Commentary at the close: MBS were able to rally today as Stock prices edged lower on Trump protectionism talk and as Qualcomm dragged tech shares lower. One of the downsides to protectionism is an increase of the costs of goods that comes from overseas which could increase inflation. Hopefully we are looking for fairer trade deals that help us grow and will allow our global partner’s economy to grow also. We will watch and see what happens.
What is 'Protectionism'
Protectionism refers to government actions and policies that restrict or restrain international trade, often done with the intent of protecting local businesses and jobs from foreign competition. Typical methods of protectionism are tariffs and quotas on imports and subsidies or tax cuts granted to local businesses. The primary objective of protectionism is to make local businesses or industries more competitive by increasing the price or restricting the quantity of imports entering the country.
Wrap: There were no economic reports released today. The 3.5% Fannie Mae 30-yr coupon closed up 38bp to end at 102.41. The Dow lost 27.40 points to 19,799.85, the S&P fell 6.11 points to 2,265.20, while the Nasdaq was down 2.39 points to end the session at 5,552.94. WTI oil closed at $52.75/barrel, down $0.47. 10-yr T Note yield 2.40%. December Existing Home Sales will be released tomorrow.
Commentary 9:15 AM 3.5% Fannie Mae 30-yr coupon up 9bp at a price of 102.12 up 34 bp when rates were set on Friday. Pretty good open to start off the week for MBS. All eyes are on Trump's first week of work. Stocks appear to be moving sideways at this time. Stay tuned for mor information.
What Is Going On With Interest Rates? #wigowir
Below is the news when it happened and the market’s reaction. For a full view of the day start at the bottom and work your way up. If want to know what just happened start at the top. All Times are Eastern Standard Time. When the price of Mortgage Backed Securities (MBS) goes down rates go up, and when the price goes up rates come down. Remember in the bond market Bad News is Good News and Good News is Bad news.
3:35 PM MBS trade in a tight range for most of the session holding solid gains.
1:00 PM At midday, MBS holding solid gains. Stocks lower. 10-yr yield falls to 2.39%.
12:12 PM With MBS pushing higher, continue to recommend floating.
12:07 PM President Trump signs executive order to withdraw from the Trans Pacific Partnership (TPP). The TPP was a trade agreement among 12 of the Pacific Rim countries, including the U.S. and notably not including China. It was aimed to potentially create a single new market.
11:58 AM President Trump signs executive order to freeze federal hiring, does not apply to military.
10:59 AM 10-yr yield falls to 2.40%.
10:18 AM MBS at session highs as Stocks resume their push into negative territory.
9:46 AM President Trump wants massive tax cuts for businesses and middle class. Wants to reduce regulations in a big way.
9:40 AM The S&P cuts opening losses and trades to unchanged.
9:31 AM Stocks open lower, but the losses are modest, for now.
9:19 AM The New York Fed will be purchasing up to $2.125B in Fannie/Freddie 30-yr 3s and 3.5s beginning at 11:15 a.m. ET.
8:43 AM Economic data this week includes Existing Home Sales on Tuesday, Weekly Initial Jobless Claims and New Home Sales on Thursday with GDP, Durable Orders and Consumer Sentiment on Friday.
8:38 AM President Trump to sign an executive order to renegotiate NAFTA between the U.S., Canada and Mexico. NAFTA, North American Free Trade Agreement, is a comprehensive agreement that sets rules for international trade and investment between the aforementioned countries.
8:33 AM U.S. dollar index 100.37, -0.32.
8:31 AM MBS edge higher on Stock future weakness.
8:29 AM There are no economic reports due for release today.
8:28 AM The Treasury will sell a total of $88B in 2-, 5- and 7-year Notes on Tuesday, Wednesday and Thursday.
8:24 AM WTI oil $52.49/barrel, -$0.72.
8:21 AM 10-yr T Note yield 2.45%, near unchanged.
8:14 AM MBS open slightly higher as S&P futures decline as investors worry about the lack of details from President Donald Trump's proposals for tax and regulatory reforms and higher infrastructure spending.
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