Foreclosure Inventory Is Still Elevated in Judicial States
In judicial states, foreclosures can take years. Judges are often reluctant to push delinquent borrowers out of their homes.
One way of thinking about the employment cost index is that it represents the wage side of the wage-price spiral, whereas the CPI represents the price side.
The labor force participation rate is the ratio of the labor force against its demographic cohort. Since 2008, this rate has fallen to late-1970s levels.
In January 2016, the unemployment rate fell from 5.0% to 4.9%, or by about 7.8 million people. The underemployment rate was flat at 9.9%.
Mortgage REITs such as Annaly Capital Management (NLY), MFA Financial (MFA), and American Capital Agency (AGNC) are big holders of Ginnie Mae TBAs.
For the week ending January 29, Fannie Mae TBAs ended at 104 22/32. They rose by 2 ticks to go out at 104 24/32 last week.
Mortgage rates are the lifeblood of the housing market. The Fed helped the housing market when it pushed rates lower to allow people to refinance.
Ten-year bond yields influence everything from mortgage rates to corporate debt. Now, they’re the benchmark for long-term US interest rates.
The equity sell-off continued last week. Personal incomes rose, but personal spending didn’t. Construction spending disappointed as well.
This week, investors will still be digesting the jobs report from last Friday. The biggest data points will be the JOLTS jobs report and retail sales.
American Capital Agency maintained its leverage ratio at roughly 6.8x in the fourth quarter. The company funded its balance sheet with roughly $41.7 billion in repurchase agreements.
American Capital Agency ended up declaring a dividend of $0.60 per share for the fourth quarter. This is no change from the $0.60 per share declared during the third quarter.
In 4Q15, American Capital Agency’s balance sheet fell from $60.6 billion in assets to $57 billion. At the end of 4Q15, 30-year fixed-rate mortgages were flat with 3Q15.
American Capital Agency’s (AGNC) book value per share fell from $23 in 3Q15 to $22.59 in 4Q15. The fall was due in part to a widening of MBS (mortgage-backed security) spreads.
The ten-year bond yield, tradable through the iShares 20+ Year Treasury Bond ETF (TLT), fell 13 basis points last week. Ginnie Mae TBAs picked up 17 ticks to close at 105 9/32.
For the week ended January 22, Fannie Mae TBAs ended at 104 2/32. They rose 20 ticks to go out at 104 22/32 last week.
Mortgage rates have largely ignored bond market movements. Last week, they rose 3 basis points to 3.76%. The ten-year bond yield fell from 2.05% to 1.92%
After closing out the prior week at 2.05%, bond yields, as tracked by the iShares 20+ Year Treasury Bond ETF (TLT), fell 13 basis points last week to close at 1.92%.
Dovish comments in the FOMC statement, as well as a surprise move by the Bank of Japan to institute negative interest rates, pushed stocks and bonds markedly higher on Friday.
Investors return after a dovish FOMC statement to a packed week of data. The biggest report will be the jobs report on Friday, and the bond market will focus like a laser on wage growth.