100 day moving average is not our friend at this time

October 20th, 2016

What Is Going On With Interest Rates?  #wigowir

 

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.

 

The 3% Fannie Mae 30-yr coupon traded in a fairly wide 25bp range today, but drifted lower after the Fed supported the market late morning. Today's economic data was mixed. The Bond closed near unchanged at 103.28. Stocks ended lower as oil prices fell and on mixed earnings reports. The Dow fell 40.27 points to 18,162.35, the S&P 500 lost 2.95 points to 2,141.34, while the Nasdaq closed near unchanged at 5,244.71. WTI oil was last seen at $50.43/barrel, -$1.17. 10-yr T Note yield 1.75%. There are no economic reports due for release tomorrow.

4:25 PM - Microsoft beats earnings expectations.

3:51 PM - Software giant Microsoft will report earnings after the close of trading om Wall Street.

2:36 PM - Little movement seen in Mortgage Bonds this afternoon.

1:01 PM - At midday, MBS flat, S&P flat. 10-yr yield 1.74%. WTI oil $50.69/barrel, -$1. U.S. dollar index at a seven-month high, 98.17, +0.23.

11:48 AM - The Atlanta Fed forecasts 2% growth in the third quarter, up from 0.8% in the first quarter and 1.4% in the second quarter.

11:47 AM - Stocks churn lower, MBS near unchanged.

10:45 AM - Stocks now back in negative territory.

10:38 AM - Freddie Mac reports that the 30-yr fixed rate conventional mortgage rose to 3.52% from 3.47% this week, with 0.5 in points and fees.

10:03 AM - September Existing Home Sales +3.2% from August to an annual rate of 5.47M units, above the 5.30M expected.

9:49 AM - Stocks quickly erase losses, now near unchanged.

9:31 AM - Stocks open modestly lower. MBS near session highs.

9:11 AM - Correction: We reported Verizon beat on revenues ... Verizon actually fell a bit short on revenues.

8:38 AM - S&P futures turn negative after the economic data.

8:36 AM - Travelers, Verizon, Amex all beat on revenues and earnings in their quarterly earnings reports.

8:34 AM - The Oct Philly Manufacturing Index 9.7 vs the 5.5 expected, down from 12.8 in September.

8:31 AM - Weekly Initial Jobless Claims rise 13K to 260K vs the 249K expected.

8:28 AM - CoreLogic reports that cash sales decreased in July to 29.7% of total home sales, -1.9% from July 2015 though up slightly from June's 29.3%.

8:08 AM - U.S. dollar index 97.91, near unchanged.

8:07 AM - Weekly Initial Jobless Claims and the Philly Fed will be released at 8:30, Existing Home Sales at 10.

8:04 AM - WTI oil -$0.70 at $50.90/barrel after hitting a 15-month high yesterday.

8:03 AM - 10-yr T Note yield 1.75%.

8:00 AM - MBS look to open near unchanged.

8:00 AM - ECB leaves its benchmark interest rate unchanged and leaves its current asset purchase program intact.

7:56 AM - Dudley went on to say that a quarter-point hike this year "is not really a big deal" given the economy is "reasonably close" to the Fed's inflation goal of 2% and maximum sustainable employment.

7:56 AM - S&P futures modestly higher on improving quarterly earnings and after the final presidential debate.

7:51 AM - New York Fed President William Dudley says the central bank will raise the short-term Fed Funds Rate later this year "if the economy stays on its current trajectory".

 

 

Today's Agenda

 

Report                             For       Estimate     Actual         prior   impact

Jobless Claims                 10/15       249k             260k      247k     moderate

Philadelphia Fed index     Oct            5.5              9.7         12.8       High

Existing Home Sales        Sep           5.3M             5.47M     5.33M  moderate


 

 

What is the 'Jobless Claims’ Report?

The number of people who are filing or have filed to receive unemployment insurance benefits, as reported weekly by the U.S. Department of Labor. There are two categories of jobless claims - initial, which comprises people filing for the first time, and continuing, which consists of unemployed people who have been receiving unemployment benefits for a while. Jobless claims are an important leading indicator on the state of the employment situation and the health of the economy. Average weekly initial jobless claims are one of the 10 components of The Conference Board Leading Economic Index.

