January 4th, 2017
Commentary: MBS closed wider vs Treasuries, but did manage to close near uncharged for the session.W Be sure to read tomorrow morning's Daily Update for news headed into Friday's Jobs Report for December.
WRAP: MBS were able to rally off the session lows as buyers emerged after some selling yesterday and this morning. There were no economic reports released today. The 3.5% Fannie Mae 30-yr coupon closed near unchanged at 102.34. The Fed minutes didn't reveal any glaring new headlines as some members were worried over inflation pressures from the Trump administration policies while others feared that the rising dollar could hold down inflation. Stocks continued their winning ways as the Dow inched closer to 20,000. The Dow closed at 19,942.16, + 60.40 points, the S&P 500 was up 12.92 points to end at 2,270.75, while the Nasdaq closed at 5,477.00, +47.92 points. WTI oil closed at $53.26/barrel, +$0.94. 10-yr T Note yield 2.44%. Tomorrow's economic data includes December ADP Private Payrolls, ISM Services and Weekly Initial Jobless Claims.
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.
3:53 PM MBS able to claw their way to unchanged levels as buyers emerge.
3:10 PM Fed minutes: several Fed members pointed out that a further rise in the dollar might continue to hold down inflation.
2:17 PM Not much reaction in MBS to the Fed minutes.
2:05 PM Fed: most members see labor market close to full employment.
2:04 PM Minutes: half of Fed officials expect more fiscal policy.
2:03 PM Fed: possible downside risks from dollar rising.
2:02 PM Fed Minutes: Fed staff also raised economic outlook slightly.
2:00 PM Fed minutes reveal FOMC members see inflation risks in Trump fiscal expansion.
1:46 PM The 10-year T Note yield rose by 132 basis points from the 7/6/2016 low of 1.32% to the 12/15/2016 high of 2.64%. It is currently at 2.45%.
12:55 PM At midday, MBS lower, Stocks holding modest gains. 10-yr yield 2.45%.
12:20 PM Friday's Jobs Report for December is holding traders back on adding any new positions in MBS, thus not much movement today.
11:45 AM Not much movement in MBS after opening modestly lower this morning. Stocks holding decent gains.
9:54 AM Stocks quickly cut gains in half.
9:35 AM Stocks open higher ... Dow +60 points.
8:33 AM U.S. dollar index 102.89, -0.30.
8:31 AM WTI oil $52.63/barrel, +$0.30.
8:15 AM With last week's rise in MBS, the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417K or less) decreased, falling to 4.39% from 4.45%.
8:13 AM The MBAs Market Composite Index, a measure of total mortgage application volume, fell 12% from two weeks earlier. The MBA does report application volume for the last week of the year
8:13 AM The MBAs refi index declined 22%, purchase index -2% from two weeks earlier.
8:01 AM 10-yr T Note yield near unchanged at 2.45%.
8:00 AM MBS look to open near unchanged, while S&P futures edging higher ahead of the 2:00 p.m. ET release of the December Fed minutes
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