February 9th, 2017
Rollover Not Beethoven: The Monthly Bond Rollover will take place this evening. This will change the pricing, and the way the chart looks. This will not affect yields.
Commentary at the close: MBS closed lower in price and tighter on spread vs Treasuries as the recent rally stalled as risk assets soared on tax reform hopes. Mortgage Bonds fell today on Trump tax talk, which lifted Stocks to record highs. President Trump said today that a big league tax announcement will come in the next few weeks "that will be phenomenal in terms of tax." The good news is that we are still above the 50 and 25 day moving average.
3.5% Fannie Mae 30-yr coupon down 31bp at a price of 102.53 down 9bp when rates were set today at 10:00 am Open 102.69 High 102.78 Low 102.47
The Dow gained 118.06 points to 20,172.40, the S&P 500 gained 13.20 points to 2,307.40, while the Nasdaq was up 32.72 points to end at 5,715.18. WTI oil closed at $53/barrel, +$0.66. 10-yr T Note yield 2.39%. Tomorrow's data is limited to Consumer Sentiment.
Trump promises a major tax announcement in a few weeks
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.
3:34 PM Chicago Fed President Evans (FOMC voter) reiterates support for gradual rate hikes; Fed should halt portfolio reinvestment after a "few more" rate hikes; $1.5T is one potential target for the size of the balance sheet (currently $4.5T); 3 rate hikes in 2017 "not unreasonable" but inflation is too low, although moving in the right direction.
3:02 PM MBS at session lows. Continue locking.
1:11 PM The $15B 30-yr Bond auction garners a "C-".
1:05 PM The Monthly Bond Rollover will take place after the close of trading tonight.
1:01 PM At midday, MBS underwater, Stocks holding solid gains. 10-yr yield 2.38%. 15-yr Bond auction results imminent.
11:36 AM The Dow hits a record high of 20,196.
11:24 AM President Trump said earlier that an announcement on taxes would be made in two or three weeks. While this was a cloudy commitment, traders have been able to push the dollar higher and Treasury yields higher in the expectation that more money for investment in the economy would be available and at the same time, supply of U.S. Treasuries would increase. Both MBS and Treasury prices have declined since the statement. The 10-yr yield has moved up to 2.38% from 2.34% this morning.
10:40 AM Freddie Mac reports that the 30-yr fixed rate conventional mortgage ($424K or less) fell slightly this week to 4.17% from 4.19% with 0.4 in points and fees.
10:33 AM The S&P (2,304) and Nasdaq (5,698) hit record highs.
9:36 AM The S&P opens modestly higher as political uncertainty weighs.
9:26 AM St. Louis Fed President Bullard (non-FOMC voter) does not expect Trump policies to overheat U.S. economy this year; no undue inflation pressure building so far
8:33 AM The Treasury will be selling $15B 30-yr Bonds today, results at 1:00 p.m. ET.
8:31 AM Weekly Initial Jobless Claims down 12K to 234K, below the 250K expected.
8:18 AM U.S. dollar index 100.21, -0.05.
8:16 AM The only economic data point due for release today is Weekly Initial Jobless Claims.
8:13 AM WTI oil $52.86/barrel, +$0.52.
8:12 AM 10-yr T Note yield 2.35%, little changed from yesterday's close.
8:10 AM MBS open lower after yesterday's Lock Alert being pressured by higher Stock futures.
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