MBS are down almost 1/3 of a point early. Stocks are flat
Bonds were weaker in the overnight session with most of the losses being a catch-up move to the rest of the global bond market after being closed yesterday. Though have recovered somewhat on comments from Fed’s Waller, who said recent data gave the Fed space before making the next rate decision.
The latest Atlanta Fed GDP Now index sees Q3 growth at 5.6%, which seems completely out-to-lunch in the current debate whether the US will have a hard landing or a soft landing.
The upcoming week is pretty data-light as is typical in the week after the jobs report. The most important report will be the ISM Services index on Wednesday, along with the second estimate for Q2 productivity. Just a bunch of Fed speak.
Realtor.com (News Corp) showed that new listings increased by 3.5% on the month and are now down only 7.5% YoY. This is a dramatic improvement from YoY declines of 20-25% for a while.
Also saw news that we are currently at 50% the highest LO head count of 2021.
Bonds were decently weaker on the first day back after Labor Day weekend. Futures and overseas markets were not on holiday and they spent Monday building in some of the weakness seen today’s opening levels. In fact, from those opening levels, today’s selling was fairly minimal, or at least fairly gradual. One of the only obvious measurable culprits was a glut of corporate bond issuance. This is always a consideration in the background, but it tends to push yields higher when issuance is larger than expected. The long weekend served to concentrate the dose.
There was some more talk on Friday about non-bank lenders getting access to funding via the FHLB Banks. The FHA had a closed-door discussion and will be “finalizing recommendations on a range of topics, including improving the FHLBanks’ support for members doing the most for housing and community development” according to the FHFA in an email response. We are still a long way away from something happening as any expansion for the FHLBs would require action from Congress. One thing that comes with integration would be a new level of regulation for these non-bank entities. Maybe there can be more integration via warehouse lending for these lenders? Warehouse lenders are depositories and are likely FHLB member banks.
ICE/Black Knight merger set to close today.