February 1st, 2017
Commentary at the close: The chart for the 3.5% Fannie Mae 30-yr coupon shows that once it fails to break above the 50-day Moving Average, it tends to decline for several days. However, with the somewhat dovish Fed statement, prices could be supported in tomorrow's session. Probably not much room to run with the overhead resistance at the 50-day Moving Average. The following is how the bond traded today. Once again we closed at 102
Close 3.5% Fannie Mae 30-yr coupon down 3 bp at a price of 102.00 up 9bp when rates were set today at 10:00 am Open 102.03 High 102.12 Low 101.72
The highly anticipated Fed statement came and went without much fanfare today, but it did manage to push MBS off their lows, closing just below unchanged. Today's better-than-expected ADP and ISM weighed on Bond prices for most of the session until the statement was released at 2:00 p.m. ET. Stocks closed with modest gains. The Dow gained 26.85 points to 19,890.94, the S&P was near unchanged at 2,279.55 while the Nasdaq closed up 27.86 points to end at 5,642.65. WTI oil gained $1.02 to $53.88/barrel. 10-yr T Note yield 2.47%. Economic data out tomorrow includes Weekly Initial Jobless Claims and Productivity.
Private payrolls grew 246K in January vs. 165K est.: ADP
A report that measures levels of non-farm private employment. The ADP National Employment Report is based on payroll data from over half of ADP's U.S. business clients. The data represents about 24 million employees from all 19 of the major North American Industrial Classification (NAICS) private industrial sectors.
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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.
3:24 PM The Senate confirms former Exxon Mobil CEO Rex Tillerson as Secretary of State.
3:13 PM The S&P gives up its gains, Dow, Nasdaq modestly higher.
3:09 PM 10-yr yield at 2.47%.
2:50 PM The Fed offered no hints as to when the next rate hike will be.
2:24 PM The Dow, S&P and Nasdaq all move into positive territory.
2:23 PM MBS cutting into losses after the somewhat dovish Fed statement.
2:07 PM The Fed is maintaining its existing reinvestment policy of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities and it anticipates doing so until normalization of the level of the federal funds rate is well under way.
2:02 PM Consumer and business sentiment has improved.
2:01 PM Inflation has increased in recent quarters.
2:01 PM Economy will warrant gradual rate hikes. Economic activity is growing at a moderate pace.
2:00 PM No change in the Fed Funds Rate at this meeting.
1:48 PM Past midday, MBS underwater, Stocks mixed ahead of the 2:00 p.m. ET release of the Fed's monetary policy statement.
10:56 AM S&P now near unchanged, giving up early gains.
10:30 AM The Bond pits say MBS look to stay pressured in the new month as nothing has changed in regards to the technical outlook, outlook for increased growth under the Trump administration and thus higher rates. Traders look for increasing information in the months ahead on the Fed's strategy for ending reinvestment purchases.
10:06 AM MBS edge lower after the robust ISM Index data.
10:03 AM The January ISM National Manufacturing Index rises to 56 from 54.5 in December and above the 55 expected.
9:51 AM Dow +90 points.
9:34 AM Stocks open higher fueled by shares of Apple (AAPL, $127.27, +$5.95).
8:41 AM The MBA reported that the 30-year fixed rate conventional rate rose to 4.39% from 4.35%, while jumbos increased to 4.32% from 4.28%.
8:41 AM MBS cut some losses.
8:37 AM The MBAs refinance index -1.4%, purchase index -5.6%.
8:25 AM WTI oil $53.27/barrel, +0.46.
8:24 AM U.S. dollar index 99.77, +0.29.
8:19 AM 10-yr yield 2.48% from yesterday's close of 2.45%.
8:18 AM Bond prices edging lower after the better-than-expected jobs data.
8:16 AM January ADP Private Payrolls +246K vs the 165K expected.
8:13 AM The MBAs Market Composite Index, a measure of total mortgage application volume, fell 3.2% in the latest week.
8:09 AM Apple Inc. (AAPL) reported better-than-expected quarterly earnings results after the bell yesterday and is boosting Stock futures this morning.
8:08 AM MBS open flat to slightly lower.
8:08 AM The ISM National Manufacturing Index will be released at 10:00.
8:01 AM MBS look to open lower ahead of the 8:15 release of the January ADP Private Payrolls report.
8:01 AM The Fed statement will be released this afternoon at 2:00 p.m. ET. There is almost a zero percent chance of a hike to the short-term Fed Funds Rate.
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