September 23, 2024 | Premium Service | Below for our subscribers we provide updated thoughts on the future of the GSEs, Fannie Mae and Freddie Mac, for our presentation in New York today. We also ponder spreads and interest rates, and mortgage servicing rights (MSRs). With the mortgage industry finally slipping back into GAAP profitability after two years of carnage ℅ the FOMC, are we about to see a boom in mortgage refinance or a nothing burger?
More than a few people in the investment world have rightly taken the Fed’s “big” rate cut last week as a sign of confusion or even fear. Komal Sri-Kumar:
“In his prepared remarks at his press conference on Wednesday, Federal Reserve Chairman Jerome Powell spoke of the ongoing strength of the US economy. “Recent indicators suggest that economic activity has continued to expand at a solid pace,” he said…. Listening to these remarks you may have expected Powell to say that no new monetary stimulus is necessary. And you would be wrong!”
We continue to wonder how the FOMC will spin a bad print on inflation later this year, especially since the folks writing the narrative at the Board of Governors in Washington don’t seem to be looking at the data, as Sri-Kumar points out. Into this market in transition we now toss the prospect of releasing the GSEs from government control after 15 years in an induced political and operational coma. Below we detail some of the financial and practical considerations in releasing the GSEs.
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