Realist real estate roundup, September 9–13

Analysis of breaking news: Larry Summers withdraws name from consideration

Why follow the Weekly Realist real estate roundup?

The Weekly Realist real estate roundup is a summary of real estate–related trading and economics

10 year bond yieldEnlarge Graph

The roundup is a weekly series in which we discuss the week’s trading in in government bonds and TBA (To-Be-Announced) mortgage-backed securities. We’ll see where mortgage rates have been and we’ll go over the weekly economic data and earnings announcements. Then we’ll look forward to what’s coming up the following week. The information in this series will be relevant to mortgage REITs like American Capital Agency (AGNC), Annaly (NLY), Hatteras (HTS), Capstead (CMO), MFA Financial (MFA), and people who invest in homebuilders.

With a data-light week for the ten-year bond, ths focus is on next week’s FOMC meeting

The ten-year bond rallied slightly over the week, with the yield falling 3 basis points to 2.88%. The bond market is completely focused on the upcoming week’s FOMC meeting, where the market is focused on the Fed’s exit from asset purchases, or quantitative easing (QE). After last Friday’s jobs report failed to move the needle on the Fed’s expected withdrawal of quantitative easing, the market really didn’t have any major data to chew on. The Syria situation seems to not be a factor for the market, nor does the upcoming debt ceiling fight, which the market takes as some sort of elaborate political kabuki dance.

In breaking news, Larry Summers has withdrawn his name from consideration for the next Federal Reserve Chairman after receiving push-back on the left. This makes Janet Yellen a lock for the job. Summers would have meant a more aggressive withdrawal of QE, and given that Yellen is even more dovish (that is, even less aggressive) than Bernanke, QE may stick around a bit longer than the Street is anticipating.

In upcoming parts of this series, we’ll look at trading in the TBA market, which is the basis for mortgage rates, see where mortgage rates have been for the week, and then discuss past and upcoming economic data.

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