full picture of real estate construction. And it is historic. Coming on the day when mortgage applications drop to a fifteen year low, the data presented does not disappoint the buildup in suspense. First, though, the pace of the collapse in mortgages is [...]
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