February 22nd, 2017
Commentary at the close: MBS closed mixed after a mid-afternoon slump then a pop higher as the Fed minutes were seen as less hawkish then expected.
3.5% Fannie Mae 30-yr coupon up 6 bp at a price of 102.22 down 9 bp when rates were set today at 10:00 am Open 102.25 High 102.38 Low 101.84 (S1)
You will notice the Fannie Mae 3.5% 30-yr coupon traded as high as 102.38 and as low as 101.84, which is support one (S1) soon after the Fed minutes. You will see this on the chart below how the MBS appears to have bounced off S1.
Stocks closed mixed but the Dow was able to post its 9th straight record close hitting 20,775.60, +32.60 points. The S&P lost 2.56 points to 2,362.82, while the Nasdaq fell 5.32 points to end at 5,860.62. WTI oil closed at $53.59/barrel, -$0.74. 10-yr yield 2.41%. Tomorrow's economic data is limited to Weekly Initial Jobless Claims.
The Federal Open Market Committee (FOMC) Meeting Minutes are a detailed record of the committee's policy-setting meeting held about two weeks earlier. The minutes offer detailed insights regarding the FOMC's stance on monetary policy, so currency traders carefully examine them for clues regarding the outcome of future interest rate decisions. https://www.investing.com/economic-calendar/fomc-meeting-minutes-108
Wall Street set to open flat ahead of Fed minutes
For more information click: http://www.reuters.com/article/us-usa-stocks-idUSKBN1611G2
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.
4:02 PM Stocks closed mixed, but the Dow posts 9th straight record close of 20,774, +32 points.
2:10 PM The 10-yr yield went from 2.45% before the minutes, down to the current 2.41% after the minutes.
2:08 PM Not much reaction in Stocks after the minutes. MBS bouncing off lows and back into positive territory.
2:04 PM Fed: gradual pace of rate hikes appropriate.
2:03 PM Fed: no indication of selling balance sheet assets.
2:02 PM Fed: some Fed members see rate hikes more quickly than anticipated.
2:01 PM February Fed minutes reveal Fed members said it might be appropriate to raise the Fed Funds Rate fairly soon.
2:01 PM Fed: dollar appreciation could weigh on progress.
1:14 PM The $34B 5-yr Note auction garners a "D" rating.
12:56 PM At midday, MBS flat to lower ahead of the auction results and Fed minutes. Stocks mixed.
12:21 PM Traders await the 1:00 p.m. ET release of today's $34B 5-year Note auction, then the minutes from the February 1 monetary policy statement at 2:00 p.m.
11:01 AM The Dow Jones Industrial Average is up 13% since the election.
10:51 AM The Fannie Mae 30-yr 3.5% coupon falls below resistance at the 50-day Moving Average.
10:46 AM MBS losing momentum, now well below the session highs. Be on guard for an alert to lock.
10:22 AM Dow edges into positive territory after the strong Existing Home Sales data.
10:04 AM The 5.69M January Existing Home Sales at a 10-yr high.
10:02 AM January Existing Home Sales +3.3% from December to an annual rate of 5.69M, above the 5.57M expected.
9:50 AM Stocks cutting 1/2 of opening losses.
9:33 AM Dow lower by 38 points soon after the opening bell on Wall Street.
8:41 AM Fed Fund Futures now show just a 22% chance of a hike to the short term Fed Funds Rate at next month's FOMC meeting.
8:23 AM January Existing Home Sales will be released at 10:00 a.m. ET.
8:15 AM The MBA reports the 30-yr jumbo rate mortgage ($424K or more) at 4.29% from 4.28%, FHA 4.14% from 4.12%.
8:13 AM The MBA also reports that the 30-yr fixed rate conventional mortgage ($424K or less) rose to 4.36% from 4.2%.
8:12 AM The MBAs refinance index -1%, purchase index -2.8%.
8:10 AM The MBAs Market Composite Index, a measure of total mortgage loan application volume, fell 2% in the latest week as rates edged higher.
8:09 AM The Fannie Mae 30-yr 3.5% coupon opens modestly higher at 102.25 and above resistance one (R1) at the 50-day Moving Average (102.11).
8:09 AM U.S. dollar index 101.58, +$0.22.
8:04 AM The Treasury will sell $34B 5-yr Notes today, results at 1:00 p.m. ET and comes after strong demand for the 2-yr offering yesterday.
8:03 AM The 10-yr T Note yield edges lower to 2.41%.
8:02 AM MBS look to open flat to higher as S&P futures slip after record high closes yesterday for the Dow (20,743), S&P (2,365) and the Nasdaq (5,865).
8:02 AM The Fed minutes from the February 1 meeting will be released at 2:00 p.m. ET this afternoon.
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