Call for today's Rates: Next Rate Sheet posted on Wednesday Morning
Suggestions that can change during the day: Mortgage Bond prices are modestly lower after last week's strong gains. Carefully floating is recommended.
After close Commentary: Not a lot of movement in MBS for most of the session today as Bond prices were capped by rising Stock prices, a strong Empire State Index and after Fed Chair Yellen said yesterday that the U.S. economic outlook looks bright and that she looks for higher inflation in coming months. The Fannie Mae 30-yr 3.5% coupon fell 12bp to end at 103.03. The three major Stock indexes closed at record highs led by financials and energy shares. The Dow closed at 22,956.96 +85.24 points, the S&P 500 gained 4.47 points to 2,557.64, while the tech heavy NASDAQ was up 18.20 points to end the day at 6,624.00. WTI oil closed +$0.42 to $51.87/barrel on Mideast tensions. 10-yr yield 2.30%. Tomorrow's economic data is limited to the NAHB Housing Market Index.
Late morning Commentary: Regional manufacturing data from New York State surged in October due in part to strong gains in employment, new orders and shipments. The Empire State Index jumped to 30.2 in October, well above the 20.0 expected and well above the 24.4 recorded in September, the highest in three years. Looking ahead, firms are optimistic about upcoming conditions as future business, new orders and employment are expected to increase.
At an international banking seminar on Sunday, Fed Chair Yellen said that the outlook looks bright for the U.S. economy and for inflation prospects in coming months; this is weighing on Bond prices this morning. Ms. Yellen was speaking "Economic activity in the United States has been growing moderately so far this year, and the labor market has continued to strengthen," said Ms. Yellen.
Banking giant Citigroup reported third quarter earnings last week and within the numbers it revealed that mortgage originations continued to decline. The bank is slowly pulling away from mortgage originations as it focuses in on other lines of business. Total mortgage originations fell to $3.2 billion in the third quarter, down from $6.5 billion in the third quarter of 2016. There is no clear reason as to why the bank is moving out of the mortgage servicing business, but the increase in regulations could be one of the bigger reasons.
|Mon, Oct 16 8:35 AM The New York Fed will purchase up to $1.52B in Fannie/Freddie 30-yr 3.5% and 4% coupons today beginning at 11:15 a.m. ET.|
|Mon, Oct 16 8:31 AM The Empire Manufacturing Index for October rises to 30.2 vs the 21 expected.|
|Mon, Oct 16 8:21 AM The 30-yr fixed-rate mortgage begins the week at 3.91% with an average point of 0.5, as reported by Freddie Mac last Thursday.|
|Mon, Oct 16 8:17 AM Citigroup continues slow pull away from mortgage originations.|
|Mon, Oct 16 8:10 AM U.S. dollar index 93.03, +0.10.|
|Mon, Oct 16 8:09 AM WTI oil at $52.33/barrel, +$0.88.|
|Mon, Oct 16 8:08 AM The rest of the week's calendar features NAHB Housing Market Index Tuesday, Housing Starts and Building Permits Wednesday, Philly Fed Thursday and Existing Home Sales on Friday.|
|Mon, Oct 16 8:07 AM Economic data is limited to Empire Manufacturing, due out at 8:30.|
|Mon, Oct 16 8:06 AM MBS open near unchanged.|
|Mon, Oct 16 8:02 AM S&P futures modestly higher as earnings season ramps up this week.|
|Mon, Oct 16 8:01 AM The 10-yr T Note yield at 2.28%.|
|Mon, Oct 16 8:00 AM After last week's gains, MBS look to open near unchanged as the new trading week begins.|
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