 

Initial jobless claims, rather than continuing claims, are closely watched by financial market participants, since a sustained increase would indicate rising unemployment and a challenging economic environment. Since initial jobless claims may be volatile from week to week, the four-week moving average of jobless claims is also observed to get a better indication of the underlying trend.

 

What is the  'Philadelphia Federal Index?'

A regional federal-reserve-bank index measuring changes in business growth. The index is constructed from a survey of participants who voluntarily answer questions regarding the direction of change in their overall business activities. The survey is a measure of regional manufacturing growth. When the index is above 0 it indicates factory-sector growth, and when below 0 indicatescontraction.

 

BREAKING DOWN 'Philadelphia Federal Index'

This index is published by the Philadelphia Federal Reserve Bank on the third Thursday of the month at 10 am EST. It is considered to be a good gauge of general business conditions.

 

The survey covers the Pennsylvania, New Jersey and Delaware region.

 

What is the  'Existing Home Sales' report?

An economic indicator of both the number and prices of existing single-family homes, condos and co-op sales over a one-month period. The existing home sales report is released monthly by the U.S. National Association of Realtors. It is a lagging indicator as it tends to react after a change in mortgage rates.

BREAKING DOWN 'Existing Home Sales'

The existing home sales report does not look at newly built houses or the sale of new houses. This indicator is thought to be a good measure of demand in the real-estate sector.

 

 

 

 

 

 

 

 

 

What is on the Agenda?

Report                              For          Estimate     Actual     prior     impact

Jobless Claims                 10/15       249k           260k      247k     Moderate

Philadelphia Fed index     Oct           5.5              9.7       12.8       High

Existing Home Sales        Sep          5.3M            5.47m  5.33M     Moderate

What is the 'Jobless Claims’ Report?

The number of people who are filing or have filed to receive unemployment insurance benefits, as reported weekly by the U.S. Department of Labor. There are two categories of jobless claims - initial, which comprises people filing for the first time, and continuing, which consists of unemployed people who have been receiving unemployment benefits for a while. Jobless claims are an important leading indicator on the state of the employment situation and the health of the economy. Average weekly initial jobless claims are one of the 10 components of The Conference Board Leading Economic Index.

Initial jobless claims, rather than continuing claims, are closely watched by financial market participants, since a sustained increase would indicate rising unemployment and a challenging economic environment. Since initial jobless claims may be volatile from week to week, the four-week moving average of jobless claims is also observed to get a better indication of the underlying trend.

 

What is the  'Philadelphia Federal Index?'

A regional federal-reserve-bank index measuring changes in business growth. The index is constructed from a survey of participants who voluntarily answer questions regarding the direction of change in their overall business activities. The survey is a measure of regional manufacturing growth. When the index is above 0 it indicates factory-sector growth, and when below 0 indicatescontraction.

BREAKING DOWN 'Philadelphia Federal Index'

This index is published by the Philadelphia Federal Reserve Bank on the third Thursday of the month at 10 am EST. It is considered to be a good gauge of general business conditions.

The survey covers the Pennsylvania, New Jersey and Delaware region.

What is the  'Existing Home Sales' report?

An economic indicator of both the number and prices of existing single-family homes, condos and co-op sales over a one-month period. The existing home sales report is released monthly by the U.S. National Association of Realtors. It is a lagging indicator as it tends to react after a change in mortgage rates.

BREAKING DOWN 'Existing Home Sales'

The existing home sales report does not look at newly built houses or the sale of new houses. This indicator is thought to be a good measure of demand in the real-estate sector.

 

 

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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As a loan officer (mortgage broker 1989-2006) since 1985, I have seen a lot of changes over the years. The only consistency in the mortgage business and life is change. This is the reason that we believe it is necessary to move quickly and to be early. Let us know if you have any questions or if we can help in any way.

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