December 9th, 2016
Commentary: Today we closed below S1 $102.47, but above S2 ($102.22) on the Fannie Mae 3.5% coupon. Does it seem like this number will be broken in the near future? Or is this the moment that traders start to buy? The old cliche says it is always darkest before the dawn. Read further for today’s market wrap and what is on the agenda next week.
MARKET WRAP: MBS started the day lower, then pushed into positive territory but buyers faded by mid-morning and caused the sell-off. The Bond closed at 102.31, -31bp. The better-than-expected Consumer Sentiment report weighed on Bond prices. Stocks closed at fresh record highs. The Dow gained 142.04 points to 19756.85, the S&P was up 13.34 points to 2259.53, while the Nasdaq rose 27.14 points to end at 5444.498. WTI oil saw a gain of $0.57 to $51.40/barrel. The 10-yr T Note yield closed at 2.46%.
Next week's economic calendar is packed with reports that will give a broad view of the U.S. economic landscape. The Fed's 2-day FOMC meeting kicks off on Tuesday and ends Wednesday with the monetary policy statement being released at 2:00 p.m. ET followed by a news conference by Fed Chair Yellen at 2:30. The Treasury will sell a total of $56B in Notes and Bonds. The Monthly Bond Rollover will take place after the close of trading this evening. Have a great weekend!
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.
3:00 PM MBS able to bounce off lows though still underwater. Stocks holding solid gains
1:20 PM Rate Change, only change is the 30 yr fixed goes up to 4% from 4.125%
11:33 AM Alert To Lock!
11:18 AM MBS edging lower.
10:31 AM The much better than expected Consumer Sentiment Index weighs on Bond prices and lifts Stocks.
10:29 AM The S&P edges higher into positive territory as the trading day unfolds.
10:01 AM December preliminary Consumer Sentiment 98 vs the 94.3 expected and up from 93.8 in November. MBS lose some steam.
9:36 AM S&P opens modestly higher. MBS trade near unchanged
8:23 AM MBS quickly trade to unchanged levels. 10-yr T Note yield falls to 2.40% from 2.43%.
8:20 AM Stocks begin the session at record highs ... Dow (19,614.81) - S&P (2,246.19) - Nasdaq (5,417.35).
8:11 AM Preliminary December Consumer Sentiment will be released at 10:00 a.m. ET.
8:09 AM WTI oil $51.28/barrel, +$0.44.
8:09 AM U.S. dollar index 101.60, +0.48.
8:08 AM 10-yr T Note yield 2.43% from yesterday's close of 2.38%.
8:07 AM MBS open modestly lower.
8:04 AM The Monthly Bond Rollover will take place after the close of trading this evening.
8:00 AM Reflation is fiscal or monetary policy, designed to expand a country's output and curb effects of deflation. Reflation policies can include reducing taxes, changing money supply and lowering interest rates.
7:59 AM S&P futures are positive as global investors continue to embrace the reflation trade.