February 14th, 2017
MBS saw volatility in today's session following Fed Chairs Yellen's "unwise to wait too long to raise rates" comment. The Fannie Mae 3.5% 30-yr coupon opened near unchanged, but fell hard following Ms. Yellen's speech, but did manage to bounce off the lows as bargain hunting set in. Here is how the coupon traded today.
At the close 3.5% Fannie Mae 30-yr coupon down 19 bp at a price of 102.00 down 16 bp when rates were set today at 10:00 am Open 102.09 High 102.19 Low 101.69 (We do not believe it is coincidence that once again we closed at 102)
Stocks rallied led by bank shares on Yellen's comments. Higher rates mean that banks could charge higher interest rates to borrowers.The Dow gained 92.25 points to 20,504.41, the S&P was up 9.33 points to 2,337.58, while the Nasdaq was higher by 18.61 points to 5,782.57, all record high closes. WTI oil settled at $53.20/barrel, +$0.27. 10-yr yield closed at 2.47%, up from the session low of 2.42%.
Fed Chair Yellen: 'Unwise' to wait too long to hike interest rates
US Producer Price Index rose 0.6% in Jan vs 0.3% increase expected
The Producer Price Index (PPI) is a weighted index of prices measured at the wholesale, or producer level. A monthly release from the Bureau of Labor Statistics (BLS), the PPI shows trends within the wholesale markets (the PPI was once called the Wholesale Price Index), manufacturing industries and commodities markets.
|Tuesday, February 14, 2017||Report||For||Estimate||Actual||Prior||Impact|
|8:30 AM||Core Producer Price Index (PPI)||Jan||0.20%||0.30%||0.30%||Moderate|
|8:30 AM||Producer Price Index (PPI)||Jan||0.30%||0.6%||0.20%||Moderate|
|Wednesday, February 15, 2017||Report||For||Estimate||Actual||Prior||Impact|
|8:30 AM||Consumer Price Index (CPI)||Jan||0.30%||0.30%||High|
|8:30 AM||Core Consumer Price Index (CPI)||Jan||0.20%||0.20%||High|
|8:30 AM||Retail Sales||Jan||0.10%||0.60%||High|
|8:30 AM||Retail Sales ex-autos||Jan||0.10%||0.20%||High|
|8:30 AM||Empire State INdex||Feb||7||6.5||Moderate|
|10:00 AM||Housing Market Index||Feb||68||67||Moderate|
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.
3:23 PM The Dow, Nasdaq and S&P are set for record closing highs.
3:08 PM Washington press secretary Spicer says President Trump will present plan to repair nation's crumbling infrastructure in light of Oroville Dam situation.
3:06 PM Atlanta Fed President Lockhart (non-FOMC voter, retiring this year): sees a moderate pace of rate hikes; two hikes in 2017. Dallas Fed President Kaplan (FOMC voter): Fed should hike sooner rather than later; it makes sense to begin removing some accommodation; slack in labor market declining rapidly.
2:33 PM 3.5% Fannie Mae 30-yr coupon down 19 bp at a price of 102.00 down 16 bp when rates were set today at 10:00 am Open 102.09 High 102.19 Low 101.69. A pretty good improvement from this morning
1:23 PM Just past midday, MBS bounce off lows, though still underwater. Stocks higher led by bank shares after Fed Chair Yellen said it would be unwise to wait too long to raise interest rates.
12:42 PM Yellen says economic growth is disappointing.
11:37 AM The MBAs Builder Application Survey surged 22% in January, +9.2% from a year ago.
11:34 AMMBS able to bounce off the lows.
11:05 AM 10-yr T Note yield rises to 2.49% from 2.43% this morning.
11:03 AM Yellen says long term housing reform an important issue.
10:40 AM 3.5% Fannie Mae 30-yr coupon down 41 bp at a price of 101.78 down 38 bp when rates were set today at 10:00 am Open 102.09 High 102.19 Low 101.78
10:35 AM Yellen: says goal is to shrink its balance sheet, meaning to get MBS off its books. In other words the Fed is looking to stop buying MBS.
10:06 AM MBS fall to session lows. Alert To Lock!
10:02 AM Yellen says rising mortgage rates could restrain policy. Waiting to long to hike would be unwise.
10:01 AM Yellen says fiscal policy a source of uncertainty. MBS prices dropping.
9:32 AM Stocks open slightly lower ahead of Yellen's speech.
8:53 AM Fed's Lacker says next rate hike should come sooner rather than later.
8:42 AM CoreLogic reports that there were 21K completed foreclosures nationally in December, down from 36K in December 2015.
8:40 AM The January push-pull PPI data has little impact on Bond prices and yields.
8:39 AM December PPI revised to 0.2% from 0.3%, Core PPI revised to 0.1% from 0.2%.
8:34 AM Year-over-year PPI 1.6%, unchanged, Core 1.2% down from 1.6% in December.
8:31 AM January PPI hotter than expected at 0.6% vs the 0.3% estimated, Core PPI 0.4% vs 0.2% expected.
8:22 AM Chinese inflation was reported to have run hotter than expected in January, which is somewhat weighing on Bond prices.
8:21 AM January PPI will be released at 8:30.
8:20 AM U.S. dollar index 100.79, -0.16.
8:19 AM WTI oil at $53.28/barrel, +$0.36.
8:15 AM The NFIB Small Business Optimism Index rose to a 12-year high of 105.9 for January from 105.8 in December.
8:12 AM 10-yr T Note yield 2.44%, near unchanged.
8:08 AM S&P futures and Mortgage Bonds near unchanged as Fed Chair Yellen's speech awaits any rate clues. Ms. Yellen will be testifying on the state of the U.S. economy in front of the Senate Banking Committee on Capitol Hill beginning at 10:00 a.m. ET.
Johnmarbury.com has attempted to verify the information contained on this post. However any aspect of such may change without notice. Johnmarbury.com does not provide investment advice and does not represent that any of the information or related analysis is accurate or complete at any time. On October 5th we started posting our rates and leaving them on the site for you to refer back to. This will allow you see where actual rates have been along with the news that caused the fluctuations on the rate sheet. I ask that you forgive my spelling and grammatical mistakes. This is due writing skills that are lacking and the need to communicate quickly. Most of the information posted on this blog along with the charts and indexes are available all during the day to the subscrbers of www.themortgagemarketguide.com The cost of subscription is very reasonable.