by Calculated Risk on 9/22/2011 03:09:00 PM

Update: from Bloomberg: Europe Officials Weigh Forming Crisis ‘Firewall’

European officials said governments may leverage the region’s bailout program to erect a “firewall” around the sovereign debt crisis once a revamp of the fund is completed.

From the Financial Times: EU set to speed recapitalisation of 16 banks

European officials look set to speed up plans to recapitalise the 16 banks that came close to failing last summer’s pan-EU stress tests as part of a co-ordinated effort to reassure the markets about the strength of the 27-nation bloc’s banking sector.

A senior French official said the 16 banks regarded to be close to the threshold would now have to seek new funds immediately. Although there has been widespread speculation that French banks are seeking more capital, none is on the list.
excerpt with permission

From Bloomberg: Greece Speeds Budget Cuts to Ensure Aid

Measures announced yesterday following two rounds of talks with the European Union and the IMF include: a 20 percent cut in pensions of more than 1,200 euros ($1,650) a month, according to a government statement; pensions paid to those younger than 55 will be shaved by 40 percent for the amount exceeding 1,000 euros and wages will be lowered for 30,000 state employees.

With an 8 billion-euro aid payment in the balance, Greek creditors are also in the final stages of negotiating a bond exchange intended to reduce the country’s debt load of about 350 billion euros.

The Greek 2 year yield was up to 66.5%. The Greek 1 year yield is at 135%.

The Portuguese 2 year yield is up to 17.5% (rising quickly) and the Irish 2 year yield was down to 9.1%.

The Italian 10 year yield was down slightly to 5.7%.

Here are the links for bond yields for several countries (source: Bloomberg):

Greece	2 Year	5 Year	10 Year
Portugal	2 Year	5 Year	10 Year
Ireland	2 Year	5 Year	10 Year
Spain	2 Year	5 Year	10 Year
Italy	2 Year	5 Year	10 Year
Belgium	2 Year	5 Year	10 Year
France	2 Year	5 Year	10 Year
Germany	2 Year	5 Year	10 Year

by Calculated Risk on 9/22/2011 11:52:00 AM

From Bloomberg: Commercial Real Estate Prices in U.S. Increased 5% in July, Moody’s Says

The Moody’s/REAL Commercial Property Price Index advanced 5 percent from June. It’s up 1.2 percent from a year earlier and almost 13 percent from its post-peak low in April, the New York- based company said in a report today.

Demand was driven by middle-market properties that aren’t considered major assets.
...
“This month’s gain is more a continuation of the bottoming process than a harbinger of recovery,” the company said in the report. “Slow job growth will crimp expectations for the absorption of vacant space and for rent increases, which in turn will constrain near term price increases.”

Below is a comparison of the Moodys/REAL Commercial Property Price Index (CPPI) and the Case-Shiller composite 20 index. Beware of the "Real" in the title - this index is not inflation adjusted.

Click on graph for larger image in graph gallery.

CRE prices only go back to December 2000. The Case-Shiller Composite 20 residential index is in blue (with Dec 2000 set to 1.0 to line up the indexes).

According to Moody's, CRE prices are up 1.2% from a year ago and down about 42% from the peak in 2007. Some of this increase was probably seasonal - also this index is very volatile because there are relatively few transactions. Also, this report was for July, and the index will probably be weaker in August after the debt ceiling debate and the renewed fears about Europe.

by Calculated Risk on 9/22/2011 10:21:00 AM

• From Freddie Mac: Fixed-Rate Mortgages Hold Steady, Remain Near Record Lows

Freddie Mac today released the results of its Primary Mortgage Market Survey® (PMMS®), showing fixed-rate mortgages changing little amid sluggish economic, mixed housing data, and ongoing concerns over the European debt markets. The 30-year fixed remained unchanged at 4.09 percent, while the 15-year fixed dropped a single basis point to 3.29 percent, marking a new record low.

There will be new record low mortgage rates reported next week.

• From MarketWatch: August economic indicators signal weak growth

The economy should exhibit "continued weak growth" through the fall and winter, the Conference Board said Thursday as it reported that its index of leading economic indicators grew 0.3% in August, compared with a 0.1% gain expected by economists polled by MarketWatch. "There is growing risk that sustained weak confidence could put downward pressure on demand and business activity, causing the economy to potentially dip into recession," said Ken Goldstein, a Conference Board economist ...

• From the FHFA: FHFA House Price Index Up 0.8 Percent in July

U.S. house prices rose 0.8 percent on a seasonally adjusted basis from June to July, according to the Federal Housing Finance Agency’s monthly House Price Index. The previously reported 0.9 percent increase in June was revised to a 0.7 percent increase. For the 12 months ending in July, U.S. prices fell 3.3 percent.

This is the GSE only index. The FHFA “expanded-data” House Price Index (HPI) that covers all homes is only released Quarterly. There will be more house price data released soon - and Case-Shiller next Tuesday.

by Calculated Risk on 9/22/2011 08:30:00 AM

The DOL reports:

In the week ending September 17, the advance figure for seasonally adjusted initial claims was 423,000, a decrease of 9,000 from the previous week's revised figure of 432,000. The 4-week moving average was 421,000, an increase of 500 from the previous week's revised average of 420,500.

The following graph shows the 4-week moving average of weekly claims since January 2000 (there is a longer term graph in graph gallery).

Click on graph for larger image in graph gallery.

The dashed line on the graph is the current 4-week average. The four-week average of weekly unemployment claims increased this week to 421,000.

The 4-week average has been increasing recently and this is the highest level since early July.

by Calculated Risk on 9/21/2011 08:46:00 PM

• From reader Soylent Green is People (mortgage broker):

"Refinance boom will be much larger than 2009 when the Feds remove the 125% LTV cap on HARP loans. There are so many whispers about it I can hardly hear myself think."

• From Tom Petruno at the LA Times: Mortgage rates expected to slide on new Fed move

The shift back to mortgage bonds could bring $20 billion or more a month of Fed buying power into that market, said Walter Schmidt, a bond market analyst at FTN Financial in Chicago.
...
“It’s absolutely clear they’re targeting mortgages,” Keith Gumbinger, a principal at mortgage data firm HSH Associates in Pompton Plains, N.Y., said of the Fed.
...
The 4% level is a psychological barrier for the market, but “I think we can breach that” soon, Schmidt said.

• An update to the widely quoted Carmen Reinhart and Kenneth Rogoff paper from the Oregon Office of Economic Analysis: This Time is Different, An Update

I have recreated and updated some of Ms Reinhart and Mr Rogoff’s work. Specifically, what follows (PDF – full version) is based on their draft paper for an American Economic Association presentation in January 2009 “The Aftermath of Financial Crises.“

In order to not bury the lede, first up is a quick summary of the U.S.’ current experience relative to historical financial crises, followed later by graphs for each individual measure.

All told, the recent U.S. financial crisis looks very similar to the historical crises as detailed by Reinhart and Rogoff – just your “garden variety, severe financial crisis” if you will. Across each of the five measures discussed in the Aftermath paper, the current U.S. experience is of the same magnitude

See the post for several tables and graphs.

Earlier:
• Existing Home Sales in August: 5.0 million SAAR, 8.5 months of supply
• Existing Home Sales: Comments and NSA Graph
• Will there be another Refinance Boom?
• AIA: Architecture Billings Index Turns Positive
• Existing Home Sales graphs