Archive | April 2016

Market Update 4/28/2016

MBS are down -1/32 (FNMA 30-yr 3.0 at 102.08), around 8/32 higher than yesterday at this time. Favorable repricing took place yesterday.

Despite some major economic news, it has been a quiet morning for MBS. The Bank of Japan added no new stimulus measures, which disappointed some investors. The effects were seen in global currency and stock markets, but the impact on U.S. bond markets was small. In the U.S., the first estimate for first quarter GDP growth was 0.5%, a little below the consensus of 0.7%. This continues the pattern of weak readings seen during the first quarters of 2014 and 2015. The consensus is for GDP growth of about 2.0% for all of 2016. Weekly Jobless Claims rose to 257K, which was very close to expectations. The Dow is down 50 points. No more economic data will be released today. The results from the 7-yr Treasury auction will come out around 1:00 et.

FED ALERT

MBS are up +7/32 (FNMA 30-yr 3.0 at 102.06), around 6/32 above morning levels, and near the high for the day. Favorable repricing was seen. A bond friendly Fed statement (see below) lifted MBS this afternoon. March pending home sales rose 1.4% from February, above the consensus for an increase of 0.5%, to the highest level since May 2015. The Dow is up 50 points. Tonight, there will be a Bank of Japan meeting which could influence U.S. markets tomorrow. Tomorrow, the first reading for first quarter gross domestic product (GDP) and Jobless Claims will be released at 8:30 et. The results from the 7-yr Treasury auction will come out around 1:00 et.

As widely expected, the Fed made no change in the federal funds rate. The statement was very similar to the one released after the March meeting and was viewed as slightly dovish. There were no clear signs pointing to a rate hike at the next meeting in June.

Market Update

Sorry was down for 2 days setting up a new computer system

IM BACK

MBS are up +1/32 (FNMA 30-yr 3.0 at 102.02), around 2/32 higher than yesterday at this time.

A downside miss in today’s early economic data had little impact ahead of tomorrow’s Fed meeting. March durable orders rose 0.8% from February, but investors had expected a much larger rebound from last month of 1.7%. This data is volatile from month to month. The Dow is up 50 points. Consumer Confidence will be released at 10:00 et. The results from the 5-yr Treasury auction will come out around 1:00 et.

MArket Update 4/21/2016

MBS are down -4/32 (FNMA 30-yr 3.0 at 102.05), around 13/32 lower than yesterday at this time. Unfavorable repricing took place yesterday.

It has been a volatile morning following the European Central Bank (ECB) announcement and press conference. The ECB made no changes in rates or its other stimulus programs, disappointing some investors who had hoped for more stimulus. ECB President Draghi said that the ECB is ready to add stimulus as needed to ensure that the inflation rate rises to the target level. MBS continued yesterday’s decline after Draghi’s comments. Mixed U.S. economic data was a smaller factor this morning. The Philly Fed regional manufacturing index declined to -1.6, well below the consensus of 9.0. Weekly Jobless Claims fell to 247K, below the consensus of 265K, and the lowest level since 1973. The Dow is down 25 points. No more economic data will be released today.

ALERT! Rates JUMP!!

MBS are down -8/32 (FNMA 30-yr 3.0 at 102.09), around 9/32 below morning levels, and a little above the lows. Unfavorable repricing took place. With MBS prices near the best levels of the year, investors appear to have sold MBS ahead of tomorrow’sECB meeting. Today’s housing data (see below) had little impact. The Dow is up 40 points. Tomorrow, the European Central Bank (ECB)  announcement will come out around 7:30 et, and it could have an impact on U.S. MBS prices. In the U.S., Philly Fed and Jobless Claims will be released at 8:30 et.

March existing home sales increased 5% from February to an annual rate of 5.33M, slightly above the consensus of 5.30M. Existing home sales were 2% higher than a year ago. Total inventory of existing homes available for sale rose 6% to a 4.5-month supply, but it was still 2% lower than a year ago. The median existing-home price was 6% higher than a year ago.

