by Calculated Risk on 7/31/2017 09:08:00 PM

From Matthew Graham at Mortgage News Daily: Mortgage Rates Modestly Lower Despite Flat Markets

Mortgage rates moved modestly lower today, despite an absence of improvement in underlying bond markets. ... The coming days bring increasingly important economic reports.  These have the power to create more market movement than we saw at the end of last week and thus, a bigger change in mortgage rates, for better or worse.  For now, things have been holding exceptionally steady with an average top tier 30yr fixed rate of 4.0%.

Tuesday:
• At 8:30 AM ET, Personal Income and Outlays for June. The consensus is for a 0.4% increase in personal income, and for a 0.1% increase in personal spending. And for the Core PCE price index to increase 0.1%.

• At 10:00 AM, ISM Manufacturing Index for July. The consensus is for the ISM to be at 56.4, down from 57.8 in June. The ISM manufacturing index indicated expansion at 57.8% in June. The employment index was at 57.2%, and the new orders index was at 63.5%.

• Also at 10:00 AM, Construction Spending for June. The consensus is for a 0.5% increase in construction spending.

• All day, Light vehicle sales for July. The consensus is for light vehicle sales to be 16.8 million SAAR in July, up from 16.5 million in  June (Seasonally Adjusted Annual Rate).

by Calculated Risk on 7/31/2017 04:58:00 PM

Fannie Mae reported that the Single-Family Serious Delinquency rate declined to 1.01% in June, from 1.04% in May. The serious delinquency rate is down from 1.32% in June 2016.

This is the lowest serious delinquency rate since December 2007.

These are mortgage loans that are "three monthly payments or more past due or in foreclosure". 

The Fannie Mae serious delinquency rate peaked in February 2010 at 5.59%.

Click on graph for larger image

Although the rate is declining, the "normal" serious delinquency rate is somewhat under 1%. 

The Fannie Mae serious delinquency rate has fallen 0.31 percentage points over the last year, and at that rate of improvement, the serious delinquency rate should be below 1% next month.

Note: Freddie Mac reported earlier.

by Calculated Risk on 7/31/2017 01:26:00 PM

Earlier from the Chicago PMI: July Chicago Business Barometer at 58.9 vs 65.7 in June

The MNI Chicago Business Barometer fell to 58.9 in July from 65.7 in June, the lowest level in three months.
...
“MNI’s July Chicago Business Barometer should be viewed in the context of the underlying, upward trend in business sentiment witnessed since early 2016. Key indicators, despite reversing their June reading, remain above their respective averages set over the last twelve months, and point towards robust confidence among U.S firms,” said Jamie Satchi, Economist at MNI Indicators. 
emphasis added

This was below the consensus forecast of 62.0, but still a solid reading.

by Calculated Risk on 7/31/2017 10:41:00 AM

From the Dallas Fed: Texas Manufacturing Activity Strengthens, Outlooks Improve

Texas factory activity increased again in July, according to business executives responding to the Texas Manufacturing Outlook Survey. The production index, a key measure of state manufacturing conditions, rose 11 points to 22.8, indicating output grew at a faster pace than in June.

Other measures of current manufacturing activity also indicated a pickup in growth. The new orders and the growth rate of orders indexes rose several points each, coming in at 16.1 and 12.2, respectively. The capacity utilization index moved up to 18.1 and the shipments index increased three points to 11.6.

Perceptions of broader business conditions improved again in July, with a sharp pickup in outlooks. The general business activity index edged up to 16.8, marking a 10th consecutive positive reading. The company outlook index jumped 15 points to 25.9, reaching its highest level since 2010.

Labor market measures indicated slightly stronger employment gains and longer workweeks this month. The employment index has been positive all year and edged up to 11.2, its highest reading since the end of 2015. Twenty-one percent of firms noted net hiring, compared with 9 percent noting net layoffs. The hours worked index ticked up to 9.8.
emphasis added

This was the last of the regional Fed surveys for July.

Here is a graph comparing the regional Fed surveys and the ISM manufacturing index:

Click on graph for larger image.

The New York and Philly Fed surveys are averaged together (yellow, through July), and five Fed surveys are averaged (blue, through July) including New York, Philly, Richmond, Dallas and Kansas City. The Institute for Supply Management (ISM) PMI (red) is through June (right axis).

Based on these regional surveys, it seems likely the ISM manufacturing index will decrease in July compared to June (to be released tomorrow, August 1st). The consensus is for the ISM index to decrease to 56.4 in July from 57.8 in June.

by Calculated Risk on 7/31/2017 10:03:00 AM

From the NAR: Pending Home Sales Recover in June, Grow 1.5 Percent

After declining for three straight months, pending home sales reversed course in June as all major regions, except for the Midwest, saw an increase in contract activity, according to the National Association of Realtors®.

The Pending Home Sales Index, a forward-looking indicator based on contract signings, climbed 1.5 percent to 110.2 in June from an upwardly revised 108.6 in May. At 0.5 percent, the index last month increased annually for the first time since March.
...
The PHSI in the Northeast inched forward 0.7 percent to 98.0 in June, and is now 2.9 percent above a year ago. In the Midwest the index decreased 0.5 percent to 104.0 in June, and is now 3.4 percent lower than June 2016.

Pending home sales in the South rose 2.1 percent to an index of 126.0 in June and are now 2.6 percent above last June. The index in the West grew 2.9 percent in June to 101.5, but is still 1.1 percent below a year ago.
emphasis added

This was above expectations of a 0.9% increase for this index. Note: Contract signings usually lead sales by about 45 to 60 days, so this would usually be for closed sales in July and August.

by Calculated Risk on 7/30/2017 08:04:00 PM

Weekend:
• Schedule for Week of July 30, 2017

Monday:
• At 9:45 AM ET, Chicago Purchasing Managers Index for July. The consensus is for a reading of 62.0, down from 65.7 in June.

