Plenty of people I know agree with the this Forbes article titled, “We Have Learned Nothing From The Mortgage Market Meltdown.” Builders are reducing labor costs by using premanufactured products that also require low maintenance. And what’s not to like about taking advantage of cheaper labor hundreds or thousands of miles away in an environmentally controlled environment? Know the difference between “modular” and “manufactured” and “mobile.”
Mortgage Industry Advisory Corporation (“MIAC”) is pleased to offer, as exclusive agent, a $23 million pool of reperforming residential first lien whole loans. The Seller prefers to sell the loans on an all-or-none basis but will consider carves and all loans are offered on a servicing released basis. Loan characteristics are: Interest Rate Range: 1.5% to 13.28%, 76.72% Modified Loans, Geographic Concentration: CA, NJ, IL, FL, and NY, Average Total UPB: $196,937.40, WAC: 4.353% Aggregate LTV: 75%, WA FICO: 586, WA Months Performing: 7.57. For additional information, please contact Steve Harris.
Remember the acronym PIGS from 2010? Portugal, Italy, Greece, and Spain. Their fixed-income yields shot higher over the weekend due to renewed political uncertainty. Back to the future! Uncertainty about formation of a government has triggered an Italian debt sell-off, while bank shares in Spain, Portugal and France also have come under pressure.
Italy will soon be voting on what will essentially be its membership in the European Union. Although things have calmed down this morning, an Italian exit of the EU creates uncertainty in financial markets. Traders cope with that by buying bonds (among other things) from other countries, like the U.S., as a safe-haven, a flight to quality. Much of the panic money found its way into the US bond market yesterday. Not so much today.
And thus rates slid down yesterday, with the 10-year closing -16bps as investors flocked toward Treasuries amid political turmoil in Italy. Over the weekend, Italy’s President Sergio Mattarella objected to the appointment of euroskeptic Paolo Savona to the finance minister post. President Mattarella then called on former IMF official Carlo Cottarelli to form a caretaker government, but there are indications Mr. Cottarelli’s government will not be supported by any of the major parties, meaning there is an increased likelihood of another election in July or August. The worries surrounding Italy overshadowed news from Spain, where Prime Minister Mariano Rajoy will face a confidence vote before the weekend. These worries surrounding two of Europe’s most indebted economies produced the sharpest spike in the price of longer-dated Treasuries since June 2016.
In the U.S., Fed member Bullard argued for a slower pace of rate hikes. The fed funds futures market has seen a moderation in rate hike expectations, with the implied probability of a June hike falling to 75% from 90% on Friday and 95% one week ago. But housing & jobs drive our economy, and the S&P Case-Shiller Home Price Index increased 6.8% in, above expectations after an identical reading in February. The Conference Board’s Consumer Confidence Index increased to 128.0 in May, showing consumers’ assessment of current conditions is at a 17-year high.
Recall that retail sales increased 0.3 percent in April and March’s figures were revised upward; a moderate rebound after a weak first quarter. Clothing stores increased a robust 1.4 percent for the month, but department stores only managed a 0.2 percent gain. Furniture stores, which are an indication of housing demand, increased 0.8 percent. On the weak side, food services & drinking places, which are an indication of disposable income, declined 0.3 percent in April. All things considered, the increase in spending is not that dramatic considering this year’s tax cuts and current labor market conditions.
This morning we learned that last week’s apps dropped nearly 3%, the 6th straight week of declines, and refis are now down to 35% of the total. The May ADP employment report was +178k, much less than forecast. We’ve also had the second look at Q1 GDP (+2.2%, in line with expectations). And advanced indicators for April were released: wholesale (flat) and retail (+.5%) inventories. The latest Fed Beige Book will be released at 2PM ET. With lots of news, rates are higher versus Tuesday’s close: the 10-year is yielding 2.84% and agency MBS prices are worse .125.
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