November 21st, 2016
Commentary: MBS seemed to stabilize today squeaking out meager gains in the face of rallying Stocks as the Bond closed above support. We can see a few straight days of stabilization, until that time we will be prepared for anything.
WRAP: Early lofty gains were wiped away for MBS but they did manage to squeak out modest gains by the close of trading. There were no economic reports released today. The 3.5% Fannie Mae 30-yr coupon closed +12bp to end at 102.84, just above support at 102.75. The Dow, Nasdaq and S&P all closed at record highs on gushing oil prices and as the risk trade continues. The Dow gained 88.76 points to 18,956.69, the S&P jumped 16.28 points to 2,198.18, while the Nasdaq rose by 47.34 points to end the day at 5,368.86. WTI oil closed at $47.49/barrel, +$1.80. 10-yr T Note yield 2.31%. Existing Home Sales for October will be released tomorrow. The Treasury will sell $34B 5-yr Notes.
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.
3:49 PM MBS tried to rally this morning, but quickly gave back those gains as oil and Stock prices traded higher.
2:45 PM MBS slip back to unchanged levels. Stocks holding gains.
2:30 PM The benchmark 3.5% Fannie Mae 30-yr coupon is holding gains and stuck in a tight trading range today after this morning's volatility.
1:09 PM The $26B 2-yr Note auction garners a "C" rating.
12:52 PM WTI oil +$2.00 to $47.69/barrel.
12:50 PM Energy shares lifts the broader Stock markets as oil prices gush higher.
12:46 PM At midday, all three major Stock indexes trade at all-time highs. S&P 2,196, Dow 18,944, Nasdaq 5,358.
12:10 PM Fed's Fisher says low interest rates make the U.S. economy more vulnerable to shocks.
11:48 AM The S&P 500 hits an all-time high of 2,193.
9:50 AM WIT oil higher on hopes of an OPEC cut in production at $47.01/barrel, +$1.32.
9:48 AM Fed Vice Chair Fischer (voter): Enormous uncertainty about future path of fiscal policy; "not a lot of room to increase deficit without adverse consequences down the road."
9:47 AM There are no economic reports due for release today.
9:45 AM The Treasury will sell $26B 2-yr Notes today, results at 1:00 p.m. ET.
9:44 AM U.S. dollar index 100.96, -0.30.
9:39 AM The U.S. markets will be closed on Thursday for Thanksgiving. On Friday, the Bond markets will close early at 2:00 p.m. ET. Stocks close at 1:00 p.m. ET.
9:38 AM 10-yr T Note yield 2.31%.
9:38 AM Stocks open higher in this holiday shortened week.
9:02 AM Prepare yourself for another potentially volatile week, as trading desks will be empty in advance of the Holiday shortened week.
Volatile (as defined by investorwords.com)
The relative rate at which the price of a security moves up and down. Volatility is found by calculating the annualized standard deviation of daily change in price. If the price of a stock moves up and down rapidly over short time periods, it has high volatility. If the price almost never changes, it has low volatility.
9:01 AM Oil trading higher as Russia says they have no problem cutting production.
9:01 AM Stocks also looking higher as the Trump rally continues.
9:00 AM Mortgage backed securities open higher and bouncing off support at $102.75 - a good sign.