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7/14/10 |
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*Apologies for the hiatus from VFTC. Frankly while the equity markets have been ripping higher since last week there has been very little follow through in the MBS/ABS markets and I'm hearing that the leveraged credit markets failed to participate in this latest bullish run. Now to be fair the MBS markets also didn't suffer much during the downdraft and so I guess we can tout it as a more stable investment opportunity. Flows this week started off slow, but picked up yesterday with buyers outnumbering sellers. The SIV liquidation that goes off this morning at 9:00 ET will dominate focus for a couple of hours. On the back of the Spanish World Cup win Europe seems to be looking past Greek debt concerns and Spanish bank stress tests. *The only news we have seen out of the mono-lines has been an announced 11% equity stake in MBI by Fairholme Capital Management which has helped fuel the 36% rally in the stock price since 6/30. *Concern over the housing market continues to creep up. As reported in Housing Wire this morning, Toronto-based Capital Economics, an independent macroeconomic research firm, said Tuesday that a double dip in the United States housing market is now materializing. Furthermore, the report finds that for every home currently on the market, there are two homes waiting to be sold. There are conflicting opinions on whether or not a double dip will occur, and warnings abound, but the research by Paul Dales clearly calls the beginning of a new downturn. However, the Federal Reserve Bank of Cleveland is also reporting numbers that indicate the macroeconomy still shows pockets of strength. In the Capital Economics report, titled "Double Dip Begins," Dales argues that the rush to take advantage of the tax credit pushed new home sales up by 29% in the two months to April. But in May, new sales plunged by 33% m/m to a new record low. The pending home sales index also fell sharply, by 30% m/m in June. "The expiration of the homebuyer tax credit at the end of April has triggered a double-dip in the housing market, with new home sales falling particularly sharply in May," he writes. "The only reason why existing home sales did not fall significantly is because they are measured at the contract closing, rather than signing stage."
*This morning the MBA announced the lowest purchase activity in over 13 years. However with 10yrs hovering around 3% there has been a surge in refi activity, including yours truly. Have a great day. |
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6/30/10 |
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Please excuse the brevity this AM.....late night hockey game last night. *From our overseas correspondent Matt Doyle two interesting points of interest. Not sure of the direct impact upon our credit markets, especially given how well credit markets have held in versus the equity markets and emerging markets, but interesting nonetheless. Funding costs are getting more expensive in China. With failed Ministry of Finance auctions the 3 month interbank rate in Shanghai has jumped since the end of May by approximately 35%, {SHIF3M index GP }. |
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6/16/10--SIV List, CC Delinquencies |
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*Just when I didn't think it could get any worse......shortly after the Celtics get blown out and my phone blows up with text messages from Laker fans that apparently thought game 6 was worth 2 games the men's league hockey team blows a 4-1 lead with 8 minutes to go in the game. Can we just forget yesterday happened and move on? Of course the equity markets don't want to forget yesterday. Massive rally in equities while flows in RMBS/ABS continue to be somewhat muted. |
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6/21/10--China, Flows, Whitney Housing Call |
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*The big news over the weekend clearly came out of China, with the PBoC announcing they will no longer peg the renminbi to the US Dollar. From our man on the ground in Hong Kong, Matt Doyle of CS we received this real time report from their local markets, “Obviously the big story was the RMB-revaluation, which we saw move 38bps today against the USD, probably more than most had expected. That being said there was a decent amount of positive news across the board in addition to the much anticipated RMB-reval. The gov't continues to go region by region stimulating the economy, this time introducing special economic status to the entire city of Xiamen (increasing it from a district in the city), as well as approving Hainan's tourism program. |
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6/14/10--Flows, Servicer Deferrals |
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*Flows were somewhat muted on Friday which wasn't unexpected however with quarter end looming we would expect to see activity pick up especially out of the money manager community as they square up positions. We continue to see the trend of getting closer to shore and the street continues to be a proponent of shorter duration less risky assets. While the dearth of secondary market supply over the past few weeks has allowed the street to burn off some inventory, the concerns over the macro economy remain. Mortgage rates at historic lows failed to spur purchase origination as we hit volume lows not seen for over 12 years, and as the WSJ reports this morning recovery in the auto industry may not be at hand. |
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