Good evening,
After a week at the National Mortgage Bankers Association National Conference I am back and happy to report that mortgage rates are again working in our favor towards the 107:00 price set back
On April 5th, 2013. Busy week in economic releases most importantly the FOMC announcement on Wednesday.
Fed Week
by Craig Dismuke
The Fed will certainly have plenty of things to consider when they meet this week. The new risk to inflation being below their target, the labor market tightening at an increasing pace, and a commitment to end QE3 at this meeting will all be factors. The Fed is likely to end QE3, as previously indicated, despite the recent spate of market volatility. While the inflation picture is less stable than it was, the overall growth trajectory of the economy remains stable and the labor market is certainly tightening at a rapid pace. What is more of an uncertainty is how they will qualitatively describe inflation and the labor market. For now, the market expects the first rate increase to be farther in the future than it was expecting one month ago, but it also expects asset purchases to be concluded. The Fed news will certainly dominate the headlines this week.
In today’s reports, the Market Services PMI (a leading indicator for the ISM Non-Manufacturing report) is expected to show a slowdown in activity. The measures of service-sector activity have been running very hot lately, so a slowdown is not the end of the world. At 9:00 a.m. CT, the September Pending Home Sales report will be released. Last week’s New Home Sales revisions eroded confidence that housing is truly weathering the slight uptick in interest rates. At 9:30 a.m., the Dallas Fed will release its manufacturing activity index. Coming into the morning, Eurozone stocks are down 0.75% after the worse-than-expected ECB stress test results and a weak German Ifo Businsess Confidence index. The index fell for a sixth consecutive month to its lowest level since December 2012. This index is a good barometer of overall Eurozone growth and is pointing to a renewed recession. U.S. stock futures are slightly lower and Treasuries are holding stable with the 10-year at 2.26%.
The ECB released the results of their bank stress test this weekend. Sitting atop the banks which failed was the Banca Monte dei Paschi di Siena, the world’s oldest bank. It is also an Italian bank, which one-third of the failing banks were. According to the ECB results, all of the failing banks need to raise $32 billion, cumulatively, to cover their capital shortfalls. This is larger than what analysts expected and the number of failing banks is larger. However, the ECB also said that 12 of the failing banks have already presented an acceptable solution. Unfortunately, when banks are trying to raise their capital ratios, growing assets (a.k.a. loans) is the opposite objective. Loan growth is proving elusive in the region and this result will likely make the matter worse.
Capital Markets
Primary Residential Mortgage, Inc.
1480 North 2200 West| Salt Lake City| Utah| 84116
Toll Free 1.800.255.2792
o Tick 1/32 or .03125
o MBS Mortgage Backed Security
o TBA To Be Announced (MBS with unknown future delivery)
o Spec Specified Pool
The contents in this memo are not an endorsement of any financial products or investments. PRMI assumes no liability, and will not make any recommendations with respect to the purchase or sale of any investment security or its derivatives.
Economic Calendar
Date/Time(Central)
|
Indicator
|
Period
|
Est.
|
Actual
|
Prior
|
Revised
|
10/28/2014 7:30 AM
|
Durable Goods Orders
|
SEP
|
0.5%
|
--
|
-18.2%
|
-18.4%
|
10/28/2014 7:30 AM
|
Durable Goods Ex. Trans.
|
SEP
|
0.5%
|
--
|
0.7%
|
0.4%
|
10/28/2014 8:00 AM
|
S&P/CaseShiller Comp-20 (YoY)
|
AUG
|
5.70%
|
--
|
6.75%
|
--
|
10/28/2014 8:00 AM
|
S&P/CaseShiller US HPI
|
AUG
|
--
|
--
|
5.61%
|
--
|
10/28/2014 9:00 AM
|
Consumer Confidence
|
OCT
|
87.0
|
--
|
86.0
|
--
|
10/29/2014 6:00 AM
|
MBA Mortgage Apps.
|
24-Oct
|
--
|
--
|
11.6%
|
--
|
10/29/2014 1:00 PM
|
FOMC Rate Decision
|
29-Oct
|
0.25%
|
--
|
0.25%
|
--
|
10/30/2014 7:30 AM
|
Initial Jobless Claims
|
25-Oct
|
281K
|
--
|
283K
|
--
|
10/30/2014 7:30 AM
|
Continuing Jobless Claims
|
18-Oct
|
2355K
|
--
|
2351K
|
--
|
10/30/2014 7:30 AM
|
Personal Consumption
|
3Q A
|
1.9%
|
--
|
2.5%
|
--
|
10/30/2014 7:30 AM
|
GDP QoQ (Annualized)
|
3Q A
|
3.0%
|
--
|
4.6%
|
--
|
10/31/2014 7:30 AM
|
Employment Cost Index
|
3Q
|
0.5%
|
--
|
0.7%
|
--
|
10/31/2014 7:30 AM
|
Personal Income
|
Sep
|
0.3%
|
--
|
0.3%
|
--
|
10/31/2014 7:30 AM
|
Personal Spending
|
Sep
|
0.1%
|
--
|
0.5%
|
--
|
10/31/2014 7:30 AM
|
PCE Deflator (YoY)
|
Sep
|
1.5%
|
--
|
1.5%
|
--
|
10/31/2014 7:30 AM
|
PCE Core (MoM)
|
Sep
|
0.1%
|
--
|
0.1%
|
--
|
10/31/2014 7:30 AM
|
PCE Core (YoY)
|
Sep
|
1.5%
|
--
|
1.5%
|
--
|
10/31/2014 8:45 AM
|
Chicago Purchasing Manager
|
OCT
|
60.0
|
--
|
60.5
|
--
|
10/31/2014 8:55 AM
|
U of Mich. Consumer Confidence
|
OCT F
|
86.4
|
--
|
86.4
|
