MBS are up +6/32 (FNMA 30-yr 3.0 at 101.31), around 14/32 higher than yesterday at this time. Favorable repricing took place yesterday.
A surprise move by the Bank of Japan (BOJ) has lifted global bond markets this morning. The BOJ announced a decline to negative interest rates for its benchmark rates to try to boost economic growth and inflation. The BOJ made no change to its massive bond buying program. U.S. stocks and MBS rose after the news. The Dow is up 125 points. Consumer Sentiment will come out at 10:00 et.
Fourth quarter GDP increased 0.7%, slightly below the consensus of 0.8%, and down from 2.0% during the third quarter. For the entire year, GDP rose 2.4%, matching the level seen in 2014. Separately, the Chicago PMI regional manufacturing index jumped to 55.6, far above the consensus of 45.0, and the highest reading since January 2015.
MBS are down -1/32 (FNMA 30-yr 3.0 at 101.17), around 3/32 higher than yesterday at this time. Favorable repricing took place yesterday.
It has been a volatile morning. A Saudi proposal to cut oil production has driven up the price of oil. December Durable Orders fell 5.1% from November, far below the consensus for a decline of 0.5%. Weekly Jobless Claims declined to 278K, which was close to expectations. The Dow is up 100 points. Pending Home Sales will come out at 10:00 et. The results from the 7-yr Treasury auction will come out around 1:00 et.
MBS are up +1/32 (FNMA 30-yr 3.0 at 101.19), around 5/32 above morning levels, 10/32 above the lows, and at the high for the day. Favorable repricing was seen. MBS moved higher and stocks declined following the release of the Fed statement (see below). December New Home Sales jumped 11% from November to an annual rate of 544K, well above the consensus of 500K, and near the best levels of the year. Demand was weaker than average for the 5-year Treasury auction. The Dow is down 225 points. Tomorrow, Durable Orders, Jobless Claims, and Pending Home Sales will come out at 10:00 et. The results from the 7-yr Treasury auction will come out around 1:00 et.
As expected, the Fed made no change in the federal funds rate. The statement contained no major surprises. In the statement, Fed officials expressed more concern about the outlook for U.S. economic growth and said that they are “closely monitoring” developments in overseas economies and markets. The statement kept open the possibility of a rate hike in March.
MBS are up +2/32 (FNMA 30-yr 3.0 at 101.16), around 3/32 above morning levels, but 3/32 below the highs. Favorable repricing was seen. Despite a stock market rally and average results for the 2-year Treasury auction, MBS moved higher this afternoon. Consumer Confidence rose to 98.3, above the consensus of 96.5. The Dow is up 280 points. Tomorrow, The Fed announcement will come out around 2:00 et. Investors will be looking for information about the impact of the stock market decline on the outlook for Fed policy. Before that, New Home Sales will come out at 10:00 et.
No Economic news out today:
MBS are up +6/32 (FNMA 30-yr 3.0 at 101.12), around 6/32 higher than yesterday at this time.
Weakness in stocks has helped MBS this morning. The Dow is down 75 points. No economic data will be released today.
MBS are down -5/32 (FNMA 30-yr 3.0 at 101.06), around 12/32 lower than yesterday at this time. Unfavorable repricing took place yesterday.
MBS prices are again taking their lead from the stock market. The The Dow is up 200 points. Existing Home Sales and Leading Indicators will be released at 10:00 et.
MBS are up +2/32 (FNMA 30-yr 3.5 at 101.18), around 2/32 higher than yesterday at this time. Favorable repricing took place yesterday. Early investors may have priced at lower levels.
It has been a volatile morning. ECB President Draghi said that the ECB will review its policy stance in March, meaning that the ECB may add more stimulus sooner than expected. In the U.S., the Philly Fed regional manufacturing index came in very close to expectations. Weekly Jobless Claims rose to 293K, above the consensus of 275K. The The Dow is down 25 points. No more economic data will be released today.
We switched the current coupon from the 30-yr 3.5% to the 30-yr 3.0% to better reflect current market conditions.
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MBS are up +8/32 (FNMA 30-yr 3.5 at 104.05), around 5/32 higher than yesterday at this time.
A decline in the stock market has lifted MBS this morning. Today’s economic data (see below) had little impact. The The Dow is down 250 points. No more economic data will be released today.
December Housing Starts declined 3% from November to an annual rate of 1149K, well below the consensus of 1200K. Building permits dropped 4%, but this reading still exceeded expectations. December CPI fell 0.1% from November, below the consensus for a flat reading, and it was 0.7% higher than a year ago. Core CPI, which excludes food and energy, increased 0.1%, below the consensus for a rise of 0.2%. Core CPI was 2.1% higher than one year ago, the largest annual rate of increase since July 2012.
MBS prices are unchanged from the end of the day Friday (FNMA 30 yr 3.5 at 104.00), 3/32 below Friday at this time.
China released it’s fourth quarter GDP this morning. It was 6.8%, a little below expectations. For the year it was 6.9%, the slowest pace in 25 years. However, global stock market have reacted favorably. Investor expectations for additional stimulus from the Chinese government have grown. The Dow is up 170 points.
NAHB Housing Index will be released at 10:00 ET.