Tuesday

April 11th, 2017

Commentary at the close: Mortgage Bond prices rallied to just below the 2017 highs as the 3.5% Fannie Mae 30-yr coupon closed below resistance at 102.72, a level it has closed above just four times this year. The Bond closed at 102.66, +38bp. The geopolitical tensions kept a lid on and pressured Stocks lower for most of the session before closing with minor losses. The Dow lost 6.72 points to 20,651.30, the S&P fell by 3.38 points to 2,252.78, while the NASDAQ was lower by 14.15 points to end at 5,866.77. WTI oil closed at $53.40/barrel, +$0.32. 10-yr yield 2.30%. There are no economic reports due for release tomorrow.

 

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 After being down over 100 points, the Dow closes with just a six point loss.
3:58 PM Minneapolis Fed President Kashkari (FOMC voter): Fed can do a bit better on its dual mandate of price stability and maximizing employment.
3:53 PM San Francisco Fed President Williams (non-FOMC voter) says Fed may partially end some balance-sheet reinvestments and partially continue others; balance sheet unwinding could take five years.
3:40 PM Stocks once again trying to make a run at trading to flat levels.
3:17 PM Stocks tried to push into positive territory but the rally fizzles out. Dow -55 points. Investors playing it safe pushing Bond prices higher on rising U.S. tensions with Syria and North Korea.
2:36 PM Saudi Arabia says it wants oil output cuts extended.
2:28 PM MBS able to bounce back to session highs.
1:48 PM MBS bounce around on the ebb and flow of Stock prices, geopolitical news and the Treasury auction results.
1:11 PM 10-yr Note auction garners a "C-" rating.
1:05 PM Dow cuts most of its losses.
1:03 PM MBS well off session highs. Be on guard. 10-yr T Note results imminent.
12:17 PM Stocks cutting into some of their losses.
12:12 PM More renters put moving plans on hold even as financial optimism grows, reports Freddie Mac.
12:08 PM MBS were supported this morning as the New York Fed purchased $1.188B Fannie/Freddie 3.5% and 4% coupons.
12:06 PM MBS trade in a tight range for the past few hours with little movement as they hold gains. $20B 10-yr Note auction results due at 1:00 p.m. ET.
11:34 AM Job openings in the U.S. hit a seven-month high in February as the rate of hiring slips, which indicates that the job market continues to tighten, according to the JOLTS report (Job Opening and Labor Turnover Survey).
11:31 AM MBS now off session highs, though still holding gains. Dow -100 points.
10:11 AM The 10-yr T Note yield edges lower to 2.32% on the safe haven trade.
10:02 AM Stocks edge into negative territory.
9:32 AM Stocks open modestly lower.
9:27 AM North Korea vows response to U.S. move, says ready for war.

9:20 AM  3.5% Fannie Mae 30-yr coupon up 16  bp at a price of 102.44 down 3 bp when rates were set yesterday at 10:00 am (Keep in mind Mortgage Bonds had 19 bprollover last night.  This has no affect on yields.  Think of this as an extension) Open 102.38 High 102.47 Low 102.38

 

8:28 AM Just an update, the Bond markets will close early Thursday at 2:00 p.m. ET and both Stocks and Bonds will be closed on Friday in observance of the Good Friday holiday.
8:25 AM Ms. Yellen did not offer any words on the timing of future interest rate hikes nor any clues on reducing its massive $4.5T balance sheet.
8:23 AM Fed Chair Yellen spoke late yesterday saying, "I think we have a healthy economy now" and that inflation is "reasonably close" to the Fed's 2% target range.
8:22 AM The Treasury will sell $20B 10-yr Notes today, results at 1:00 p.m. ET and comes after yesterday's uneventful 3-yr offering.
8:21 AM WTI oil $53.03/barrel, near unchanged.
8:17 AM There are no major economic reports due for release today.
8:14 AM S&P futures slightly lower as geopolitical concerns modestly boost the safe haven trade.
8:11 AM 10-yr T Note yield 2.34% from yesterday's close of 2.36%.
8:10 AM After last night's Mortgage Bond Rollover, prices open flat to modestly higher.
8:07 AM Fannie Mortgage Bonds had their Monthly Rollover last night with the effect being 19bp for 30-yr 3.5% coupon.

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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