January 31st, 2017
Commentary at the close: MBS spreads closed wider vs Treasuries with volumes picking up as the day wore on led by Fed buying. The benchmark Fannie Mae 30-yr coupon hit resistance today at the 50-day Moving Average and once again failed to overcome that level. The black line going down on the chart below is the 50 day moving average. Notice how the red line on the 31st and pulls back from the line, but at least we closed above 102.. We have seen this on many occasion in the past as it hit that level, only to retreat. MBS were able to squeak out minor gains today, but closed below the best levels after hitting resistance. This morning's move higher was due in part to weak economic data and with the help of buying in MBS from the Federal Reserve. The Fannie 30-yr 3.5% closed up 3bp to 102.03, below the session high of 102.31. Stocks closed lower on weak earnings and economic data. The Dow lost 107.04 to 19,864.09, the S&P 500 fell 2.03 points to 2,278.87, while the Nasdaq closed near unchanged at 5.614.78. WTI oil closed at $52.81/barrel, +$0.18. 10-yr yield 1.46%. Tomorrow's economic data includes ADP Private Payrolls and the ISM Index. The Fed statement is due out at 2:00 p.m. ET.
Trump's protectionism biggest threat to US economy's growth, CNBC Fed Survey respondents say http://www.cnbc.com/2017/01/30/trumps-protectionism-biggest-threat-to-us-economys-growth-cnbc-fed-survey-respondents-say.html
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.
3:41 PM Stocks trying to cut some losses headed into the close.
2:48 PM The U.S. homeownership rate up slightly to 63.7% in Q4 2016 from 63.5% in Q3. A year ago it was 63.8%.
2:20 PM 3.5% Fannie Mae 30-yr coupon up 25bp at a price of 102.25 up 9bp when rates were set today at 10:00 am Open 102.06 High 102.28 Low 101.94
1:48 PM Stocks fall on missed earnings and as economic data disappoints.
1:44 PM Past midday, MBS holding gains, Stocks underwater. 10-yr yield 2.44%.
11:14 AM Stocks begin to cut some losses.
10:56 AM The 3.5% Fannie Mae 30-yr coupon continues to trade at stiff resistance supplied by both the 25- and 50-day moving averages.
10:07 AM The Fannie Mae 30-yr coupon trades at resistance at the 25- and 50-day Moving averages.
10:02 AM January Chicago PMI misses, at 50.3 vs 55 expected.
10:02 AM January Consumer Confidence misses, at 111.8 vs the 112.5 expected.
9:58 AM Dow down nearly 100 points.
9:38 AM Stocks open lower.
9:20 AM 3.5% Fannie Mae 30-yr coupon up 3bp at a price of 102.03 down 3bp when rates were set today at 10:00 am Open 102.06 High 102.06 Low 102.00
9:03 AM The S&P CoreLogic Case-Shiller 20-city Index on an annual basis rose 5.3% from November 2015 to November 2016, up from October's annual increase of 5.1%.
9:00 AM The 2-day Fed meeting kicks off on Capitol Hill later this morning.
8:44 AM The slight lower employment costs, which is an inflation gauge, supports Bond prices.
8:38 AM The Employment Cost Index for Q4 2016 at 0.5%, just below the 0.6% expected.
8:32 AM Economic data this morning includes Employment Cost Index (8:30), S&P Case Shiller Home Price Index (9), Chicago PMI (9:45) and Consumer Confidence (10).
8:24 AM WTI oil $52.87, +$0.23.
8:22 AM U.S. dollar index 100.50, -0.36.
8:21 AM 10-yr yield 2.48%.
8:19 AM MBS open near unchanged with Stock futures under pressure as investors fret over Trump's policies.
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