Archive | November 2016

Nov 30 2016 OUCH! Rates Jump yet again

MBS are down -16/32 (FNMA 30-yr 3.5 at 102.19), around 5/32 lower than yesterday at this time. Favorable repricing took place yesterday. It has been a volatile morning, and early investors may have priced at a wide range of levels.

There has been a lot of negative news for MBS this morning. OPEC moved closer to a deal to cut oil production, which caused oil prices to rise about 7%. This has helped stocks and hurt bonds. In addition, today’s U.S. economic data (see below) was stronger than expected nearly across the board. The Dow is up 100 points. Pending Home Sales will be released at 10:00 et. The Fed’s Beige Book will be released at 2:00 et.

The ADP estimate for private sector job gains in November was 216K, well above the consensus of 160K. The Chicago PMI regional manufacturing index jumped to 57.6, far above the consensus of 52.0, and the highest reading since January 2015. October Personal Income increased 0.6% from September, above the consensus of 0.4%. Finally, the October core PCE price index rose 0.1% from September, matching expectations, and it was 1.7% higher than a year ago.

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Rates continue to ease!

MBS are up +5/32 (FNMA 30-yr 3.5 at 103.01), around 8/32 above morning levels, and near the high for the day. Favorable repricing was seen. Despite stronger than expected economic data, MBS prices moved higher during the middle of the session. Consumer Confidence jumped to 107.1, far above the consensus of 101.0, and the highest level since July 2007. The Dow is up 25 points. Tomorrow, ADP Employment Change, Personal Income, Core PCE, Chicago PMI, Pending Home Sales, and the Fed’s Beige Book will be released. In addition, an OPEC meeting tonight could have a significant impact on oil prices, which could lead to some volatility for MBS prices.

Rates finally Stop moving UP

MBS are up +13/32 (FNMA 30-yr 3.5 at 102.29), around 9/32 above morning levels, and at the high for the day. Favorable repricing was seen. Concerns about the outcome of a referendum in Italy on Sunday

(see below) caused a flight to safer assets, helping MBS today. No economic data was released. The Dow is down 50 points. Tomorrow, the second estimate of third quarter GDP and Consumer Sentiment will be released.

Next Sunday, voters in Italy will decide on a referendum presented by Prime Minister Matteo Renzi which would reform the constitution to speed up lawmaking and to produce a more stable government. If the referendum fails to pass, there is the potential for many troubles to develop in Italy. First, much needed reforms for the Italian banking sector likely would be postponed, which would put many banks at risk of failing. Investors are concerned that this could impact banks throughout Europe. In addition, Renzi has said that he will step down if the referendum does not pass. His resignation would likely lead to a period of political uncertainty in Italy, and it could result in more power for a political group which favors leaving the euro. In the wake of the Brexit vote in the UK, investors would be very concerned if they saw the potential for Italy to exit the European Union. The most recent polls show that it may be a very close vote. Investors have reacted to the uncertainty
by shifting to safer assets, including U.S. mortgage-backed securities (MBS). Since mortgage rates are set based on MBS prices, the news resulted in improvement. For the rest of this week, news which points to the referendum passing likely would be negative for MBS, and news which suggests a defeat would be positive

Finally a day where rates haven’t went up

MBS are up +10/32 (FNMA 30-yr 3.0 at 100.13), around 3/32 lower than yesterday at this time. Both favorable and unfavorable repricing took place yesterday. It has been another volatile morning.

Despite stronger than expected data, MBS have finally posted some gains this morning. October Retail Sales rose 0.8% from September, above the consensus of 0.6%. Retail Sales excluding the volatile auto component exceeded the consensus by an even wider margin with a similar increase of 0.8% from September. In addition, the September results were revised higher for both readings. Separately, the Empire State index came in a little stronger than expected, and Import Prices were close to expectations. The Dow is down 50 points. No more economic data will be released today. Fed Vice Chair Fischer will be speaking at 1:30 et.

Rates continue to SPIKE higher off of the TRUMP TRADE

MBS are down -18/32 (FNMA 30-yr 3.0 at 100.16), around 25/32 lower than yesterday at this time. First favorable and later unfavorable repricing took place Friday.

The selloff in MBS following the Trump victory has continued this morning. Global bond yields are higher today. The Dow is up 25 points. No economic data will be released today.

 

Nov 10 2016 Rates continue to SPIKE UP!!

The selloff in MBS following the Trump victory has continued this morning. Weekly Jobless Claims declined to 254K, a little below the consensus of 260K. The Dow is up 150 points. No more economic data will be released today. The results from the 30-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 November to the December contract. If you are tracking daily MBS price movements, December MBS prices reflected a drop of about -6/32 from November. 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.

Bond News on President Trump

MBS are down -12/32 (FNMA 30-yr 3.0 at 102.14), around 17/32 lower than yesterday at this time. Unfavorable repricing took place yesterday.

The initial reaction to the election results was a shift to safer assets, likely due to the uncertainty about future policy under a Trump administration, and bond yields moved significantly lower. Dow futures were down the equivalent of roughly 800 points at one time. However, both stock and bond markets reversed direction, as investors focused more on possible policy changes. In particular, the government is expected to spend more money in areas such as defense and infrastructure, while cutting taxes. This could result in an increase in the budget deficit, which would means a larger supply of Treasuries. The potential increase in supply caused bond prices to decline, including MBS. The Dow is up 50 points. No more economic data will be released today. The results from the 10-yr Treasury auction will come out around 1:00 et.

Market Update Nov 3 2016

MBS are down -1/32 (FNMA 30-yr 3.0 at 102.29), around 2/32 lower than yesterday at this time.

This morning, election related news and events in the UK have overshadowed the U.S. economic data. Headlines about the candidates for President have caused some volatility. A court in the UK ruled that the government cannot begin the process to leave the European Union without a vote from Parliament, adding to the uncertainty surrounding Brexit. Perhaps most influential this morning, the Bank of England surprised investors with new guidance that suggests that further rate cuts are less likely, which pushed global bond yields higher. In the U.S., weekly Jobless Claims were a little higher than expected, and third quarter Productivity growth was stronger than expected. The Dow is up 10 points. ISM Services and Factory Orders will be released at 10:00 et.

More Proof why not to deal with the BIG BANKS. They cheat and deceive you and make BILLIONS. If you have a Wells Fargo account (RUN)

When it rains, it pours for “The Coach.” Wells Fargo (WFC) Friday agreed to pay a $50 million settlementarising out of allegations the bank (retail side, not correspondent) padded appraisal fees for roughly 250,000 homeowners. The settlement, which still awaits approval by an Oakland, CA court, is centered around alleged appraisal markups the banks charged to homeowners who defaulted on mortgage loans on a lawsuit filed in 2012.  The fees were difficult to detect since they were shown as “other charges,” the lawsuit says Tom Goyda, a spokesman for Wells Fargo, says the bank stands by its procedures and is settling this suit to avoid prolonged litigation.

REALLY   get caught overcharging and made MILLIONS & MILLIONS then settle for a fraction of the profits.

Market Update NOV 1

MBS are up +3/32 (FNMA 30-yr 3.0 at 103.00), around 3/32 higher than yesterday at this time.

This morning, stronger than expected economic data in Asia and Europe has caused global bond yields to move higher. The Chinese PMI, an important indicator for the manufacturing sector, reached the highest level since July 2014. The PMI readings from Japan, South Korea, and many European countries also were stronger than expected. The Bank of Japan made no policy changes. The Dow is up 10 points. ISM Manufacturing and Construction Spending will be released at 10:00 et.