8/25/16 Hawks or Doves tomorrow?

August 25th, 2016

What Is Going On With Interest Rates?  #wigowir

When the price of Mortgage Backed Securities (MBS) on the Chart above goes down rates go up, and when the price goes up rates come down. Chart was posted at: 11:53 am.  All times are Eastern Standard.

Commentary

At the Close: Not much action again today in the Mortgage Bond markets as players did not add to positions as rangebound trading took hold. Better-than-expected Durable Orders and a weak 7-yr Note auction weighed on prices. The 3% Fannie Mae 30-yr coupon closed near unchanged at 103.69. Stocks ended modestly lower on declining healthcare and consumer names. The Dow lost 33.07 points to 18,448.41, the S&P 500 fell 2.97 points to 2,172.47, while the Nasdaq was down 5.49 points to end at 5,212.20. WTI oil closed at $47.33/barrel, +$0.56. Tomorrow's economic data includes the second reading on Q2 GDP and Consumer Sentiment. Fed Chair Yellen will speak at 10:00 a.m. ET from Jackson Hole, Wyoming and traders and investors around the globe will hang on her every word. Be sure to look to the Market News section of the MMG website for the headlines and market reaction.

11:45 am this commentary will be pretty much the same as yesterday, Traders around the world have their eyes on Jackson Hole where Janet Yellen, the Fed Chairman is speaking Friday at 10 am.  See yesterday’s morning commentary about Hawks and Doves.  It is expected that she will not say much for fear of upsetting the economy.  Stay tuned for tomorrows post.

The 3% MBS is down 3 ticks from Wednesday’s close at 103.69   above the 50 day moving average (Black line) of $103.61, and sitting on the 25 day moving average (Green Line) of $103.69.  The Rate below are unchanged from yesterday.  

Feel free to call (205-266-5669) or email (jmarbury@nationalbankofcommerce.com) John for a quote based on the terms of you loan.

11:45 AM ET New Rates have been posted

30-Year Fixed 3.375% (3.457% APR) No Origination Fee  

15-Year Fixed 2.750%   (2.892% APR) No Origination Fee

7-1 ARM 30 year 3.000% (3.341% APR) No Origination Fee

For more rates and details click: http://www.johnmarbury.com/page5.html/

  • 30-Year Fixed-Rate Mortgage: The monthly payment on a $200,000 30-year Fixed-Rate Loan at 3.375% and 70% loan-to-value (LTV) is $884.19 with 0 points due at closing. The Annual Percentage Rate (APR) is 3.457%. Payment does not include taxes and insurance premiums. The actual payment amount will be greater. Some state and county maximum loan amount restrictions may apply.
  •  15-Year Fixed-Rate Mortgage: The monthly payment on a $200,000 15-year Fixed-Rate Loan at 2.750% and 70% loan-to-value (LTV) is $1357.24 with 0 points due at closing. The Annual Percentage Rate (APR) is 2.892%. Payment does not include taxes and insurance premiums. The actual payment amount will be greater. Some state and county maximum loan amount restrictions may apply.
  • 7-1 30 year ARM for $200,000 with an Initial Interest Rate of 3.000% (3.334% APR) your monthly payments for years 1 – 7 would be $870.41 and for years 8 -30 monthly payments would be $886.87 (based on the current Index  of  1.210% Plus Margin of 2.25% to $417,000 and 2.5% to $900,000).  Monthly payments do not include taxes and insurance and the actual payment obligation will be greater.  Your variable interest rate is subject to a floor of your Initial Interest Rate.  Your variable interest rate can increase or decrease after the seventh year by 2 percentage points annually and can increase 4 percentage points over your Initial Interest Rate over the term of your loan.  The index for this loan program is the average of the interbank Offered Rates for One Year Denominated Deposits in the London Market (LIBOR)

Below is the news when it happened and the market’s reaction.  All Times are Eastern Standard Time. 

Thu, Aug 25 2:47 PM
MBS trade in an extremely tight range today as traders look ahead to Fed Chair Yellen's speech tomorrow morning at 10:00 a.m.m ET.
Thu, Aug 25 2:01 PM
Today's $27B 7-yr Note offering garners a "D" rating, weakest demand since February, but had little impact on the Bond markets.
Thu, Aug 25 12:47 PM
Near midday, Stocks, Mortgage Bonds and Treasury securities near unchanged as the markets await Fed Chair Yellen's speech tomorrow.

11:13 AM - The Dow, S&P and the Nasdaq edge into positive territory.

10:33 AM - The S&P continues to hover near unchanged as traders may not be looking to add any new positions ahead of Fed Chair Yellen's speech tomorrow morning at the Fed economic symposium in Jackson Hole, Wyoming.

10:20 AM - Freddie Mac reports that the 30-yr fixed conventional mortgage rate ($417K or less) remained at 3.43% this week with 0.6 in points and fees.

9:37 AM - Hawish Fed member Esther George says "time is right for a near-term rate hike" but that rates should go higher gradually.

9:32 AM - As expected, Stocks open modestly lower. Dow -23 points.

9:29 AM - WTI oil $46.68/barrel, near unchanged.

8:57 AM
From the other hand, the Treasury will sell $28B 7-yr Notes, results at 1:00 p.m. ET.

8:55 AM - The New York Fed will purchase up to $2.05B in Fannie/Freddie 30-yr 3% and 3.5% later this morning.

8:41 AM - Not much reaction to the economic data.

8:34 AM - July Durable Orders +4.4% vs the +3.5% expected.

Weekly Initial Jobless Claims -1K to 261K, below the 265K expected.

 8:27 AM - U.S. dollar index 94.67, -0.07.

S&P futures modestly lower.

10-yr T Note yield 1.55%, unchanged.

More of the same trading pattern continues today as MBS open near unchanged as the countdown to Yellen begins.

 

Contact

John Marbury
jmarbury@nationalbankofcommerce.com
NMLS# 740833
Phone:205-266-5669
Fax: 866-217-4174

813 Shades Creek Parkway
Birmingham, Alabama 35209
 

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