by Calculated Risk on 6/14/2021 09:00:00 PM

From Matthew Graham at Mortgage News Daily: MBS RECAP: New Week, New Sense of Urgency

The new week wasted no time in differentiating itself from the previous week as bonds sold off somewhat briskly this morning. ... The bigger question of "where do we go from here" may depend on the incoming data and especially Wednesday afternoon's Fed announcement/forecasts. Despite the early selling pressure, bonds offered some reassurance in the afternoon by holding calmly under 1.50%. [30 year fixed 3.05%]
emphasis added

Tuesday:
• At 8:30 AM ET, Retail sales for May is scheduled to be released.  The consensus is for 0.4% decrease in retail sales.

• Also at 8:30 AM, The Producer Price Index for May from the BLS. The consensus is for a 0.6% increase in PPI, and a 0.6% increase in core PPI.

• Also at 8:30 AM, The New York Fed Empire State manufacturing survey for June. The consensus is for a reading of 22.0, down from 24.3.

• At 9:15 AM, The Fed will release Industrial Production and Capacity Utilization for May. The consensus is for a 0.6% increase in Industrial Production, and for Capacity Utilization to increase to 75.1%.

• At 10:00 AM, The June NAHB homebuilder survey. The consensus is for a reading of 83, unchanged from 83 last month. Any number below 50 indicates that more builders view sales conditions as poor than good.

by Calculated Risk on 6/14/2021 04:31:00 PM

Note: This is not Mortgage Equity Withdrawal (MEW) data from the Fed. The last MEW data from Fed economist Dr. Kennedy was for Q4 2008.

The following data is calculated from the Fed's Flow of Funds data (released last week) and the BEA supplement data on single family structure investment. This is an aggregate number, and is a combination of homeowners extracting equity - hence the name "MEW" - and normal principal payments and debt cancellation (modifications, short sales, and foreclosures).

For Q1 2021, the Net Equity Extraction was $41 billion, or 0.8% of Disposable Personal Income (DPI) .   This is nothing like the amount of equity extraction during the housing bubble as a percent of DPI.

Click on graph for larger image.

This graph shows the net equity extraction, or mortgage equity withdrawal (MEW), results, using the Flow of Funds (and BEA data) compared to the Kennedy-Greenspan method.

MEW has been mostly positive for the last five years.

The Fed's Flow of Funds report showed that the amount of mortgage debt outstanding increased by $117 billion in Q1.

For reference:

Dr. James Kennedy also has a simple method for calculating equity extraction: "A Simple Method for Estimating Gross Equity Extracted from Housing Wealth". Here is a companion spread sheet (the above uses my simple method).

For those interested in the last Kennedy data included in the graph, the spreadsheet from the Fed is available here.

by Calculated Risk on 6/14/2021 04:00:00 PM

Note: This is as of June 6th.

From the MBA: Share of Mortgage Loans in Forbearance Decreases to 4.04%

The Mortgage Bankers Association’s (MBA) latest Forbearance and Call Volume Survey revealed that the total number of loans now in forbearance decreased by 12 basis points from 4.16% of servicers’ portfolio volume in the prior week to 4.04% as of June 6, 2021. According to MBA’s estimate, 2 million homeowners are in forbearance plans.

The share of Fannie Mae and Freddie Mac loans in forbearance decreased 9 basis points to 2.09%. Ginnie Mae loans in forbearance decreased 32 basis points to 5.22%, while the forbearance share for portfolio loans and private-label securities (PLS) increased 2 basis points to 8.33%. The percentage of loans in forbearance for independent mortgage bank (IMB) servicers decreased 13 basis points to 4.21%, and the percentage of loans in forbearance for depository servicers decreased 14 basis points to 4.19%.

“MBA estimates that 2 million homeowners remain in forbearance as of June 6th. The share of loans in forbearance has now declined for 15 straight weeks, with a larger decline this week as many reached the 15-month mark,” said Mike Fratantoni, MBA’s Senior Vice President and Chief Economist. “Forbearance exits increased – as is typical in the beginning of a month – and reached the fastest pace since April. New forbearance requests, at 4 basis points, remained at an extremely low level.”

Added Fratantoni, “We are seeing an increase in the share of forbearance exits, where borrowers do not have a loss mitigation plan in place. Homeowners who are reaching the end of their forbearance term need to contact their servicer to discuss the next steps in the process, as servicers cannot extend the forbearance term without talking to the borrower.”
emphasis added

Click on graph for larger image.

