Mortgage Focus: A Review of the Q2 Financial Accounts Data
--The latest data from the Fed showed that residential mortgage debt continued its protracted decline in the second quarter.
--The agencies continue to finance about 60% of outstanding total mortgage debt and 65% of outstanding first lien debt.
--The Fed's share of outstanding agency debt and MBS continued to increase, but we know that trend will end when the asset purchase program concludes.
--Banks and thrifts are still the largest shareholders of outstanding agency securities. However, recently banks have been acquiring more Treasuries than agencies.
Quarter-End ON RRP Craziness
In this note we review today's quarter-end ON RRP operation. This is the first such operation wherein the new $300 bln cap was binding. Despite a 0% stop-out rate on the offering, we do not necessarily regard today's operation as a message that the $300 bln cap is too low.
Federal Reserve Research
Preview Sept Employment-Downward Bias, But Also Lower Expectations
We look for September payrolls to come in around 200,000, after rising 142,000 in August. We also look for August payrolls to be revised substantially upward. Our 200,000 anticipated increase in September payrolls is just below the 207,000 3-month average payroll increase in the period ending August, and more noticeably below the 236,000 3-month average increase in the period ending July.
Fixed Income Focus: Q2 Corporate Financial Accounts
Treasury yields were mostly lower this past week. The 2-year and 5-year notes lagged on the roll to the new issues, but the curve was flatter as bonds led better gains further out the curve amid a tough week for equities.
The Federal Reserve recently released their latest Financial Accounts of the United States (formerly the Flow of Funds) data, which included information through Q2-2014. It was yet another very strong quarter for corporate issuance, but there were major historical revisions to the sector with this release.
Fixed Income Focus
US Economic Chartbooks
Please see our Economic Week Ahead Chartbook for a discussion of next week's economic releases provided in a visually friendly format that includes graphs, brief descriptions of SMR's forecasts, and links to detailed data previews. If you missed anything from last week, see our Economic Week in Review Chartbook for a look back at the releases with links to full analyses.