January 13th, 2017
Commentary end of the day: The Monthly Bond Rollover will take place after the close of trading this evening. This will make chart below look different, but no effect on yields.
MBS plunged today after yesterday's reversal lower ushered in big selling. Decent economic data from PPI (definition below) and Retail Sales also led to lower prices. The 3.5% Fannie Mae 30-yr coupon fell by 28bp to close at 102.53. But the closing price doesn't tell the whole story. The Bond hit 102.94 early in the session then fell off a cliff to 102.38 before closing off of that low. Stocks closed mixed. The Dow lost 5.27 points to close at 19,885.73, the S&P 500 was up 4.20 points to 2,274.64, while the Nasdaq gained 26.63 points to end at 5,574.12. The 10-yr T Note yield closed at 2.39%. WTI closed at $52.37, -$0.64 and posted its first weekly loss in five weeks on OPEC output cut concerns. The markets will be closed on Monday in observance of Martin Luther King Day. John will be available if you need anything on Monday or anytime this weekend.
The Producer Price Index (PPI) program measures the average change over time in the selling prices received by domestic producers for their output. The prices included in the PPI are from the first commercial transaction for many products and some services. https://www.bls.gov/ppi/
Commentary 11:33 am Yesterday morning we posted, "We are moving in the right direction." Later that day we were moving in the wrong direction. We won't say never, but we will say it will be a cold day in He.. before we say it again. Today MBS are off again after a hotter than expected wholesale inflation. See below for details. Currently the 3.5% Fannie Mae 30-yr coupon is down 37bp at a price of 102.44
Never Say Never Again is a 1983 film. Sean Connery played the role of James Bond for the seventh time, marking his return to the character 12 years after Diamonds Are Forever. The film's title is a reference to Connery's reported declaration in 1971 that he would "never again" play that role. As Connery was 52 at the time of filming, the storyline features an aging Bond, who is brought back into action to investigate the theft of two nuclear weapons by SPECTRE. Filming locations included France, Spain, the Bahamas and Elstree Studios in England.https://en.wikipedia.org/wiki/Never_Say_Never_Again
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.
2:18 PM MBS edging higher cutting into losses.
2:04 PM Past midday, MBS still underwater though off worst levels. Dow negative, S&P and Nasdaq holding modest gains. 10-yr yield 2.39% from 2.32% this morning.
12:17 PM MBS able to bounce off the session lows as the Dow slips into negative territory.
11:25 AM Stocks holding modest gains.
10:29 AM All U.S. financial markets will be closed Monday in observance of Martin Luther King Day.
10:03 AM January Consumer Sentiment 98.1 vs 98.5 expected.
9:53 AM Sellers come out of the wood-works as they try and capture the recent gains in MBS.
9:52 AM The monthly Bond rollover will take place after the close of trading today.
Fri, Jan 13 9:47 AM MBS continue to push lower.
Fri, Jan 13 9:36 AM Stocks open higher, MBS fall to fresh session lows.
Fri, Jan 13 9:20 AM MBS at session lows as S&P futures push into positive territory after the economic data was released.
Fri, Jan 13 8:43 AM The slightly hotter Core PPI and higher year-over-year PPI pushes MBS off highs. The 3.5% Fannie Mae hit 102.94 before the news, fell to 102.66 after, now at 102.78.
Fri, Jan 13 8:39 AM December Retail Sales 0.6% vs 0.7%, but up from 0.2% in November. Retail Sales x-autos 0.2% vs 0.6% expected.
Fri, Jan 13 8:37 AM Year-over-year PPI 1.6%, biggest 12-month gain since 2014.
Fri, Jan 13 8:32 AM December wholesale inflation, PPI, +0.3%, inline. Core PPI +0.2% vs +0.1%.
Fri, Jan 13 8:28 AM Fed Chair Yellen said last night in the short-term she doesn't see any serious obstacles and sees the economy as doing quite well. She is worried about longer-term issues like widening income inequality and weak growth in labor productivity.
Fri, Jan 13 8:27 AM PPI, Retail Sales and Consumer Sentiment on tap this morning.
Fri, Jan 13 8:22 AM Yesterday, the 3.5% Fannie Mae 30-yr coupon opened at 103.03, topped out at 103.12, fell to 102.78 before closing at 102.81, right near resistance at the 50-day Moving Average. It is currently trading at 102.94.
Fri, Jan 13 8:19 AM U.S. dollar index edges lower by 0.31 to 101.06. Lower dollar and flat S&P futures supporting Bond prices.
Fri, Jan 13 8:17 AM S&P futures near unchanged after mixed bank earnings.
Fri, Jan 13 8:17 AM 10-yr T Note yield 2.34% from yesterday's close of 2.36%.
Fri, Jan 13 8:12 AM Wells Fargo profit falls, revenue misses estimates. JPMorgan Chase reports better-than-expected earnings. Bank of America beats on earnings per share, revenue misses.
Fri, Jan 13 8:10 AM MBS open flat to higher after yesterday's slide lower.
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