• At 10:00 AM, Pending Home Sales Index for May. The consensus is for a 0.9% increase in the index.

• At 10:30 AM, Dallas Fed Survey of Manufacturing Activity for July.

From CNBC: Pre-Market Data and Bloomberg futures: S&P futures are down 1, and DOW futures are down 11 (fair value).

Oil prices were up over the last week with WTI futures at $49.95 per barrel and Brent at $52.76 per barrel.  A year ago, WTI was at $42, and Brent was at $41 - so oil prices are up about 20% year-over-year.

Here is a graph from Gasbuddy.com for nationwide gasoline prices. Nationally prices are at $2.31 per gallon - a year ago prices were at $2.14 per gallon - so gasoline prices are up 17 cents per gallon year-over-year.

by Calculated Risk on 7/30/2017 09:01:00 AM

Note: Surferdude808 compiles an unofficial list of Problem Banks compiled only from public sources.

Here is the unofficial problem bank list for July 2017.

Here are the monthly changes and a few comments from surferdude808:

Update on the Unofficial Problem Bank List for July 2017.  It was a quiet month for changes to the list as only three banks were removed that lowered the total count from 137 to 134 institutions.  Aggregate assets fell by $2.4 billion to $32.8 billion.  A year ago, the list held 196 institutions with assets of $58.9 billion.  Actions were terminated against Gibraltar Private Bank & Trust Co., Coral Gables, FL ($1.6 billion); Dieterich Bank, N.A., Dieterich, IL ($617 million); and Washita State Bank, Burns Flat, OK ($114 million).

by Calculated Risk on 7/29/2017 08:21:00 AM

The key report this week is the July employment report on Friday.

Other key indicators include the July ISM manufacturing and non-manufacturing indexes, July auto sales, and the June Trade Deficit.

----- Monday, July 31st -----
9:45 AM: Chicago Purchasing Managers Index for July. The consensus is for a reading of 62.0, down from 65.7 in June.

10:00 AM: Pending Home Sales Index for May. The consensus is for a 0.9% increase in the index.

10:30 AM: Dallas Fed Survey of Manufacturing Activity for July.

----- Tuesday, Aug 1st -----
8:30 AM: Personal Income and Outlays for June. The consensus is for a 0.4% increase in personal income, and for a 0.1% increase in personal spending. And for the Core PCE price index to increase 0.1%.

10:00 AM: ISM Manufacturing Index for July. The consensus is for the ISM to be at 56.4, down from 57.8 in June.

Here is a long term graph of the ISM manufacturing index.

The ISM manufacturing index indicated expansion at 57.8% in June. The employment index was at 57.2%, and the new orders index was at 63.5%.

10:00 AM: Construction Spending for June. The consensus is for a 0.5% increase in construction spending.

All day: Light vehicle sales for July. The consensus is for light vehicle sales to be 16.8 million SAAR in July, up from 16.5 million in  June (Seasonally Adjusted Annual Rate).

This graph shows light vehicle sales since the BEA started keeping data in 1967. The dashed line is the June sales rate.

----- Wednesday, Aug 2nd -----
7:00 AM ET: The Mortgage Bankers Association (MBA) will release the results for the mortgage purchase applications index.

8:15 AM: The ADP Employment Report for July. This report is for private payrolls only (no government). The consensus is for 175,000 payroll jobs added in July, up from 158,000 added in June.

----- Thursday, Aug 3rd -----
8:30 AM ET: The initial weekly unemployment claims report will be released. The consensus is for 244 thousand initial claims, unchanged from 244 thousand the previous week.

10:00 AM: the ISM non-Manufacturing Index for July. The consensus is for index to decrease to 56.9 from 57.4 in June.

----- Friday, Aug 4th -----
8:30 AM: Employment Report for July. The consensus is for an increase of 180,000 non-farm payroll jobs added in July, down from the 222,000 non-farm payroll jobs added in June.

The consensus is for the unemployment rate to decline to 4.3%.

This graph shows the year-over-year change in total non-farm employment since 1968.

In June, the year-over-year change was 2.24 million jobs.

A key will be the change in wages.

8:30 AM: Trade Balance report for June from the Census Bureau.

This graph shows the U.S. trade deficit, with and without petroleum, through May. The blue line is the total deficit, and the black line is the petroleum deficit, and the red line is the trade deficit ex-petroleum products.

The consensus is for the U.S. trade deficit to be at $44.5 billion in June from $46.5 billion in May.

by Calculated Risk on 7/28/2017 05:10:00 PM

A few comments from Steven Kopits of Princeton Energy Advisors LLC on July 28, 2017:

• Total US oil rigs were up 2 to 766

• Horizontal oil rigs were up 5 to 658
...
• With oil prices now over $49, operators are both above breakeven and in a position to hedge future production.  Expect a return to rig additions at these prices.

Click on graph for larger image.

CR note: This graph shows the US horizontal rig count by basin.

Graph and comments Courtesy of Steven Kopits of Princeton Energy Advisors LLC.

by Calculated Risk on 7/28/2017 02:09:00 PM

Freddie Mac reported that the Single-Family serious delinquency rate in June was at 0.85%, down from 0.87% in May.  Freddie's rate is down from 1.08% in June 2016.

Freddie's serious delinquency rate peaked in February 2010 at 4.20%.

This is the lowest serious delinquency rate since April 2008.

These are mortgage loans that are "three monthly payments or more past due or in foreclosure". 

Click on graph for larger image

Although the rate is still declining, the rate of decline has slowed.

Maybe the rate will decline another 0.2 to 0.3 percentage points or so to a cycle bottom, but this is pretty close to normal.

Note: Fannie Mae will report for June soon.