Fed Day! Announcement at 2 PM ET Today

December 14th, 2016

Commenttary MBS were crushed following today's Fed announcement which touched off a wave of sellers.  

 
WRAP: Mortgage Bonds traded flat to higher ahead of the Fed statement, but plunged once the statement read that there will be one additional rate hike in 2017 and as the Fed said inflation is moving higher. The 3.5% Fannie Mae 30-yr coupon fell by 78bp to end the volatile session at 101.38 and 106bp below the session high. Stocks also declined on the more hawkish statement. The Dow fell 118.68 points to 19,792.53, the S&P 500 lost 18.44 points to 2,253.28, while the Nasdaq was down 27.15 points to end at 5,436.67. WTI oil closed at $51.04/barrel, -$1.94. 10-yr yield rose to 2.57%. Tomorrow's data includes CPI, Weekly Initial Jobless Claims, Philly Fed, Empire manufacturing and the NAHB Housing Market Index.

Today's Agenda

 

Date & Time of ReportReportForEstimateActualPriorImpact
12/14/2016 8:30:00Core Producer Price Index (PPI)Nov0.20%0.40%-0.20%Moderate
 Producer Price Index (PPI)Nov0.10%0.40%0.80%Moderate
 Retail SalesNov0.40%0.10%0.80%High
 Retail Sales ex-autosNov0.40%0.20%0.80%High
12/14/2016 14:00:00FOMC MeetingDecNA NAHigh

 

Tomorrow's Agenda

 

12/15/2016 8:30:00Consumer Price Index (CPI)Nov0.20% 0.10%High
 Core Consumer Price Index (CPI)Nov0.20% 0.10%High
 Philadelphia Fed indexDec9 7.6High
 Empire State IndexDec3 1.5Moderate

 

 

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.

4:00 PM 10-yr T Note rises to 2.57%.

3:39 PM Volatility is the name of the game after the Fed rate hike news. MBS bouncing and falling.

3:26 PM The dollar surges higher in anticipation of additional rate hikes ... U.S. dollar index 102.0, +0.90.

3:21 PM Dow down 130 points on the three or possibly more rate hikes in 2017.

2:36 PM Yellen expects job growth to strengthen.

2:32 PM Yellen says core inflation has risen.

2:31 PM Yellen says economic growth has picked up since the middle of the year, business investment remains soft.

2:30 PM Fed Chair Yellen begins her press conference.

2:28 PM Stocks initially rose after the statement, but have since dropped well into negative territory.

2:26 PM The Fed is maintaining its existing policy of reinvesting principal payments from its holdings of agency debt and agency Mortgage-Backed Securities in agency Mortgage-Backed Securities.

Indexes and Chart below posted around 2:28 pm.  Pretty significant difference in the chart posted at 10:12 am this morning.

 

2:17 PM Fed said inflation has increased since earlier this year, but is still below the Fed's 2% long run objective.

2:12 PM Alert To Lock!

 

2:04 PM Kneejerk reaction lower for MBS after the Fed headlines.

2:03 PM Stocks turn modestly positive.

2:01 PM Fed hikes Fed Funds Rate by 0.25%, says three rate hikes in 2017, up from the 2 forecasted in September.

12:44 PM Near midday, MBS holding solid gains, Stocks modestly lower ahead of the 2:00 p.m. ET release of the Fed statement.

10:41 AM MBS hit session highs. Stocks slightly lower.

Chart below posted at 10:12 am as you can see we are now trading above S2. Stay tuned till 2pm et.

 

 

9:30 AM The S&P opens lower as the Fed decision looms.

8:35 AM The push-pull economic data leaves MBS holding slim gains.

8:33 AM November wholesale inflation, PPI, hotter at 0.4% vs the 0.1% expected. Core PPI, which strips out volatile food and energy, 0.4% vs 0.2% expected.

8:31 AM November Retail Sales 0.1% vs the 0.3% expected. Retail Sales x-autos 0.2% vs 0.4% expected.

8:20 AM The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA increased to 4.02% from 4%.

8:19 AM The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417K or less) increased to its highest level since October 2014, 4.28%, from 4.27%.

8:19 AM The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $417K) increased to its highest level since September 2014, 4.29%, from 4.22%.

8:17 AM The refinance index -4%, purchase index -3%.

8:16 AM The MBA reports that its Market Composite Index, a measure of total mortgage application volume, fell 4% in the latest week.

8:15 AM S&P futures near uncharged ahead of the Fed.

8:15 AM Retail Sales and PPI will be released at 8:30 a.m. ET.

8:14 AM U.S. dollar index 100.92, -0.18.

8:10 AM WTI $52/barrel, -$0.98.

8:09 AM 10-yr T Note yield falls to 2.44% from yesterday's close of 2.48%.

8:06 AM Mortgage Backed Securities open modestly higher as the Fannie Mae 30-yr 3.5% coupon hovers near multi-year lows and support at 102.22.

8:03 AM Fed Chair Yellen will hold a press conference at 2:30 p.m. ET following the statement release.

8:02 AM The two-day Fed meeting ends today with the 2:00 p.m. ET release of the monetary policy statement where it is expected that the short-term Fed Funds Rate will rise by 0.25%.

7:59 AM It's Fed Day!

Johnmarbury.com has attempted to verify the information contained on this post.  However any aspect of such may change without notice.  Johnmarbury.com does not provide investment advice and does not represent that any of the information or related analysis is accurate or complete at any time. On October 5th we started posting our rates and leaving them on the site for you to refer back to. This will allow  you see where actual rates have been along with the news that caused the fluctuations on the rate sheet.  I ask that you forgive my spelling and grammatical mistakes. This is due writing skills that are lacking and the need to communicate quickly.  Most of the information posted on this blog along with the charts and indexes are available all during the day to the subscrbers of www.themortgagemarketguide.com  The cost of subscription is very reasonable.

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