MBS are up +8/32 (FNMA 30-yr 3.0 at 103.22), around 7/32 above morning levels, and near the high for the day. Favorable repricing took place. The Fed statement (see below) pushed MBS to their highs this afternoon. June Pending Home Sales rose 0.2% from May, below the consensus for an increase of 1.0%. The Dow is up 5 points. Tomorrow, 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 expected, the Fed made no change in the federal funds rate. The statement modestly upgraded the performance of the U.S. economy. In particular, the Fed noted strength in the labor market and in consumer spending. Investors now assign about a 50% chance of a rate hike in 2016.
MBS are up +1/32 (FNMA 30-yr 3.0 at 103.15), around 1/32 higher than yesterday at this time.
This morning, June Durable Orders fell 4.0% from May, much weaker than the consensus for a decline of just 1.0%. There was little reaction, though, as investors are waiting for today’s Fed announcement. The Dow is up 50 points. Pending Home Sales will be released at 10:00 et. The Fed meeting announcement will be released around 2:00 et. No change in rates is expected, but it could be a market moving event.
MBS are down -1/32 (FNMA 30-yr 3.0 at 103.14), around 3/32 below morning levels, and at the low for the day. No economic data was released today. Weaker than average results for the 2-yr Treasury auction caused MBS to decline a little this afternoon. The Dow is down 75 points. Tomorrow, New Home Sales and Consumer Confidence will be released at 10:00 et. The results from the 5-yr Treasury auction will come out around 1:00 et. The next Fed meeting will take place on Wednesday.
MBS are down -4/32 (FNMA 30-yr 3.0 at 103.15), around 5/32 lower than yesterday at this time.
This morning, the European Central Bank (ECB) made no change in monetary policy. Some investors had hoped for additional stimulus to ease the effects of Brexit. In addition, a Bank of Japan officials downplayed the need for an extreme stimulus measure. Investors lowered their expectations for looser monetary policy action in Europe and Japan, which was negative for MBS. The Dow is down 25 points. Existing Home Sales and Leading Indicators will be released at 10:00 et.
In the U.S., the Philly Fed regional manufacturing index declined to -2.9, below the consensus of 5.0. Weekly Jobless Claims fell to 253K, below the consensus of 265K.
Yesterday, the bond market opened in positive territory proving that the coup attempt in Turkey on Friday had no major impact on global markets. After open, treasuries faced a different challenge, a flood of corporate bonds. Teva Pharmaceuticals released bonds and drove treasury yields up but the pressure was only enough to push yields into the highs seen Friday. All of this means that mortgage rates have risen moderately but are reluctant to move further upward. “In terms of this week’s data, although it’s less important for bond traders, it is moderately more interesting for those in the mortgage biz as most of the notable reports are housing-related.” Today’s housing-related report is Housing Starts which is a measure of the number of homes where construction is just begining.
MBS are up +3/32 (FNMA 30-yr 3.0 at 103.20), around 2/32 higher than yesterday at this time.
This morning, June Housing Starts rose 5% from May to an annual rate of 1189K, above the consensus of 1170K. The results for May were revised lower, though, and there was little reaction to the data. The Dow is down 20 points. No more economic data will be released today.
MBS are down -3/32 (FNMA 30-yr 3.0 at 103.16), around 2/32 below morning levels. Today’s Retail Sales and CPI data had little impact on MBS. Consumer Sentiment declined to 89.5, below the consensus of 93.0. The Dow is up 10 points. For the week, MBS fell about 14/32.
Looking ahead, most of next week’s economic data will come from the housing sector. The NAHB housing confidence index will come out on Monday. Housing Starts will be released on Tuesday. Existing Home Sales and the Philly Fed regional manufacturing index will come out on Thursday. In addition, there will be a European Central Bank (ECB) meeting on Thursday which could influence U.S. mortgage rates.
MBS are up +5/32 (FNMA 30-yr 3.0 at 103.25), around 2/32 higher than yesterday at this time. Unfavorable repricing took place yesterday.
This morning, June Import Prices rose 0.2%, below the consensus for an increase of 0.5%. The Dow is down 10 points. The results from the 10-yr Treasury auction will come out around 1:00 et. The Fed’s Beige Book will come out at 2:00 et.
The monthly rollover took place overnight for FNMA and FHLMC 30-yr securities. The current coupon switched from the July to the August contract. If you are tracking daily MBS price movements, August MBS prices reflected a drop of about -7/32 from July. 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.
MBS are down -2/32 (FNMA 30-yr 3.0 at 104.02), around 5/32 lower than yesterday at this time. Some unfavorable repricing was seen yesterday.
This morning, the ADP estimate for private sector job gains in June was 172K, above the consensus of 150K. Weekly Jobless Claims fell to 254K, below the consensus of 265K. Today’s stronger than expected labor market data suggests that the disappointing Employment report for May is unlikely to be followed by similarly weak reports in coming months. The Dow is up 50 points. No more economic data will be released today. The key Employment report will come out tomorrow.