February 28th, 2017
Commentary at the close: MBS traded flat to higher for most of the session until a few Fed members made some negative Bond comments, which caused prices to plunge. The 3.5% Fannie Mae 30-yr coupon traded as high as 102.62 and fell to 102.19 only to close at 102.28, -19bp. As you can see on the chart below that we are in between support and resistance which would normally lower expectations of dramatic move in either direction. Normal logic takes a backseat to tonight's headline risk with President Trump speaking to a joint session of Congress. His words could conjure up big headline risk which in reality may be an everyday occurrence. So far financial markets seem to like what he is saying.
Stocks finally paused after their recent run higher which saw the Dow, NASDAQ and S&P at all-time highs. Today the Dow lost 25.20 points to 20,812.24, the S&P fell 6.11 points to 2,363.64, while the NASDAQ as down 36.46 points to end at 5,825.43. WTI oil closed at $54.01/barrel, near unchanged. 10-yr T Note yield rose to 2.39% from the session low of 2.33%. Tomorrow's economic data includes Personal Income and Spending, Core PCE and the ISM Index.
Gross domestic product (GDP) is the monetary value of all the finished goods and services produced within a country's borders in a specific time period. Though GDP is usually calculated on an annual basis, it can be calculated on a quarterly basis as well. GDP includes all private and public consumption, government outlays, investments and exports minus imports that occur within a defined territory. Put simply, GDP is a broad measurement of a nation’s overall economic activity.
|Tuesday, February 28, 2017||Report||For||Estimate||Actual||Prior||Impact|
|8:30 AM||Gross Domestic Product (GDP)||Q4||2.10%||1.90%||1.90%||High|
|8:30 AM||GDP Chain Deflator||Q4||2.10%||2.00%||2.10%||High|
|9:00 AM||S&P/Case-Shiller Home Price||Dec||5.60%||5.60%||5.20%||Moderate|
|9:45 AM||Chicago PMI||Feb||53||57.4||50.3||High|
|10:00 AM||Consumer Confidence||Feb||111.5||114.8||111.8||Moderate|
|Wednesday, March 1, 2017||Report||For||Estimate||Actual||Prior||Impact|
|8:30 AM||Core PCE||Jan||NA||1.70%||High|
|8:30 AM||Core PCE||YOY||0.20%||0.10%||High|
|8:30 AM||Personal Spending||Jan||0.30%||0.50%||Moderate|
|8:30 AM||Personal Income||Jan||0.40%||0.30%||Moderate|
|10:00 AM||ISM Index||Feb||56.1||56||High|
|2:00 PM||Beige Book||Mar||NA||NA||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.
4:20 PM 3.5% Fannie Mae 30-yr coupon down 19 bp at a price of 102.28 down 25 bp when rates were set today at 10:00 am Open 102.62 High 102.34 Low 102.19
4:17 PM Fed's Williams says March rate hike up for serious consideration, says once rates are away from zero, Fed will allow balance sheet to shrink meaning getting MBS and Treasury positions off the balance sheet.
4:02 PM Dow snaps 12-day straight win streak, declines 25 points today.
12:35 PM MBS at session highs with modest gains. Dow, S&P and NASDAQ push further into negative territory.
11:09 AM The Dow, S&P and NASDAQ all trade with modest losses.
10:19 AM The S&P slips as financials, discretionary stocks drag.
10:02 AM February Consumer Confidence 114.8 vs 111.5 expected and up from 111.8 in January. The 114.8 is the best reading since July 2001.
9:50 AM The February Chicago PMI rises to 57.4, above the 54 expected and up from the 50.3 recorded in January.
9:45 AM Stocks open lower, but the losses are minimal at this point.
9:06 AM Case Shiller 20-city Home Price Index +5.6% from December 2015 to December 2016.
8:37 AM Within the GDP report, consumer spending rose to 3% from 2.5%.
8:32 AM Q4 2016 GDP 2nd look 1.9%, just below the 2.1% expected and matches the first reading.
8:19 AM WTI oil $53.71/barrel, -0.33.
8:18 AM U.S. dollar index 101.00, -0.12.
8:08 AM MBS open near unchanged.
8:03 AM U.S. Stock futures slightly lower ahead of the 8:30 a.m. ET release of Q4 2016 GDP. Chicago PMI at 9:45, Consumer Confidence at 10.
8:03 AM 10-yr yield 2.35%.
8:03 AM President trump will make his first address to Congress tonight at 9:00 p.m. ET and could discuss the health care system, tax reform and defense spending.
7:54 AM Dallas Fed President Kaplan (FOMC voter) says Fed should begin removal of policy accommodation; exact timing is not important.
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