Consumer Price Index (CPI)

February 15th, 2017

Commentary at the close: Strong economic data coupled with higher numbers from the Consumer Price Index pressured Bond prices lower, yields higher.

3.5% Fannie Mae 30-yr coupon down 19 bp at a price of 101.84 flat when rates were set today at 10:00 am Open 101.94 High 102.00 Low 101.69  You will notice that that we closed at S1.  (See chart below)

The Dow rose 107.45 points to 20,611.86, the S&P closed higher by 11.67 points to 2,349.25, while the Nasdaq saw a gain of 36.57 points to end the bullish session at 5,819.45 - all record high closes. WTI oil closed at $53.11/barrel, near unchanged. 10-yr T Note yield moved up to 2.50%. Tomorrow's economic data includes Housing Starts/Building Permits, Weekly Initial Jobless Claims and the Philly Fed.

What is the 'Consumer Price Index - CPI'

The Consumer Price Index (CPI) is a measure that examines the weighted average of prices of a basket of consumer goods and services, such as transportation, food and medical care. It is calculated by taking price changes for each item in the predetermined basket of goods and averaging them. Changes in the CPI are used to assess price changes associated with the cost of living; the CPI is one of the most frequently used statistics for identifying periods of inflation or deflation.

Read more: Consumer Price Index - CPI Definition | Investopedia http://www.investopedia.com/terms/c/consumerpriceindex.asp#ixzz4YbmyIsS9 
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Today's Agenda

 

Wednesday, February 15, 2017ReportForEstimateActualPriorImpact
8:30 AMConsumer Price Index (CPI)Jan0.30%0.6%0.30%High
8:30 AMCore Consumer Price Index (CPI)Jan0.20%0.3%0.20%High
8:30 AMRetail SalesJan0.10%0.4%0.60%High
8:30 AMRetail Sales ex-autosJan0.10%0.8%0.20%High
8:30 AMEmpire State INdexFeb718.76.5Moderate
10:00 AMHousing Market IndexFeb686567Moderate

 

 

Tomorrow's Agenda

 

Thursday, February 16, 2017ReportForEstimateActualPriorImpact
8:30 AMJobless Claims2/11245 234KModerate
8:30 AMPhiladelphia Fed IndexFeb17.5 23.6High
8:30 AMHousing StartsJan1220K 1226KModerate
8:30 AMBuilding PermitsJan1230K 1210KModerate

 

 

 

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.

4:24 PM Russian spy ship spotted near U.S. submarine base in Connecticut.

3:57 PM Stocks closing at record highs led again by bank shares. Strong economic data also chips in, Trump's tax talk.

3:25 PM Stock gains accelerate into uncharted territory as the Dow, S&P and Nasdaq all hit record highs as the rally marches on.

1:56 PM President Trump, in a meeting with top executives at U.S. retail companies this morning, said he would lower taxes substantially and simplify the tax code - echoing a vow he made last Thursday that renewed optimism about the economy and revived the Stock rally.

1:22 PM At midday, MBS underwater, Stocks holding gains. 10-yr yield 2.51%.

11:11 AM Stocks continue their winning ways as the Dow, Nasdaq and S&P hit fresh record highs. Dow +80 points to 20,584.

10:26 AM Fed Fund Futures now show a 22% probability of an interest rate hike in March.

10:22 AM The MBA also reported that the average mortgage loan rate for a conforming 30-year fixed-rate mortgage ($424K or less) decreased from 4.35% to 4.32%. The rate for a jumbo 30-year fixed-rate mortgage ($424K or above) rose from 4.27% to 4.28%. However, the data was before yields pushed higher and Mortgage Bond prices declined.

10:19 AM The MBAs purchase index -5%, refinance index -3%. Refinance application volume at lowest level since June 2009.

10:17 AM The MBAs Market Composite Index, a measure of total mortgage loan application volume, fell 3.7% in the latest week.

10:01 AM The February NAHB Housing Market Index at 65 vs 68 expected and down from the January reading of 67.

9:42 AM S&P flat after record highs yesterday.

9:12 AM 3.5% Fannie Mae 30-yr coupon down 25 bp at a price of 101.78 down 38 bp when rates were set yesterday at 10:00 am Open 101.94 High 102.00 Low 101.69

8:49 AM The new York Fed will purchase up to $1.475B in Fannie/Freddie 30-yr 3s and 3.5s beginning at 9:00 a.m. ET, which could lend some support.

8:46 AM Fed Chair Yellen will be back on Capitol Hill this morning beginning at 10:00 a.m. ET in front of the House Financial Services Committee.

8:41 AM December Retail Sales revised higher to 1% from 0.6%, ex-autos revised to 0.4% from 0.2%.

8:39 AM 10-yr yield rises to 2.52% from earlier number of 2.46%.

8:38 AM January Retail Sales 0.4% vs 0.1% expected, ex-autos, 0.8% vs 0.4%, also adding to downward pressure on Bond prices.

8:37 AM In addition, Bond prices pressured lower by February Empire Manufacturing 18.7 vs 7 expected, up from 6.5 in January.

8:35 AM Year-over-year CPI 2.5%, up from 2.1% in December, Core 2.3% from 2.2%. MBS decline, yields push higher on the hot CPI data.

8:34 AM January CPI hotter than expected at 0.6% vs 0.3%, Core CPI 0.3% vs 0.2%.

8:26 AM Fed Fund Futures show an 18% chance of a hike to the Fed Funds Rate in March.

8:20 AM U.S. dollar index 101.46, +0.22 after Yellen's rate talk yesterday.

8:19 AM Today's economic data includes CPI, Retail Sales, Empire Manufacturing and the NAHB Housing Market Index.

8:12 AM Ms Yellen's words sent Bond prices lower, yields higher, and in the same time sent the Dow (20,504), Nasdaq (5,782) and the S&P (2,337) to close at record highs.

8:08 AM MBS open flat to slightly lower after Fed Chair Yellen said yesterday it would be "unwise to wait too long to hike interest rates" and painted a largely upbeat picture of the economy.

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.

 

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