December 8th, 2016
ECB President Mario Draghi in above picture
ECB unexpectedly cuts asset buys to 60 bln euros per month from April
Commentary: MBS closed tighter vs Treasuries after the ECB's taper news. Unfortunately we were unable to stay above the resistence level R1 ($102.75) Tommorrow is another day.
WRAP: The unexpected taper announcement by the ECB pushed Bond prices lower in today's session, while Stocks closed at fresh record highs. The 3.5% Fannie Mae 30-yr coupon fell by 25bp to 102.62, but off the -38bp seen early in the session. Stocks closed at fresh record highs as the rally continued. The Dow gained 65.19 points to 19,614.81, the S&P 500 was up 4.84 points to 2,246.19, while the Nasdaq rose 23.59 points to 5,417.36. WTI oil closed at $50.84/barrel, +$1.07. 10-yr T Note yield 2.39%. Economic data is limited to Consumer Sentiment tomorrow.
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.
3:59 PM Former astronaut and U.S. Senator John Glenn dies aged 95.
2:55 PM Stocks indexes look to close at fresh record highs as the Trump rally marches on.
12:40 PM Stocks well into positive territory as the Dow, Nasdaq and S&P are at fresh record high intraday levels. MBS at session highs, though still in the red and well off the session lows.
11:51 AM The S&P edges back into positive territory.
11:05 AM The Treasury will sell $24B 3-yr Notes on Monday, $20B 10s on Tuesday and $12B 30-yr Bonds on Wednesday.
10:53 AM Freddie Mac reports that the 30-yr fixed conventional mortgage rate ($417K or less) rose to 4.13% in the latest week with 0.5 in points and fees added on top of that rate.
10:06 AM Stocks fall back into negative territory.
Commentary: The come back has disappeared.. MBS is now below R1 ($102.75) and trading at $102.62. Stay tuned to see if this continues. Maybe we will be back on the comeback trail soon.
9:47 AM The S&P edges into positive territory.
9:32 AM The S&P opens modestly lower.
8:41 AM Home flipping decreased in the third quarter of 2016 amid rising home prices and higher mortgage rates.
8:33 AM S&P futures slip into negative territory.
8:30 AM Weekly Initial Jobless Claims -10K to 258K, above the 255K expected.
8:25 AM Economic data is limited to Weekly Initial Jobless Claims this morning.
8:19 AM MBS quickly bounce off the opening lows, cutting into losses.
8:13 AM S&P futures turn modestly positive after the ECB announcement.
8:10 AM The U.S. dollar index 100.21, -0.05.
8:10 AM WTI oil $50.23/barrel, +$0.47.
8:08 AM The 10-yr yield rises to 2.40% from yesterday's close of 2.34% as the peak and valley trading pattern continues in the debt markets.
8:04 AM MBS look to open lower.
8:04 AM MBS open lower giving back yesterday's gains in sympathy with falling Treasury prices.
8:03 AM Treasury yields rise on the ECB news.
8:00 AM The ECB cuts its Bond buying program to 60 billion euros/month from 80 billion and extends the program until December 2017.