MBS are up +3/32 (FNMA 30-yr 3.0 at 102.05), around 5/32 higher than yesterday at this time. Early investors may have priced at a range of levels.
This morning, the Chicago PMI regional manufacturing index rose slightly to 46.3, but this was well below the consensus of 50.0. Bad weather and the West Coast port strikes likely hurt the results over the last couple of months. The Dow is down 100 points. Consumer Confidence will be released at 10:00 et.
MBS are up +2/32. Chicago PMI will be released at 9:45 et.
Mon 8:30 AM Personal Income and Outlays 10:00 AM Pending Home Sales Index
Tues 9:00 AM S&P Case-Shiller HPI 10:00 AM Consumer Confidence
Wed 7:00 AM MBA Mortgage Applications 8:15 AM ADP Employment Report 9:45 AM PMI Manufacturing Index 10:00 AM ISM Mfg Index 10:00 AM Construction Spending
Thur 8:30 AM International Trade 8:30 AM Jobless Claims 10:00 AM Factory Orders
Fri 9:45 AM Employment Situation Report
Mortgage rates reached their lowest point in six weeks
yesterday before selling off a bit in the afternoon
following a weak Treasury Auction. Bonds have rallied
ever since the FOMC Announcement and yesterday’s
selloff is most likely just some adjusting after several
days of price improvement. For most of the week, the
Fed talk has helped sustain the post FOMC rally as
several officials have urged for a slow gradual
approach to any hike in short term rates. MBS markets
are opening the day down from yesterdays close
following the release of Jobless Claims, which came in
lower than expected.
MBS are up +8/32 (FNMA 30-yr 3.0 at 102.15), around 7/32 above morning levels, and near the high for the day. Favorable repricing was seen. Despite stronger than expected housing data (see below), MBS moved higher again today. Demand was close to average for the 2-yr Treasury auction. The Dow is down 100 points. Tomorrow, Durable Orders will be released at 8:30 et. The results from the 5-yr Treasury auction will come out around 1:00 et.
February New Home Sales increased 8% from January to an annual rate of 539K, far above the consensus of 465K, and the highest level since February 2008. They were 25% higher than one year ago.
MBS are up +1/32 (FNMA 30-yr 3.0 at 102.17), around 9/32 higher than yesterday at this time. Favorable repricing took place yesterday.
This morning, February Durable Orders declined 1.4% from January, far below the consensus for an increase of 0.5%. Even excluding volatile transportation orders, the results still fell well short of expectations. There was surprisingly little reaction to the data, however. The Dow is down 50 points. No more economic data will be released today. The results from the 5-yr Treasury auction will come out around 1:00 et.
MBS are up +1/32. CPI inflation was close to expectations.
Mortgage rates plummeted today, relatively speaking. While the average improvement of 0.10% might not look like much at face value, it’s the biggest one-day drop we’ve had in 2015, and in a league with very few other players historically. The motivation for today’s movement was twofold, but certainly the biggest factor was the Fed announcement and Yellen’s press conference. In short, markets falsely assumed that the recent run of super strong Nonfarm Payrolls numbers (the “jobs report”) would materially accelerate the Fed’s rate hike outlook. Beyond that, too much focus had been placed on the word “patient” as an important indicator of the Fed’s stance.
Not only did we see a Fed that looks just as committed to patience (despite removing the word itself from the statement), we also saw significant downgrades in the inflation and growth outlook. While the Fed may say that they expect inflation to pick back up after the temporary effects of low oil prices work their way through the economy, IF inflation DOES NOT pick back up, today’s statement suggests they won’t be keen to hike rates. This is also in line with recent speeches from the more influential Fed members (like Yellen) who have said they expect inflation to go lower before it goes higher.
MBS are up +13/32 (FNMA 30-yr 3.0 at 101.09), around 5/32 above morning levels, and at the high for the day. Favorable repricing was seen. Investors shifted assets from stocks to bonds today, partly due to Eurozone central bank bond purchases. The value of the dollar versus the euro rose to the highest level in nearly 12 years. Demand was very strong for the 3-yr Treasury auction. The Dow is down 330 points. Tomorrow, no economic data will be released. The results from the 10-yr Treasury auction will come out around 1:00 et.
The January JOLTS data showed that job openings rose to 5.00M, which was a little lower than expected, but it was the highest level since 2001. Job openings were 28% higher than one year ago. The percentage of people quitting their jobs was nearly unchanged around 2.0%.