This graph shows the percent of portfolio in forbearance by investor type over time.  Most of the increase was in late March and early April 2020, and has trended down since then.

The MBA notes: "Total weekly forbearance requests as a percent of servicing portfolio volume (#) remained the same relative to the prior week at 0.04%."

by Calculated Risk on 6/14/2021 03:58:00 PM

Congratulations to the residents of New York State and D.C. on joining the 70% club! Go for 80%!!!

This data is from the CDC.

According to the CDC, on Vaccinations.

Total doses administered: 310,645,827, as of yesterday 309,322,545. Daily: 1.32 million.

COVID Metrics
	Current	Yesterday	Goal
Percent over 18, One Dose	64.5%	64.4%	≥70.0%1,2
Fully Vaccinated (millions)	144.9	143.91	≥1601
New Cases per Day3	12,223	13,005	≤5,0002
Hospitalized3	13,944	14,683	≤3,0002
Deaths per Day3	331	337	≤502
1 America's Goal by July 4th, 2my goals to stop daily posts, 37 day average for Cases, Hospitalized, and Deaths

KUDOS to the residents of the 14 states and D.C. that have already achieved the 70% goal: Vermont, Hawaii and Massachusetts are at 80%+, and Connecticut, New Jersey, Maine, Rhode Island, Pennsylvania, New Mexico, California, New Hampshire, Maryland, Washington, New York and D.C. are all over 70%.

Next up are Illinois at 69.5%, Virginia at 69.1%, Minnesota at 68.7%, Delaware at 68.3%, Colorado at 67.9%, Oregon at 67.9% and Wisconsin at 64.1%.

Click on graph for larger image.

This graph shows the daily (columns) and 7 day average (line) of positive tests reported.

This data is from the CDC.

by Calculated Risk on 6/14/2021 11:57:00 AM

Note: I'm tracking data for many local markets around the U.S. I think it is especially important to watch inventory this year.  Remember sales were weak in April and May 2020 due to the pandemic, so the YoY sales comparison is easy. 

From the Maryland Realtors for the entire state:

Closed sales in May 2021 were 9,334, up 46.1% from 6,389 in May 2020.

Active Listings in May 2021 were 7,490, down 56.6% from 17,254 in May 2020.

Inventory in May was up 4.5% from last month, and up 21% from the all time low in March.

Months of Supply was 0.9 Months in May 2021, compared to 2.4 Months in May 2020.

by Calculated Risk on 6/14/2021 10:42:00 AM

One of the key questions for 2021 is: Will inventory increase as the pandemic subsides, or will inventory decrease further in 2021?

Tracking inventory will be very important this year.

Click on graph for larger image in graph gallery.

This inventory graph is courtesy of Altos Research.

As of June 11th, inventory was at 342 thousand (7 day average), compared to 698 thousand the same week a year ago.  That is a decline of 51.0%.

A week ago, inventory was at 329 thousand, and was down 53.3% YoY.  Seasonally, inventory has bottomed.  

Inventory was about 11.6% above the low in early April.

Mike Simonsen discusses this data regularly on Youtube.

by Calculated Risk on 6/14/2021 08:26:00 AM

These indicators are mostly for travel and entertainment.    It will interesting to watch these sectors recover as the pandemic subsides.

----- Airlines: Transportation Security Administration -----
The TSA is providing daily travel numbers.

Click on graph for larger image.

This data shows the seven day average of daily total traveler throughput from the TSA for 2019 (Light Blue), 2020 (Blue) and 2021 (Red).

The dashed line is the percent of 2019 for the seven day average.

This data is as of June 13th.

The seven day average is down 27.7% from the same day in 2019 (72.3% of 2019).  (Dashed line)

There was a slow increase from the bottom - and TSA data has picked up in 2021.

----- Restaurants: OpenTable -----
The second graph shows the 7 day average of the year-over-year change in diners as tabulated by OpenTable for the US and several selected cities.

IMPORTANT: OpenTable notes: "we’ve updated the data including downloadable dataset from January 1, 2021 onward to compare seated diners from 2021 to 2019, as opposed to year over year." Thanks!

Thanks to OpenTable for providing this restaurant data:

This data is updated through June 9, 2021.

This data is "a sample of restaurants on the OpenTable network across all channels: online reservations, phone reservations, and walk-ins. For year-over-year comparisons by day, we compare to the same day of the week from the same week in the previous year."

