September 21st, 2016
What Is Going On With Interest Rates? #wigowir
Chart was posted after the close
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. All times are Eastern Standard.
3% MBS price $103.59 up 25 basis points from Tuesday’s close. The 25 day moving average is $103.60 only 1 basis point below today’s close.
Commentary End of the Day
The Fed held the benchmark Fed Funds Rate steady today with a "hawkish hold." The central bank did say that one rate hike could be expected in 2016, most likely at the December meeting after the presidential election. The 3% Fannie Mae 30-yr coupon rose by 25bp to end the session at 103.59, near the session high as it knocks on the door to the second layer at the 25- and 50-day Moving Averages. Stocks surged after the no rate hike decision. The Dow gained 163.74 points to 18,293.70, the S&P was up 23.36 points to 2,163.12, while the tech heavy Nasdaq jumped 53.83 points to end the session at 5,295.18. WTI oil closed at $45.34/barrel, +$1.29. The 10-yr T Note yield fell to 1.65% from the session high of 1.73%. The U.S. dollar index fell to 95.47, -0.50.
9:22AM New Rates have been posted
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Below is the news when it happened and the market’s reaction. All Times are Eastern Standard Time.
4:30 pm Based on the indexes posted this morning before the Fed Announcement and the close below, it appears that all the markets like what was said.
3:54 PM - Dow surges +167 points after the Fed held the benchmark Fed Funds Rate steady.
3:42 PM - The Fed sees GDP of 1.8% in 2016, 2% in both 2017 and 2018.
3:37 PM - The 10-yr T Note yield falls to 1.65% from the session high of 1.73%.
2:50 PM -The markets received the "hawkish hold" today from the Fed as it left the short-term Fed Funds Rate steady at current levels while saying it expects one rate hike this year, which would most likely be in December.
2:44 PM - Yellen: Economy not overheating at the moment. Most on FOMC do expect one increase in the Fed Funds Rate this year.
Yellen: economic growth has picked up.
The Fed will continue to purchase MBS in the open markets on a weekly basis.
Yellen: lack of inflation key in today's decision.
Inflation remains below the 2% objective.
The Fed expects inflation to rise over 2% in the next 2-3 years.
Yellen: case for rate hike has strengthened.
Yellen: business investment is still soft.
Yellen: household spending is driving improvement.
2:14 pm - Fed Leaves Rates Unchanged, Signals 2016 Hike Still Likely:
2:06 PM - Stocks trade higher after rates remain on hold.
Three Fed members forecast no rate hike this year.
Fed: job gains have been solid on average.
Three Fed members dissented.
Fed: there is a case for rates to go higher, but the Fed will wait for further economic data to come in.
No change in the short term Fed Funds Rate.
1:25 PM - Just past midday, MBS flat to slightly higher, S&P holding meager gains. 10-yr yield 1.69%. Fed statement due at 2:00 p.m. ET.
12:28 PM - MBS trade to session highs.
12:20 PM - Stocks give up gains and trade to near unchanged levels.
11:09 AM - Freddie Mac: revises its forecast of home price appreciation to 5.6% and 4.7% in 2016 and 2017, respectively. This is up from last month's forecast of 5.3% for 2016 and 4.0% for 2017.
Freddie Mac: mortgage originations to reach $2 trillion in 2016, the highest total since 2012.
Freddie Mac says the housing sector remains a bright spot in the U.S. economy, expects the 30-year fixed rate mortgage to average 3.6% in 2016, the lowest annual average in over 40 years.
10:16 AM - Treasury prices turn negative.
9:30 AM - Stocks open higher ahead of the 2:00 p.m. ET release of the Fed statement.
8:29 AM - The MBA reports that the 30-yr fixed conventional mortgage rate ($417K or less) rose to 3.70% from 3.67%, the highest rate since June. Jumbo 30-yr fixed rose to 3.69% from 3.64%.
8:21 AM - The MBAs purchase index -6.8%, refi index -8%.
8:15 AM - The MBAs Market Composite Index, a measure of total mortgage application volume, fell 7.3% in the latest week.
8:09 AM - Today we are expect a "hawkish hold" for the Fed's benchmark interest rate (Fed Funds Rate).
As expected, MBS open near unchanged.
Fed Fund Futures show a 15% probability of a hike in the Fed Funds Rate today, up from 12% yesterday while there is a 60% chance in December.
The U.S. dollar index edges lower to 95.81, -0.16 on fading hopes of a hike in rates today.
10-yr T Note yield unchanged at 1.69%.
The Fed's monetary policy statement will be released at 2:00 p.m. ET with a press conference by Fed Chair Yellen to follow at 2:30.
WTI oil $44.94/barrel, +$0.87.
MBS look to open near unchanged.
S&P futures are rising as investors shift their focus to today's Fed announcement where it there is little chance of a hike to the Fed Funds Rate. Also helping to push futures higher is a 2% rise in oil.
7:51 AM - The Wall Street Journal reports that the core of the Bank of Japan's (BOJ) new policy is a pledge to buy as many or as few Japanese government bonds as necessary to ensure that the yield on 10-year bonds is zero. Simultaneously, the BOJ said it would maintain its existing policy of increasing its government-bond holdings by about ¥80 trillion ($785 billion) a year and said it was “strengthening monetary easing.” Sort of a two direction statement.