Archive | February 2017

End of Week UPDATE

MBS are up +11/32 (FNMA 30-yr 3.5 at 102.26), around 5/32 above morning levels, and near the high for the day. Some favorable repricing was seen. A rally in global bond markets helped MBS today. January New Home Sales rose 4% to 555K, below the consensus of 570K. Consumer Sentiment rose to 96.3, above the consensus of 95.7. The Dow is up 10 points. For the week, MBS rose about 18/32.

Looking ahead, Pending Home Sales and Durable Orders will come out on Monday. The Core PCE price index, the inflation indicator favored by the Fed, will be released on Wednesday. The ISM national manufacturing index also will come out on Wednesday, and the ISM national services index will be released on Friday. Fed Chair Yellen is scheduled to speak on Friday as well. The next Employment report will come out on March 10 (due to February being a shorter month).

TGIF

Uncertainty in France = LOCK in your RATE!!!

 

MBS are up +6/32 (FNMA 30-yr 3.5 at 102.21), around 10/32 higher than yesterday at this time. Some favorable repricing took place yesterday.

It has been a volatile morning, as global bond yields have moved lower, following the lead of Europe. Uncertainty about the outcome of the French election on April 23 has caused some investors to shift to the relative safety of bonds. The Dow is down 40 points. New Home Sales and Consumer Sentiment will be released at 10:00 et.

Market Update 2/23/2017

MBS are up +7/32 (FNMA 30-yr 3.5 at 102.15), around 4/32 above morning levels, and at the high for the day. MBS drifted higher today after comments from the Treasury Secretary were viewed as positive for bonds. Demand was close to average for the 7-yr Treasury auction. The Dow is up 30 points. Tomorrow, New Home Sales and Consumer Sentiment will be released at 10:00 et.

Freddie Mac reported that average mortgage rates rose in the week through February 23, with 30-yrs hitting 4.16%, from 4.15% the prior week.

FED NEWS 2/22/2017

MBS are up +2/32 (FNMA 30-yr 3.5 at 102.08), around 2/32 below morning levels before 10:00 et, but 7/32 above midday lows. First unfavorable and later favorable repricing was seen. MBS moved lower this morning after stronger than expected housing data (see below) and on a reversal of a flight to safety on news which favored the more traditional candidate in the French presidential election in April. The Minutes from the February 1 Fed meeting contained no bad news for MBS, however, and MBS prices recovered this afternoon. Of note, there was little discussion about a need to begin to reduce the Fed’s large holdings of MBS. Demand was weaker than average for the 5-yr Treasury auction. The Dow is up 30 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.

January existing home sales increased 3% from December to an annual rate of 5.69M, above the consensus of 5.55M, and the highest level since February 2007. Existing home sales were 4% higher than a year ago. Total inventory of existing homes available for sale rose 2% to a 3.6-month supply, but it was still 7% lower than a year ago. The median existing-home price was 7% higher than a year ago.

TGIF 2/17/2017

MBS are up +4/32 (FNMA 30-yr 3.5 at 102.08), around 3/32 below morning levels, and near the low for the day. With little news, MBS moved higher this morning and then drifted lower later in the session. No economic data was released today. The Dow is up 10 points. For the week, MBS fell about 2/32.

Looking ahead, the minutes from the February 1 Fed meeting will come out on Wednesday. These detailed minutes provide additional insight into the debate between Fed officials and have the potential to significantly move markets. Existing Home Sales will be released on Wednesday and New Home Sales will come out on Friday. Mortgage markets will be closed on Monday in observance of Presidents Day.

Market Update 2/15/2017

MBS are down -8/32 (FNMA 30-yr 3.5 at 101.26), close to volatile morning levels, but 4/32 below late morning highs. First scattered favorable and later scattered unfavorable repricing was seen. It was a volatile session as a large batch of economic data with many upside and downside misses was released. The May NAHB housing index showed that home builder confidence declined from 67 to 65, below the consensus for an increase to 68. Hawkish comments from the Fed’s Rosengren were negative for MBS this afternoon. Fed Chair Yellen’s second day of testimony focused on banking regulations and provided no new guidance on monetary policy. The Dow is up 90 points. Tomorrow, Jobless Claims, Housing Starts, and Philly Fed will be released at 8:30 et.

Market Update 2/14/2017

MBS are down -1/32 (FNMA 30-yr 3.5 at 102.03), around 2/32 lower than yesterday at this time.

This morning, January PPI rose 0.6% from December, above the consensus for an increase of 0.3%, and it was 1.6% higher than one year ago. Core PPI, which excludes food and energy, increased 0.4%, above the consensus for an increase of 0.2%. Core PPI was 1.2% higher than one year ago. The Dow is down 10 points. No more economic data will be released today. Fed Chair Yellen will deliver her semi-annual testimony to Congress at 10:00 et.

Market Update 2/10/2017

MBS are down -5/32 (FNMA 30-yr 3.5 at 102.05), around 11/32 lower than yesterday at this time.  Some unfavorable repricing took place yesterday.

This morning, January Import Prices rose 0.4% from December, above the consensus for an increase of 0.2%. MBS prices moved a little lower following the data on concerns about higher inflation. The Dow is up 50 points. Consumer Sentiment will be released at 10:00 et.

The monthly rollover took place overnight for FNMA and FHLMC 30-yr securities. The current coupon switched from the February to the March contract. If you are tracking daily MBS price movements, March MBS prices reflected a drop of about -7/32 from February. 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.

Mid Day Update 2/9/2017

MBS are down -11/32 (FNMA 30-yr 3.5 at 102.17), around 6/32 below morning levels, and near the low for the day. Some unfavorable repricing took place. Several factors were negative for MBS prices today. There was a stock market rally. Jobless Claims were lower than expected. President Trump said that there will be an announcement about tax cuts in two to three weeks. The Fed’s Bullard expressed support for considering a reduction in the Fed’s holdings of MBS. These events combined to push MBS lower. Demand was stronger than average for the 30-yr Treasury auction. The Dow is up 120 points. Tomorrow, Import Prices and Consumer Sentiment will be released.

Freddie Mac reported that average mortgage rates were fell in the week through February 9, with 30-yrs hitting 4.17%, from 4.19% the prior week.

Market update 2/2/2017

MBS are up +6/32 (FNMA 30-yr 3.5 at 102.06), around 10/32 higher than yesterday at this time. Favorable repricing took place yesterday.

The rally which began yesterday afternoon following the Fed meeting has continued this morning. Today’s economic data had little impact. Weekly Jobless Claims fell to 246K, close to the consensus of 250K. Fourth quarter Productivity increased 1.3%, close to the consensus of 1.2%. The Dow is down 25 points. No more economic data will be released today. The important Employment report will come out tomorrow.