Suggestion: Mortgage Bonds continue in their sideways pattern near seven-month highs. Carefully floating is recommended.
Overview: May Existing Home Sales rose 1.1% from April to an annual rate of 5.62 million units, above the 5.52 million expected. The median price rose to an all-time high of $252,800. Sales were up 2.7% from May 2016. Low inventories continue to be a problem with supplies at 4.2 months where healthy supply is seen at six months. "We have a housing shortage, we may even use the term housing crisis in some markets," NAR chief economist Lawrence Yun said.
Mortgage rates were steady in the latest week and remain just above the all-time lows, while mortgage application volumes rose. The Mortgage Bankers Association reported that its Market Composite Index, a measure of total mortgage loan application volume, rose 0.6% in the latest week. The refinance index jumped 2.1% to 1526.8, the highest level since November 2016, while the purchase index fell 1%. The MBA also reports that the 30-year fixed conforming mortgage rate was unchanged at 4.13%, while jumbo and FHA rates rose 2bp and 4bp, respectively, to 4.08% and 4.04%.
S&P Dow Jones Indices and Experian reported on Tuesday that borrowers are going into default on their first mortgages less often than at nearly any point in the last 13 years. The default rate for first mortgages fell to 0.64% in May, down from 0.69% in April. The default rate in May was the second lowest for any month in nearly 13 years.
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.
Commentary at the Close: Not a lot of movement in MBS as prices remained range bound near resistance at the 200-day Moving Average for the benchmark Fannie Mae 30-yr 3.5% coupon. The Bond closed at 103.12, -6bp. The only economic report today was the better-than-expected May Existing Home Sales. Stocks ended mixed. The Dow fell by 57.11 points to 21,410.03, the NASDAQ gained 45.92 points to 6,233.95, while the closely watched S&P 500 saw a modest loss of 1.42 points to end at 2,435.61. WTI oil closed at $42.53/barrel, -$0.98. 10-yr yield 2.16%. Economic data tomorrow is limited to Weekly Initial Jobless Claims.
|Wed, Jun 21 3:15 PM Philadelphia Fed President Harker (voter) could see balance sheet unwinding beginning in September but not if inflation weakens.|
|Wed, Jun 21 1:26 PM WTI oil hits $42.13/barrel, -$1.16, lowest since August 2016.|
|Wed, Jun 21 1:04 PM At midday, MBS near unchanged. Dow, S&P lower, NASDAQ higher. 10-yr yield 2.15%.|
|Wed, Jun 21 12:02 PM The S&P trades near unchanged.|
|Wed, Jun 21 11:57 AM Treasury Secretary Mnuchin voices support for decreasing the Fed's balance sheet.|
11:50 AM ET 3.5% Fannie Mae 30-yr coupon down 6 bp at a price of 103.12 up 0 bp when rates were set today at 10:00 am et Open 103.16 High 103.16 Low 103.09
Numbers to watch for:
Currently Buying Opportunities for Traders
102.91 50 day moving average
103.00 Traders keep their eye on round numbers and this is one them with lots of zeros
Currently Selling opportunities for Traders
103.10 200 day moving average
103.12 Traders keep their eye numbers that have been resistance or support in the past. This is one of them.
103.14 25 day moving average
103.59 High of 11/17/16
104.12 High of 11/10/16
|Wed, Jun 21 11:11 AM MBS able to bounce off lows, though trade in an extremely tight range this morning. Dow, S&P lower, NASDAQ higher.|
|Wed, Jun 21 10:42 AM MBS fall to session lows.|
|Wed, Jun 21 10:22 AM MBS shrug off the positive housing data and continue to trade near unchanged.|
|Wed, Jun 21 10:02 AM May Existing Home Sales +1.1% from April to an annual rate of 5.62 million units, above the 5.52 million expected.|
|Wed, Jun 21 9:53 AM Fed Funds Futures show a 13% probability for a rate hike by the end of the September FOMC meeting, near zero percent at the July meeting.|
|Wed, Jun 21 9:40 AM Stocks trading slightly higher soon after the open.|
|Wed, Jun 21 9:11 AM The NY Fed will purchase up to $1.35B in Fannie/Freddie 30-yr 3.5% and 4% coupons this afternoon beginning at 2:30 p.m. ET.|
|Wed, Jun 21 9:05 AM S&P Dow Jones Indices and Experian report that borrowers are going into default on their first mortgages less often than at nearly any point in the last 13 years.|
|Wed, Jun 21 8:36 AM May Existing Home Sales will be released at 10:00 a.m. ET, expected 5.48 million units annualized.|
|Wed, Jun 21 8:27 AM The MBA also reports that the 30-yr fixed conforming mortgage rate was unchanged at 4.13%, while jumbo and FHA rates rose 2bp and 4bp, respectively, to 4.08% and 4.04%.|
|Wed, Jun 21 8:24 AM The MBAs purchase index -1%.|
|Wed, Jun 21 8:22 AM The MBAs refinance index jumped rose 2.1% to 1526.8, the highest level since November 2016.|
|Wed, Jun 21 8:20 AM The MBA reports that its Market Composite Index, a measure of total mortgage loan application volume, rose 0.6% in the latest week as rates hover near 7-month lows.|
|Wed, Jun 21 8:18 AM U.S. LIBOR 1-month 1.21%, 3-month 1.28%, 6-month 1.43%, 12-month 1.73%.|
|Wed, Jun 21 8:17 AM U.S. dollar index 97.31, -0.10.|
|Wed, Jun 21 8:15 AM Oil hovers near 7-month lows ... WTI at $43.68/barrel, +$0.17.|
|Wed, Jun 21 8:14 AM The 10-yr T Note yield at 2.16%, essentially unchanged from yesterday.|
|Wed, Jun 21 8:11 AM MBS open near unchanged as the Fannie Mae 30-yr 3.5% coupon continues in its sideways pattern near resistance at the 200-day Moving Average near 7-month highs.|
Johnmarbury.com has attempted to verify the information contained on this post. However any aspect of such may change without notice. Johnmarbury.com does not provide investment advice and does not represent that any of the information or related analysis is accurate or complete at any time. On October 5th we started posting our rates and leaving them on the site for you to refer back to. This will allow you see where actual rates have been along with the news that caused the fluctuations on the rate sheet. I ask that you forgive my spelling and grammatical mistakes. This is due writing skills that are lacking and the need to communicate quickly. Most of the information posted on this blog along with the charts and indexes are available all during the day to the subscribers of www.themortgagemarketguide.com The cost of subscription is very reasonable.