Market Update 4/19/2016

MBS are up +1/32 (FNMA 30-yr 3.0 at 102.20), around 2/32 higher than yesterday at this time.

This morning, the housing starts data fell short of expectations, but there has been little reaction. March housing starts fell 9% from February to an annual rate of 1.09 million, well below the consensus of 1.17 million. The decline was roughly equal for single-family and multi-family units. Building permits missed expectations by a similar amount. The housing starts data is volatile from month to month, though. The Dow is up 50 points. No more economic data will be released today.

Market Update 4/14/2016

MBS are down -5/32 (FNMA 30-yr 3.0 at 102.15), around 1/32 higher than yesterday at this time. Favorable repricing took place yesterday.

Despite some bond friendly news on inflation, MBS have moved lower this morning. March CPI increased 0.1% from February, below the consensus for an increase of 0.2%. CPI was 0.9% higher than a year ago. Core CPI, which excludes food and energy, also rose 0.1%  from February, below the consensus for an increase of 0.2%. Core CPI was 2.2% higher than a year ago, down from a multi-year high of 2.3% last month. Separately, weekly Jobless Claims declined to 253K, below the consensus of 270K, and matching the lowest level since 1973. The Dow is down 10 points. No more economic data will be released today. The results from the 30-yr Treasury auction will come out around 1:00 et.

Market Update 4/13/2016

MBS are down -3/32 (FNMA 30-yr 3.0 at 102.15), around 7/32 lower than yesterday at this time. Unfavorable repricing took place yesterday. Early investors may have priced at higher levels.

Stronger than expected Chinese economic data outweighed a shortfall in the U.S. data this morning. Chinese exports surpassed expectations, causing a rally in global stock markets. MBS moved a little higher after the release of the U.S. data (see below), but the gains did not hold. The Dow is up 125 points. No more economic data will be released today. The results from the 10-yr Treasury auction will come out around 1:00 et. The Fed’s Beige Book will be released at 2:00 et.

March Retail Sales fell 0.2% from February, below the consensus for an increase of 0.1%. Excluding the volatile auto component, retail sales rose 0.2%, below the consensus for an increase of 0.4%. After a slow start to the year, investors were hoping to see stronger retail sales activity in March. The March PPI inflation data also came in weaker than expected.

Goldman Headline Smokescreen (a must read)

Just more proof on how corrupt the entire system is when it comes to prosecuting Wall St and the BIG BANKS

Yesterday federal prosecutors announced a $5 billion deal with the Goldman Sachs Group Inc. to resolve claims over Goldman’s misconduct in packaging and selling mortgage-backed securities from 2005 to 2007. The deal includes $1.8 billion for consumer relief.  That’s a lot of ducats, although The New York Times reports that, “But that is just on paper. Buried in the fine print are provisions that allow Goldman to pay hundreds of millions of dollars less – perhaps as much as $1 billion less – than that headline figure. And that is before the tax benefits of the deal are included. The bank will be able to reduce its bill substantially through a combination of government incentives and tax credits. For example, the settlement calls for Goldman to spend $240 million on affordable housing. But a chart attached to the settlement explains that the bank will have to pay at most only 30 percent of that money to fulfill the deal. That is because it will receive a particularly large credit for each dollar it spends on affordable housing.

MArket Update 4/12/16

MBS are down -1/32 (FNMA 30-yr 3.0 at 102.22), around 6/32 higher than yesterday at this time.

This morning, March Import Prices rose 0.2% from February, below the consensus for an increase of 1.0%. The IMF downgraded its forecast for global economic growth in 2015. The Dow is up 50 points. No more economic data will be released today. The results from the 3-yr Treasury auction will come out around 1:00 et.

The monthly rollover took place overnight for FNMA and FHLMC 30-yr securities. The current coupon switched from the April to the May contract. If you are tracking daily MBS price movements, May MBS prices reflected a drop of about -8/32 from April. This change is priced in over the course of the month, so the impact on mortgage rates on the day of the rollover is generally no greater than on any other day of the month.