MBS are down -10/32 (FNMA 30-yr 3.5 at 102.21), around 5/32 below volatile morning levels, and near the low for the day. Unfavorable repricing took place. Strong data and a stock market rally caused investors to sell MBS ahead of tomorrow’s Fed meeting. Consumer Confidence rose to 121.1, above the consensus of 117.0. Demand was stronger than average for the 2-yr Treasury auction. The Dow is up 100 points. Tomorrow, New Home Sales 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 tomorrow at 2:00 et. No change in the federal fund’s rate is expected, but investors will be looking for guidance about future monetary policy.
MBS are up +3/32 (FNMA 30-yr 3.5 at 103.01), close to morning levels. It was another quiet session. The Dow is down 30 points. For the week, MBS rose about 14/32.
Looking ahead, the next Fed meeting will take place on Wednesday. No change in the federal funds rate is expected, but investors will be looking for guidance about future monetary policy. Before that, Existing Home Sales will be released on Monday and New Home Sales on Wednesday. Durable Orders, an important indicator of economic activity, will come out on Thursday. The first reading for second quarter GDP, the broadest measure of economic activity, will be released on Friday. In addition, there will be Treasury auctions on Tuesday, Wednesday, and Thursday.
MBS are down -1/32 (FNMA 30-yr 3.5 at 102.29), around 2/32 higher than yesterday at this time.
It has been a quiet morning. June Housing Starts jumped 8% from May to an annual rate of 1.22 million, well above the consensus of 1.16 million, and the May figures were revised higher as well. Despite the strong data, there was little reaction. The Dow is up 10 points. No more economic data will be released today.
MBS are up +8/32 (FNMA 30-yr 3.5 at 102.27), around 7/32 higher than yesterday at this time.
Weaker than expected economic data has lifted MBS this morning. June Retail Sales fell 0.2% from May, below the consensus for an increase of 0.1%. Excluding the volatile auto component, Retail Sales also fell 0.2%, below the consensus for an increase of 0.2%. June CPI was flat from May, below the consensus for an increase of 0.1%. Core CPI, which excludes food and energy, rose 0.1% from May, also falling short of expectations. Core CPI was 1.7% higher than a year ago, the same annual rate as last month. June Industrial Production matched expectations with an increase of 0.4% from May. The Dow is up 25 points. Consumer Sentiment will be released at 10:00 et.
MBS are down -1/32 (FNMA 30-yr 3.5 at 102.13), around 1/32 lower than yesterday at this time.
Solid job gains were offset by a shortfall in wage growth in today’s Employment Report, leaving MBS prices nearly unchanged. Against a consensus forecast of 175K, the economy added 222K jobs in June. In addition, upward revisions added 47K jobs to the results for prior months. The unemployment rate increased from 4.3% to 4.4%, above the consensus for a flat reading of 4.3%, mostly due to workers entering the labor force. Average hourly earnings, an indicator of wage growth, fell a little short of expectations. They were 2.5% higher than a year ago, up from a downwardly revised 2.4% last month. The Dow is up 50 points. No more economic data will be released today.