I mentioned earlier today that pretty much the only sector of the economy (outside of government run lending for university waste) acting favorably toward interest rate “stimulus” was autos. Prior to the historic credit selloff and MBS rout in the middle of last year, you could add housing to the list. The latest figures for March 2014 from the National [...]
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 [...]
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 was nothing surprising in Federal Reserve Chairman Janet Yellen’s press conference yesterday. While some “investors” may have been shocked about where policy was headed, some parts of the credit markets have been anticipating this course right along (more on that later). Whatever may be expectations for QE and “forward guidance”, the FOMC is using the unemployment rate to provide [...]
According to Jon Hilsenrath at the Wall Street Journal, the FOMC is starting to use the ephemeral idea of “headwinds” to argue in favor of persistent monetary intrusion. He offered several examples, most of which sound like this: New York Fed president William Dudley said in an interview with the Wall Street Journal this month that “persistent headwinds” to growth [...]
There has been a lot of discussion about the Chinese credit markets, and rightfully so, as unusual events are in the midst of probing “market” sensibilities as they relate to great imbalances. Along that line, this passage in a CNBC article caught my attention: Strict government controls, and the fact that state-owned companies own the bulk of government debt prevent [...]
By any reasonable token, a healthy home market should not be all that much disturbed by a 100bp rise in the average mortgage rate. And even that likely overstates the degree to which mortgage rates have moved – they briefly reached a record low of about 3.5% at the end of 2012, now settling just below 4.5%. At the tail [...]
Chairman Bernanke handed off to Chairman Yellen a tapering asset purchase rate, and thus more than a theoretical problem. It is theoretical to the FOMC, but very much real out here where the world actually operates. The QE program instituted in September 2012 with MBS additions to the SOMA balance sheet has created a number of distortions in various pockets [...]
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 [...]
The economic hopes for 2014 have been largely concentrated in a few sectors. Monetary authorities have been counting on the historical channel of housing to be one of the continued “bright spots” that would transition finally, after almost five years, into an unambiguous recovery. You always have to be cautious about reading too much into one data point, so it [...]
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