November 22nd, 2016
Commentary: MBS closed mostly unchanged, spreads mostly tighter vs Treasuries, giving up earlier gains as buyers ran out of steam in the afternoon as volumes dwindled. The New York Fed will be absent for the rest of the week from purchasing MBS in the open markets. The Bond market looks heavy and remains in a sideways to lower trend with no clear stabilization seen yet. The silver lining? Prices are teetering on support at the $102.75 level, which is about the only positive development. It is tough to get bullish on Bonds in the face of these headwinds. It would be a good sign if prices can bust confidently back above the $103 level and off this sideways to lower price trend. For now let’s hope that we can stay above $102.75
WRAP: MBS traded higher during the session but gave up the gains by the end of the session. The better-than-expected Existing Home Sales and so-so auction results weighed on Bond prices. The 3.5% Fannie Mae 30-yr coupon closed at 102.88, unchanged. Stocks once again closed at record highs as the rally marches on post-election. The Dow gained 67.18 points to 19,023.87, the Nasdaq climbed 17.49 points to 5,386.35, while the S&P was up 4.76 points to end at 2,202.94. WTI oil was last seen at $47.91/barrel, -$0.33. 10-yr T Note yield 2.31%.
|Date & Time of Report||Report||For||Estimate||Actual||Prior||Impact|
|11/23/16 8:30 AM||Durable Goods||Oct||1.10%||-0.10%||Moderate|
|11/23/16 10:00 AM||New Home Sales||Oct||587K||593K||Moderate|
|11/23/16 2:00 PM||FOMC Minutes||Nov 2||NA||NA||NA||HIGH|
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.
4:02 PM Once again record closes for the Dow (19,023), S&P (2,202) and the S&P (5,384).
2:47 PM The S&P swings back into positive territory.
1:07 PM The $34B 5-yr Note auction garners a "C-" rating.
12:54 PM At midday, MBS modestly higher. S&P near unchanged having given up earlier gains. 10-yr yield 2.30%. WTI oil $47.47/barrel, -$0.78. U.S. dollar index unchanged at 101.11.
12:35 PM The S&P turns slightly negative.
12:06 PM The 3.5% Fannie Mae 30-yr coupon able to rise just above support one (S1) at 103.0, now trading at 103.03.
11:07 AM The 3.5% Fannie Mae 30-yr coupon trades in an extremely tight 9bp range today, especially since the wide swings we have seen since November 8.
10:05 AM October Existing Home Sales +5.9% year-over-year.
10:03 AM October Existing Home Sales +2% from September to an annual rate of 5.6 million units vs the 5.40 million expected.
9:33 AM Stocks open higher as the Dow eclipses the 19K level before falling below that level.
8:40 AM Reminder: the U.S. financial markets are closed on Thursday for Thanksgiving. There will be a regular session for both Stocks and Bonds on Wednesday. On Friday, the Bond markets will close at 2:00 p.m. ET, Stocks close at 1:00 p.m. ET.
8:31 AM The Treasury will sell $34B 5-yr Notes today, results at 1:00 p.m. ET and comes after yesterday's so-so results from the 2-year offering.
8:30 AM October Existing Home sales will be released at 10:00 a.m. ET.
8:23 AM U.S. dollar index 101.13, near unchanged.
8:15 AM 10-yr T Note yield 2.29% from yesterday's close of 2.33%.
8:15 AM WTI oil at $47.90/barrel, -$0.35.
8:00 AM At the present time, yields around the globe are now attractive to yield starved investors.
7:58 AM After MBS fell off a cliff in the aftermath of the presidential election results on November 8, the 3.5% Fannie Mae 30-yr coupon held just above the second layer of support (S2) at 102.75 yesterday.
7:58 AM This morning, MBS look to open higher as Treasury prices rebound, pushing yields modestly lower.
Modest [mod-ist]Adjective 1.having or showing a moderate or humble estimate of one's merits, importance, etc.; free from vanity, egotism, boastfulness, or great pretensions. 2.free from ostentation or showy extravagance: a modest house. 3.having or showing regard for the decencies of behavior, speech, dress, etc.; decent: a modest neckline on a dress. 4.limited or moderate in amount, extent, etc.: a modest increase in salary.
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