7/08/16 Uncharted Territory

7/08/16 Uncharted Territory

When the price of Mortgage Backed Securities (MBS) on the above chart above goes up mortgage rates come down.  When the price goes down mortgage rates go up.

The chart above shows that the price of the mbs is $104.16.  R2 on this chart shows $104 as a line of resistence.  This means that it is a line where sellers are more likely to sell. Yet we have closed over this line the last 4 trading sessions.  Next week this line may be considered a line of support.  The problem is that we are in uncharted territory when it comes to rates at these levels.  Stayed tuned for more informations or call John at 205-266-5669.

Below is the news when it happened and market reaction.  All of the times below are Eastern Standard Time

Fri, Jul 08 5:05 PM - End of the Day

Despite the big rally in Stocks today, Mortgage Bonds showed resilience and traded near unchanged for most of the session. Advise clients to carefully float. However, be advised that mortgage rates are just near all-time record lows. 

The Labor Department reported this morning that employers added 287,000 workers in June, well above the 175,000 expected. The data fueled a big rally in Stocks as the S&P 500 traded above its record closing high of 2,130 before closing just below that level. The 3% Fannie Mae 30-yr coupon closed at 104.16, +9bp and remains near multi-year highs. The Dow closed at 18,146.74, up 250.86 points, the S&P 500 gained 32 points to 2,129.90, while the Nasdaq ended the week at 4,956.75, up 79.95 points. WTI oil closed at $45.41/barrel +$0.27. 10-yr T Note yield 1.35%. Next week’s economic data includes PPI, CPI, Retail Sales and Consumer Sentiment. We’ll have to see if the summer trading doldrums set in, where trading volumes and volatility declines. Have a great weekend!

Fri, Jul 08 2:54 PM - Dow surges 260 points, but MBS resilient holding gains, though minimal.
Fri, Jul 08 2:53 PM - Dow +260 points.
Fri, Jul 08 1:39 PM - The Dow, Nasdaq and the S&P all have recovered from their losses due to the Brexit vote. The day before the Brexit vote, June 23, the S&P 500 closed at 2,113, it is currently 2,126.
Fri, Jul 08 1:07 PM - At midday, MBS trade near unchanged, Dow +217 points.
Fri, Jul 08 12:25 PM - What is the prime rate? The interest rate charged by banks to their most creditworthy customers (usually the most prominent and stable business customers).
Fri, Jul 08 11:31 AM - The Dow is up 190 points after the jobs data.
Fri, Jul 08 11:11 AM - MBS trade in a tight range after the jobs data has been digested.
Fri, Jul 08 9:51 AM -Stocks open higher - Dow up 156 points.
Fri, Jul 08 9:09 AM - MBS able to trade back to unchanged after the somewhat push-pull jobs data.
Fri, Jul 08 8:42 AM - MBS edge lower after the data.
Fri, Jul 08 8:41 AM - Non-farm Payrolls for April and May were revised lower by a total of 6K.
Fri, Jul 08 8:38 AM - S&P futures add to gains after the better-than-expected jobs data.
Fri, Jul 08 8:35 AM - Average hourly earnings 0.1% vs 0.2% expected, year-over-year 2.6% from 2.5%.
Fri, Jul 08 8:33 AM - Unemployment Rate rises to 4.9% from 4.7%.
Fri, Jul 08 8:31 AM - June Non-farm Payrolls rise to 287K vs the 175K expected.
Fri, Jul 08 8:17 AM -U.S. dollar index 96.18, -0.19.
Fri, Jul 08 8:16 AM - WTI oil at $45.55/barrel, +$0.40.
Fri, Jul 08 8:15 AM - 10-yr T Note yield 1.38%, unchanged.
Fri, Jul 08 8:13 AM - S&P futures modestly higher, but things can quickly change as the jobs data is released.
Fri, Jul 08 8:10 AM - It is expected that employers added 175K new workers in June, while the Unemployment Rate edged higher to 4.8% from 4.7%.
Fri, Jul 08 8:09 AM - MBS open near unchanged ahead of the 8:30 a.m. ET release of the the June Jobs Report.
Fri, Jul 08 8:03 AM -Tragedy strikes Dallas, Texas as 12 police officers were shot by snipers during protest last night, five of those were killed.


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