Today - Thursday, December 12, 2013
10:06 AMMortgage rates drop slightly in Freddie Mac survey
- The average rate for a 30-year fixed-rate mortgage slipped to 4.42% from 4.46% in the latest Freddie Mac weekly survey, while the average 15-year fixed rate fell to 3.43% from 3.47% in the prior week.
- A year ago, the respective rates were 3.32% and 2.66%.
9:45 AMConsumer Comfort Index continues post-shutdown bounce
- The Bloomberg Consumer Comfort Index edges higher to -30.9 from -31.3 last week. The CCI has now gained a full 7 points from its post-government shutdown low in early November - maybe heralding good things for the holiday shopping season. It remains, however, far below its long-term average of around 16.
8:40 AMTreasury yields higher after strong retail sales report
- Treasury prices are paying attention to the big retail sales beat, not the massive jump in initial jobless claims. Down to 2.84% earlier, the 10-year yield is now ahead two basis points on the session to 2.87%. Stock index futures remain marginally lower.
- The jobless claims data (they plunged to 298K last week only to soar to 368K today) clearly reflect seasonal adjustment issues surrounding the holiday season.
- Treasury ETFs: TBT, TLT, TMV, IEF, TBF, PST, EDV, TTT, TMF, TLH, ZROZ, SBND, IEI, DLBS, TYO, DTYS, VGLT, UST, UBT, TBX, TLO, VGIT, LBND, GSY, DTYL, SCHR, TYD, ITE, TYBS, TENZ, FIVZ, TBZ, DFVL, DLBL, DFVS, TYNS
2:44 AMHouse seen approving budget deal
- The House is today expected to pass a bipartisan but narrow two-year budget deal that Congressional leaders reached earlier this week despite opposition from right-wing groups, with even some of the more conservative Republicans lining up behind the agreement.
- However, the GOP-controlled Rules Committee didn't let Democrats include an amendment to extend federal unemployment benefits that are set to expire on December 28.
- Should the chamber approve the deal, the Senate is seen passing it next week.
Wednesday, December 11, 2013
3:25 PMBloomberg: Fischer has accepted Vice Chair role at Fed
- Former Bank of Israel Governor Stanley Fischer has been offered the #2 spot at the Federal Reserve by the White House, according to Bloomberg, which also reports a source as saying he's accepted.
- Prior to taking over at the Bank of Israel in 2005, Fischer had stints as a professor at MIT (where Bernanke and Draghi were students), the World Bank, the IMF, and as Vice Chairman at Citigroup. He was born in what is now Zambia and holds both U.S. and Israeli citizenship.
- From a panel discussion on Nov. 19: "Without the Fed, we’d have had a much deeper recession ... Without the extraordinary things that it’s done, the economy would be in much worse shape today and we need to remember that.”
- On QE: “Precisely how to get out of it, at what speed to get out of it, is a much harder thing to measure and to calculate."
2:59 PMIndustrials and homebuilders lead market decline
- The two worst-performing sectors on a down day are industrials (XLI -1.4%) and homebuilders (XHB -1.5%), (ITB -1.9%).
- Industrials are taking a hit after Joy Global (JOY -6.3%) missed earnings estimates and provided disappointing guidance. "With a limited number of projects that can book in time to help 2014, we continue to see both the need and opportunity to lower the cost base in our business," says the company. Caterpillar (CAT -1.2%).
- Homebuilders continue to digest Toll Brothers' (TOL -1.8%) "leveling in demand" comments from yesterday's earnings results - in the 19 weeks since August 1, business has been flat vs. last year, and in the first 5 weeks of FQ1 (beginning Nov. 1) business has also been flat from 2012 (though Hurricane Sandy makes a tricky comparison).
- CEO Doug Yearley on the earnings call (transcript): "There's just not a lot of action [this time of year]. We still feel like pent-up demand is building, demographics are on our side, affordability is in place, and we are cautiously optimistic about the spring season, which begins the end of January."
- Lennar (LEN -2.3%), D. R. Horton (DHI -3%), KB Home (KBH -3.1%), Hovnanian (HOV -3.3%)
1:04 PMBond outflows surpass all-time record
- Investors have pulled $70.7B from bond mutual funds YTD, according to TrimTabs - that's more than the $62.5B pulled amid the serial Fed rate hikes and bond market rout of 1994.
- Since June alone, investors have pulled $164.5M out of bond funds, and three of the four largest monthly outflows ever have occurred this year.
- Broad fixed-income ETFs: AGG, BOND, BND, BSV, BIV, BLV, SCHZ, LAG, SAGG, ILTB, ISTB, GBF, GVI, MINC, FWDB, GIY
4:56 AMStates' income to edge up this fiscal year
- States' revenues are projected to increase 0.8% in FY 2014 - which began in October - sharply down from a 5.7% rise in FY 2013, the National Association of State Budget Officers says.
- Major reasons for the slowdown include tax cuts and a one-time surge in revenue last year following a change in federal laws.
- Spending is poised to rise 3.6% vs 4.3% a year earlier, with both increases below the historical average growth rate of 5.6%.
- The level of "rainy day funds" for emergency spending will decline to $56.7B in states that have passed their budgets from $67B. Hiring is not expected to increase. (PR)
- Muni ETFs: MUB, HYD, PZA, MUNI, TFI, ITM, MLN, HYMB, XMPT, SHM, SUB, PRB, SMB, PVI, SMMU, VRD, GMMB, RVNU
Tuesday, December 10, 2013
6:50 PMObama pollution rules weighed by sympathetic Supreme Court
- Supreme Court justices today expressed sympathy for the EPA’s approach to air pollution that crosses state lines.
- The rule that would curb emissions from coal-fired power plants in 28 states - struck down by the D.C. Circuit Court of Appeals and being tested by power companies, states and miners - has never taken effect, but it would force companies to either shutter old plants or invest billions of dollars in pollution-control technology.
- The court’s four Democrat appointees, at times joined by Chief Justice Roberts and Justice Kennedy, suggested the EPA had adhered to the language of the Clean Air Act; only Justice Scalia seemed convinced the rule could be unfair to some states.
- ETFs: KOL, XLU, IDU, VPU, RYU, PUI, UPW, FXU, SDP, PSCU, FUTY, UTLT.
- Coal names: PCXCQ, BTU, WLT, CNX, ACI, ANR, JRCC, YZC, ARLP, AHGP, NRP, PVR, PVG, PVA, OXF, CLD, WLB, RNO.
6:31 PMHouse, Senate negotiators agree to budget deal
- House and Senate negotiators announce a budget deal that sets spending levels for the next two years and replace some of the automatic budget cuts in the sequester; if agreed to by the full House and Senate, the deal would head off a government shutdown next month.
- Some conservative groups are trashing the deal and urging rejection.
5:33 PMGundlach reiterates bullish MBS call
- Rising interest rates have killed refinancing - eliminating prepayment risk - and home prices continue to move higher, a particularly bullish cocktail for non-agency MBS, says Gundlach (DBL, DSL), who finds those securities vastly more attractive than high-yield paper (HYG, JNK).
- Asked about Annaly (NLY) - an owner of agency MBS - Gundlach says he likes it and likes its management, but won't be buyer until after the dividend is cut to something more in line with what core earnings might be.
- "Something for Nothing" slides and webcast
- Non-agency MBS players include: MTGE, MFA, DX, TWO
- Related mREIT ETFs: REM, MORT, MORL
- High-yield ETFs: HYG, JNK, HYS, HYLD, SJNK, PHB, SJB, ANGL, XOVR, UJB, QLTC, SHYG
- Previous: "Freaking out" about interest rate risk