Mortgage Bonds Moving in the right direction

January 12th, 2017

Commentary end of the day:  We started off moving in the right direction.  We ended the day moving in the wrong direction slightly as the stock market improved and traders moved out of bonds and into stocks.

WRAP: Well the MBS started the day higher, but the Fannie Mae 3.5%, 3% and 4% coupons ended lower after a weak Bond auction. The Fannie Mae 3.5% coupon ended near unchanged at 102.78 and at the session lows, but closed 28bp off the session high of 103.12. Stocks ended lower, but well off the session lows. The Dow fell by 63.28 points to 19,891.00, the S&P 500 lost 4.88 points to 2,270.44, while the Nasdaq was down 16.16 points to end the session at 5,547.48. WTI oil closed at $53.01/barrel, +$0.76. 10-yr T Note yield 2.35% after hitting 2.30% earlier in the trading day. Tomorrow's economic data includes PPI, Retail Sales and Consumer Sentiment.

Commentary 1:48 pm: Bonds are still headed in the right direction now, but not as strong as it was at 11:00am.

Commentary 11:00 am: As you can see on the chart below that Prices on mortgage backed securities have improved steadily since December the 15 of 2016.  On that day we matched the highs of September 2014.  Rates moved steadily higher after the election on November the 8, 2016 until December 15th, 2016.   You can see the rates we had on 11/08/16 (The day of the election)  Rates on 12/19/16 and compare to today’s rates by going to the following sites:

11/08/16: http://www.johnmarbury.com/blog/7719/rates-effective-as-of-november-8-2016-1142-am-est

12/19/16:http://www.johnmarbury.com/blog/8018/rates-effective-december-19-2016-930-am-est

1/12/17: http://www.johnmarbury.com/blog/8181/rates-effective-january-12-2016-930-am-est

You will see that the 30 year rate went from 3.5% on 11/08/16 all the way up to 4.25% on 12/19/16 and now we have moved down to 4% today.   You can click through the blog and see an archive of rates dating back to October 5th, 2016. Along with the rates you will see an archive of news and commentary that will show you why rates are moving up or down.

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.

 

3:10 PM Home improvement chain Lowe's say it will be laying off less than 1% of its workforce, about 2,800 employees.

2:33 PM MBS at session lows.

2:02 PM Alert To Lock!

1:44 PM The $12B 30-yr Bond auction garners a "D+" rating, tepid demand. MBS off highs

1:19 PM MBS off highs, be on the look out for reversal lower after the recent rally, which we discussed briefly in this morning's Daily Market Update.

1:05 PM At midday, MBS holding gains, though off best levels. Stocks are lower, off worst levels. 10-yr yield 2.33%.

12:27 PM The MBAs Builder Application Survey recorded its fourth consecutive decrease in December from November, declining 14%.

12:12 PM MBS continue to hover near the session highs. Stocks still well into negative territory.

11:34 AM Feds Evans says three rate hikes in 2017 is plausible.

10:46 AM Freddie Mac reports the 30-year fixed rate mortgage declined to 4.12% this week from 4.20% with 0.5 in points and fees.

10:09 AM Dow falls 171 points.

9:32 AM The S&P opens lower.

9:31 AM Tomorrow brings quarterly earnings from Bank of America, JPMorgan Chase, PNC and Wells Fargo.

9:14 AM 3.5% Fannie Mae 30-yr coupon up 28bp at a price of 103.09

8:32 AM Feds Harker sees three rates hikes this year.

8:30 AM Weekly Initial Jobless Claims up 10K this week to 247K vs the 255K expected.

8:26 AM Weekly Initial Jobless Claims will be released at 8:30.

8:26 AM The Treasury will sell $12B 30-yr Bonds today, results at 1:00 p.m. ET and comes after strong demand for the 3- and 10-yr offerings this week.

8:21 AM WTI oil $53.09/barrel, +$0.84.

8:19 AM The 3.5% Fannie Mae 30-yr coupon opens higher above resistance one (R1) at the 25-day Moving Average (102.81), now trading at 103.0.

8:17 AM U.S. dollar index 100.75, -0.99.

8:14 AM Bond prices are higher, yields lower on lower Stock futures and the falling dollar.

8:14 AM The 10-yr T Note yield falls to 2.32% from yesterday's close of 2.37%, after hitting 2.64% on December 15, which matched highs from September 2014.

8:02 AM S&P futures are lower after President-elect Trump gave little clarity on his campaign promises for boosting economic growth. Mr. Trump sent drug company shares lower citing high drug prices. His words sent the dollar lower and is declining this morning.

 

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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