Note that this data is for "only the restaurants that have chosen to reopen in a given market". Since some restaurants have not reopened, the actual year-over-year decline is worse than shown.

Dining picked up during the holidays, then slumped with the huge winter surge in cases.  Dining is picking up again.  Florida and Texas are above 2019 levels.

----- Movie Tickets: Box Office Mojo -----
This data shows domestic box office for each week and the median for the years 2016 through 2019 (dashed light blue).  

Blue is 2020 and Red is 2021.  

The data is from BoxOfficeMojo through June 10th.

Note that the data is usually noisy week-to-week and depends on when blockbusters are released.

Movie ticket sales were at $95 million last week,  down about 53% from the median for the week.

----- Hotel Occupancy: STR -----
This graph shows the seasonal pattern for the hotel occupancy rate using the four week average.

The red line is for 2021, black is 2020, blue is the median, dashed purple is 2019, and dashed light blue is for 2009 (the worst year on record for hotels prior to 2020).

The 4-week average occupancy is now above the horrible 2009 levels.

This data is through June 5th. Hotel occupancy is currently down 14% compared to same week in 2019). Note: Occupancy was up year-over-year, since occupancy declined sharply at the onset of the pandemic. However, the 4-week average occupancy is still down significantly from normal levels.

Notes: Y-axis doesn't start at zero to better show the seasonal change.

----- Gasoline Supplied: Energy Information Administration -----
This graph, based on weekly data from the U.S. Energy Information Administration (EIA), shows gasoline supplied compared to the same week of 2019.

Blue is for 2020.  Red is for 2021.

As of June 4th, gasoline supplied was down about 14.1% (about 85.9% of the same week in 2019).

Two weeks ago was the first week this year with gasoline supplied up compared to the same week in 2019.

----- Transit: Apple Mobility -----
This graph is from Apple mobility. From Apple: "This data is generated by counting the number of requests made to Apple Maps for directions in select countries/regions, sub-regions, and cities." This is just a general guide - people that regularly commute probably don't ask for directions.

There is also some great data on mobility from the Dallas Fed Mobility and Engagement Index. However the index is set "relative to its weekday-specific average over January–February", and is not seasonally adjusted, so we can't tell if an increase in mobility is due to recovery or just the normal increase in the Spring and Summer.

This data is through June 12th for the United States and several selected cities.

The graph is the running 7 day average to remove the impact of weekends.

IMPORTANT: All data is relative to January 13, 2020. This data is NOT Seasonally Adjusted. People walk and drive more when the weather is nice, so I'm just using the transit data.

According to the Apple data directions requests, public transit in the 7 day average for the US is at 90% of the January 2020 level and moving up.

----- New York City Subway Usage -----
Here is some interesting data on New York subway usage (HT BR).

This graph is from Todd W Schneider. This is weekly data since 2015. 

Most weeks are between 30 and 35 million entries, and currently there are over 12 million subway turnstile entries per week - and generally increasing.

This data is through Friday, June 11th.

Schneider has graphs for each borough, and links to all the data sources.

He notes: "Data updates weekly from the MTA’s public turnstile data, usually on Saturday mornings".

by Calculated Risk on 6/13/2021 07:52:00 PM

Weekend:
• Schedule for Week of June 13, 2021

Monday:
• No major economic releases scheduled.

From CNBC: Pre-Market Data and Bloomberg futures S&P 500 are up 5 and DOW futures are up 36 (fair value).

Oil prices were up over the last week with WTI futures at $70.99 per barrel and Brent at $72.80 per barrel. A year ago, WTI was at $36, and Brent was at $39 - so WTI oil prices are UP almost double year-over-year (oil prices collapsed at the beginning of the pandemic).

Here is a graph from Gasbuddy.com for nationwide gasoline prices. Nationally prices are at $3.08 per gallon. A year ago prices were at $2.09 per gallon, so gasoline prices are up $0.99 per gallon year-over-year.

by Calculated Risk on 6/13/2021 04:18:00 PM

New cases per day (7-day average) is now the lowest since March 26, 2020. KUDOS to the vaccinated! Great job.

This data is from the CDC.

According to the CDC, on Vaccinations.

Total doses administered: 309,322,545, as of yesterday 308,112,728. Daily: 1.21 million.

