KeNo's Housing and Economic Portal: Wednesday August 10 2016 Housing and Economic stories

Tuesday, August 9, 2016

Wednesday August 10 2016 Housing and Economic stories

High Yield Rolls On Even After Wheels Come Off Energy Markets - (www.bloomberg.com) The well-oiled machine that linked junk-bond indexes to energy prices may be sputtering. After moving in lockstep with oil markets for much of the last two years, high-yield bonds have posted modest gains in the past two months. That’s despite a renewed bear market in crude prices that’s casting doubt on the fate of oil drillers, producers and transporters, which make up the biggest portion of some high-yield indexes. The conundrum is whether the turmoil in energy markets will eventually start dragging down junk-bond valuations as defaults and bankruptcies pile up among issuers in the oil patch. Amid warnings from investors such as Bill Gross at Janus Capital Management even about top-rated debt, investors are getting more selective about high-yield and particularly wary of speculative energy debt.

Vancouver Housing Bubble, Meet Pin - (www.wolfstreet.com) The Canadian province of British Columbia may have gotten what it asked for in instituting the now notorious 15% transfer tax on home purchases involving foreign investors. Benchmark prices of Vancouver still exhibit astounding year-over-year increases, with apartment prices up 27% and detached house prices up 38%, now at C$$1,578,300. But overall sales plunged to 3,226 homes, down 27% from the record in June and down 19% from a year ago. “This is the first time since January 2016 that home sales in the region have registered below 4,000 in a month,” admits the Real Estate Board of Greater Vancouver. While apartment sales dropped “only” 7% year-over-year, sales of detached homes plummeted 31%!

Riots In Rio: Police Unleash Tear-Gas, Rubber Bullets As Poor Brazilians Block Olympic Torch Route - (www.zerohedge.com) Just 24 hours before the opening ceremony of the Rio Olympics, police have been forced to use tear-gas and rubber bullets to clear protesters from the path of the Olympic torch through a poor suburb of Rio de Janeiro. As The Guardian reports, police said anti-government protesters in Duque de Caixas, on Rio’s north side, threw rocks and blocked the torch’s path; and 3 people (including a 10-year-old girl) were injured.

Fannie Mae Profit Slides Amid Lower Rates - (www.wsj.com) Fannie Mae said it would send a $2.9 billion dividend payment to the U.S. Treasury in September as revenue and profit declined sharply in its latest quarter amid low interest rates. The mortgage-finance company posted net income of $2.95 billion for the second quarter, down from $4.64 billion a year prior and $1.14 billion in the first quarter. Revenue dropped 12% to $5.46 billion. The drop in profit was driven primarily by falling long-term interest rates, which hurt the value of derivatives Fannie uses to manage risk. Sister company Freddie Mac on Tuesday posted a second-quarter profit decline for the same reason. The percentage of Fannie-backed mortgages more than 90 days delinquent fell to 1.32% from 1.44% in the first quarter and 1.66% in the same quarter a year prior as home prices continued to rise and the unemployment rate remained low.

Saudi Interest-Rate Swaps Climb to Highest Level Since 2009 - (www.bloomberg.com) Saudi Arabian interest-rate swaps climbed this week to levels last seen during the financial crisis, stoking speculation that the central bank needs to step up efforts to ease the country’s liquidity crisis. The five-year swap rate jumped as much as 30 basis points this week to 3.70 percent on Wednesday, the highest close since January 2009, following a 22 basis point increase in July. The central bank offered domestic lenders about 15 billion riyals ($4 billion) in short-term loans at a discounted rate at the end of June, people familiar with the matter said last month.

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