February 7th, 2017
Commentary at the Close: MBS closed higher in today's session though the gains were modest as Stocks closed near unchanged levels as the Stock rally pauses near record levels. There were no major economic reports released today. The Bond closed at 102.53, +12bp. Stocks closed mixed as energy shares weighed on the equity markets. The Dow gained 37.87 points to 20,090.29, the S&P closed near unchanged at 2,293.08, while the Nasdaq closed up 10.66 points to end at 5,674.22. WTI oil closed at $52.17/barrel, -$0.84. 10-yr yield 2.39%. There are no economic reports due for release tomorrow. The Treasury will sell $23B 10-yr Notes, results at 1:00 p.m. ET.
Commentary 10:59 AM Based on the trading below you will notice that the low was 102.31 which is right on the 25 moving average. This happened between 8 and 9 today. It appears that the bond traders started buying when it hit this level. This looks like a good sign.
10:59 AM 3.5% Fannie Mae 30-yr coupon up 3 bp at a price of 102.44 up 6bp when rates were set today at 10:00 am Open 102.41 High 102.47 Low 102.31
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.
2:31 PM MBS giving up gains.
1:35 PM Minneapolis Fed President Kashkari (voter) would prefer to err on the side of too few rate hikes than too many; does not see surge in U.S. inflation; Kashkari forecast only two rate hikes in 2017 in the December dot plot, so he is a dove.
Why tighten monetary conditions when inflation remains below the Fed’s target
1:11 PM The $24B 3-yr offering garners a "C+" rating.
12:38 PM S&P trades to unchanged after trading higher all morning. MBS at session highs with modest gains.
11:26 AM Black Knight Financial Services reports that home prices are the least affordable in seven years.
10:42 AM Despite the Stock rally, the 3.5% Fannie Mae 30-year coupon hits a session high, though the gain is minimal and off the early low.
10:17 AM The Job Opening and Labor Turnover Survey (JOLTS) saw a slight decrease in job openings in December to 5.501 million from November's 5.505 million.
10:12 AM Higher Stock prices and added Bond supply today are weighing on Mortgage Bonds. Carefully floating is recommended.
9:40 AM Stocks open higher, Dow +78.
9:11 AM The Fannie Mae 30-yr 3.5% coupon trades above resistance one (R1) at the 50-day Moving Average (102.19).
9:01 AM CoreLogic reports December home prices, including distressed sales, rose 7.2% year-over-year, month-over-month +0.8% from November to December.
8:52 AM The VIX is near multi-year lows, 11.24, and is considered the best gauge of fear in the equity markets. It traded as high as 90 at the height of the Great Recession. The higher the number, the more fear in the markets and vice versa. VIX is a trademarked ticker symbol for the CBOE Volatility Index.
8:36 AM WTI oil $52.67/barrel, -$0.36.
8:32 AM The Treasury will be selling $24B 30-yr Notes today, results at 1:00 p.m. ET., part of $62B being peddled this week.
8:28 AM There are no major scheduled economic reports due for release today.
8:27 AM U.S. dollar index 100.61, +0.74.
8:19 AM 10-yr T Note yield 2.42%, up from 2.41% yesterday.
8:10 AM Late yesterday Philly Fed President Harker (voter) said that a rate hike should be on the table at the March 15 FOMC meeting, which boosted the dollar.
8:08 AM MBS open near unchanged as global Stocks bounced and S&P futures drift higher and as the dollar rallied.
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