COVID Metrics
	Current	Yesterday	Goal
Percent over 18, One Dose	64.4%	64.3%	≥70.0%1,2
Fully Vaccinated (millions)	143.9	143.1	≥1601
New Cases per Day3	12,836	13,588	≤5,0002
Hospitalized3	14,683	15,304	≤3,0002
Deaths per Day3	335	348	≤502
1 America's Goal by July 4th, 2my goals to stop daily posts, 37 day average for Cases, Hospitalized, and Deaths

KUDOS to the residents of the 13 states that have already achieved the 70% goal: Vermont, Hawaii and Massachusetts are at 80%+, and Connecticut, New Jersey, Maine, Rhode Island, Pennsylvania, New Mexico, California, New Hampshire, Maryland, and Washington are all over 70%.

Next up are New York at 69.9%, D.C. at 69.7%, Illinois at 69.3%, Virginia at 69.1%, Minnesota at 68.5%, Delaware at 68.1%, Colorado at 67.8% and Oregon at 67.7%.

Click on graph for larger image.

This graph shows the daily (columns) and 7 day average (line) of positive tests reported.

This data is from the CDC.

by Calculated Risk on 6/13/2021 08:47:00 AM

Expectations are there will be no change to rate policy when the FOMC meets on Tuesday and Wednesday this week, but that the FOMC will talk about the path of asset purchases.

Here are some comments from Merrill Lynch economists:

"Based on the FOMC minutes and subsequent speeches, we think Fed Chair Powell will note that Fed officials talked about the path of asset purchases, but that they are still very comfortable with the current program. He will reiterate that it is “some time” before substantial further progress in the economy has been made to justify a change in asset purchases. And finally he will note that starting to discuss the path for asset purchases is consistent with the idea that the Fed wants to give an abundance of guidance about changes to the policy ...

We expect the SEP forecasts to reveal a significant upward revision to core and headline PCE this year given the recent data; we are forecasting 3.1% and 3.5%, respectively, for this year (4Q/4Q change). The more important signal will be if the Fed also revises up core inflation for 2022 and 2023, which would suggest that they believe some of the gain in inflation will prove to be a bit more persistent — we think the risk is that 2022 increases to 2.1%. We also expect upward revisions to GDP this year but unlikely changes in the out years. We don’t expect significant changes to the unemployment rate."
emphasis added

For review, below are the March FOMC projections.

GDP projections of Federal Reserve Governors and Reserve Bank presidents, Change in Real GDP1
Projection Date	2021	2022	2023
Mar 2021	5.8 to 6.6	3.0 to 3.8	2.0 to 2.5
Dec 2020	3.7 to 5.0	3.0 to 3.5	2.2 to 2.7

¹ Projections of change in real GDP and inflation are from the fourth quarter of the previous year to the fourth quarter of the year indicated.

Note that real GDP increased 6.4% annualized in Q1.   And forecasts are for GDP to increase close to 10% in Q2.

It seems likely there will be a further upgrade to the GDP forecast for 2021.   

The unemployment rate was at 5.8% in May.

As people reenter the labor force - pushing up the participation rate - the improvement in the unemployment rate will likely slow.  So it seems like there will be little change to the March unemployment projections.

Unemployment projections of Federal Reserve Governors and Reserve Bank presidents, Unemployment Rate2
Projection Date	2021	2022	2023
Mar 2021	4.2 to 4.7	3.6 to 4.0	3.2 to 3.8
Dec 2020	4.7 to 5.4	3.8 to 4.6	3.5 to 4.3

² Projections for the unemployment rate are for the average civilian unemployment rate in the fourth quarter of the year indicated.

As of April 2021, PCE inflation was up 3.6% from April 2020. There was some base effect (since PCE inflation declined last year in the early months of the pandemic), but there was a clear pickup in inflation.

The FOMC will revise up their inflation projections. Merrill economists expect PCE inflation projections to be increased to around 3.1% for 2021.

Inflation projections of Federal Reserve Governors and Reserve Bank presidents, PCE Inflation1
Projection Date	2021	2022	2023
Mar 2021	2.2 to 2.4	1.8 to 2.1	2.0 to 2.2
Dec 2020	1.7 to 1.9	1.8 to 2.0	1.9 to 2.1

PCE core inflation was up 3.1% in April year-over-year and the projections for 2021 will be revised up.

Core Inflation projections of Federal Reserve Governors and Reserve Bank presidents, Core Inflation1
Projection Date	2021	2022	2023
Mar 2021	2.0 to 2.3	1.9 to 2.1	2.0 to 2.2
Dec 2020	1.7 to 1.8	1.8 to 2.0	1.9 to 2.1

It will be interesting to see if the FOMC projects an overshoot in inflation in 2022 or 2023.