Tuesday – November 5, 2024

Alright Everybody, remain calm!  It’s The Day!  It’s the end of the world as we know it, and I feel fine.

UMBS down 7 bps in early trading.  Stock futures up 11.5 points.

The national delinquency rate rose 14 basis points in September to 3.48%. On a year-over-year basis, the DQ rate rose 5.7% compared to a year ago. On a historical basis, we are still quite low compared to the early 2000s. Conforming mortgages are seeing decent performance, although FHA and VA are ticking up. Note that the ICE Mortgage Monitor does not capture the entire GNMA universe, so the FHA DQ numbers are a bit less reliable.

The National Association of Realtors put out their annual Profile of Home Buyers and Sellers. The first time homebuyer accounted for only 24% of home sales this year, a record low. To put that number into perspective, prior to the 2008 crash, the first time homebuyer share was 40%. The median age of a homebuyer was 56.

Private residential construction rose in September, according to the Census Bureau. It rose 0.2% MOM and 4.1% compared to a year ago. We are continuing to see a move towards single family residences and away from multi-family.

ISM Services = 56.0 vs 53.8 f’cast,    [54.9 prev]

employment 54.0 vs 48.0

Prices 58.1 vs 58.0

There are no two ways about it: a 56.0 reading in ISM Services is a strong result.  The internals are economically strong as well, with inflation not accounting for as much of the improvement as last time.

The big jump in employment is perhaps less of a surprise given the NFP reading.  Biz activity was slightly lower than last time, but still very strong at 57.2 vs 59.9 previously.

It was an interesting round trip for the bond market today as overnight weakness gave way to even higher yields after the ISM Services PMI.  ISM was legitimately stronger than expected, and other than the direction of the move, it was good to see bonds remaining willing to react to econ data.  But there was a greater willingness to react to “other things” in the afternoon.  One of those may have been a well-received Treasury auction considering yields dropped shortly thereafter.  A separate move in the 2pm hour accounted for an even bigger rally, and that’s the one without any clear scapegoat.  Chalk it up to pre-election positioning and count on substantially bigger volatility tomorrow.

UMBS closed the day up 30 bps at 99.47