Producer Price Index (PPI) today Consumer Price Index(CPI) Tomorrow

November 16th, 2016

Commentary: The big reversal higher left MBS with decent gains by the close of trading. Using the new 3.5% mortgage backed security on the chart below you can see that we have traded for the last 3 days in between $103 and $103.5.  It appears thate we are stablizing, and maybe we are in an oversold position.  If this is correct and we see tame inflation in tommorow's CPI, then rates will improve.

 
WRAP:MBS went through some seesaw trading early in the session, opening sharply lower, then advancing, then pulled back a bit, only to close near the highest levels of the day with modest gains. The 3% Fannie Mae 30-yr coupon has been replaced by the 3.5%, which will now be the main focus going forward. The 3.5% Fannie Mae 30-yr closed at 103.53, +12bp after hitting a low of 103.06 near the open. Stocks ended lower taking a breather after the rally that ensued after the presidential election. The Dow lost 54.92 points to 18,868.14, the S&P lost 3.45 points to 2,176.94, while the Nasdaq closed higher by 18.96 points on the relief rally in tech land. WTI oil closed at $45.57/barrel, -$0.24. 10-yr yield 2.21%. Tomorrow's economic data includes CPI, Housing Starts/Building Permits, Weekly Initial Jobless Claims and the Philly Fed.
Tomorrow's Agenda:

 

Date & Time of ReportReportForEstimateActualPriorImpact
11/17/2016 8:30:00Consumer Price IndexOct0.40% 0.30%HIGH
 Core Consumrer Price indexOct0.20% 0.10%HIGH
 Philadelphia Fed indexNov7.0 9.7HIGH
 Jobless Claims11/12257K 254KModerate
 Building PermitsOct1200K 1225KModerate

 

Today's Agenda:

 

Date & Time of ReportReportForEstimateActualPriorImpact
11/16/2016 8:30:00Producer Price IndexOct0.30%0.00%0.30%Moderate
 Core Producer Price IndexOct0.20%-0.20%0.20%Moderate

 

 

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.  On the chart below you will notice some additional items that need to be explained, they are as follows:

 

 

4:17 PM Due to the recent rise in mortgage rates, we have switched our focus over to the 3.5% Fannie Mae 30-yr coupon from the 3%.

4:00 PM The Dow's winning streak ends at seven straight days as it closes lower today, -54 points.

3:24 PM MBS trade in a tight range for the past two hours after this morning's seesaw ride.

2:21 PM Fed's Mester says not adjusting policy views based on U.S. election outcome; it's appropriate to raise rates now.

1:06 PM Dow, S&P lower. 10-yr yield 2.23%.

1:05 PM At midday, MBS well off the session lows, though below the highs for the session.

11:52 AM Big comeback for MBS after opening sharply lower this morning. The 3% Fannie Mae 30-yr coupon opened at 100.03 this morning, but has since traded higher to 100.62, a 59bp increase.

11:33 AM MBS quickly trade back to unchanged to slightly higher.

10:46 AM MBS begin to edge lower after the big rally off the opening lows.

10:02 AM The November NAHB Housing Market Index unchanged at 63, below the 64 expected with 50 being the dividing line between positive and negative sentiment.

9:40 AM MBS now unchanged after the opening sharply lower. 10-yr yield declines to 2.23% from 2.29% seen early this morning.

9:31 AM As expected, Stocks open lower.

9:26 AM MBS wipe out most of their opening losses.

8:42 AM Fed's Bullard (voter) said yesterday he was leaning toward favoring a December rate hike.

8:38 AM MBS off the opening lows as buyers bargain hunt and after the tepid wholesale inflation data.

8:34 AM Fed Fund Futures show a 91% chance of a hike to the short-term Fed Funds Rate at next month's Fed meeting.

8:32 AM The Core Producer Price Index -0.2% vs +0.2% expected.

8:31 AM Wholesale inflation tame in October. The Producer Price Index unchanged vs 0.3% expected.

8:24 AM The October Producer Price Index, a measure of wholesale inflation, will be released at 8:30, NAHB Housing Market Index at 10.

8:22 AM The MBAs refinance index -11%, purchase applications -6%.

8:21 AM The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417K or less) increased to 3.95%, from 3.77%, with points increasing to 0.39 from 0.38 (including the origination fee) for 80 percent loan-to-value ratio loans, reports the MBA.

8:19 AM The MBAs Market Composite Index, a measure of total mortgage application volume, plunged 9.2% in the latest week as rates pushed higher post-election.

8:18 AM S&P futures lower. Traders in all asset classes ponder the economic and political landscape.

8:16 AM 10-yr T Note yield rises to 2.27%.

8:16 AM WTI oil $45.85/barrel, -$0.45.

8:13 AM Bond prices open lower amid the rally in the U.S. dollar as the greenback hovers near a 12-month high of 100.41, +0.15. Traders feel a December rate hike is on the table.

 
 

 

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