May 8th, 2017
Contrary to reports that home prices across the nation have risen higher than previous peaks, a new study by online real estate information company Trulia reports that prices have not yet recovered their full value that was lost when the housing bubble burst back in 2008. The survey showed that 34.2% of homes have reached levels that are above their pre-recession peaks. There are pockets where values have risen to pre-recession levels, such as Denver and San Francisco, though areas like Las Vegas and parts of Arizona have seen only 3% of homes hit their price peaks.
Cleveland Fed President Mester (non-FOMC voter) said inflation is nearing the 2% target, the Fed's employment goal has been reached, and recent economic weakness is transitory. In order for the Fed to hike rates further, they want to see Core Personal Consumption Expenditure rise confidently above 2%. Mr. Mester went on calling for continued removal of low interest rates and announcing plans in 2017 to trim the Fed's $4.5 trillion portfolio of Treasury and Mortgage Backed Securities.
Fannie Mae released its monthly Home Purchase Sentiment Index revealing that Fannie housing sentiment in April rebounded following the March dip. The Fannie Mae Home Purchase Sentiment Index® (HPSI) increased 2.2 percentage points in April to 86 with five of the six components increasing. The net share of Americans who reported that now is a good time to buy a home rose 5 percentage points, while the net share reporting that now is a good time to sell a home decreased 5 percentage points. Consumers also expressed greater confidence about the stability of their jobs, with the net share of that component jumping 7 percentage points.
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.
Commentary at the close: Not much action in the Mortgage Bond market as prices traded in a tight range ending with modest losses, despite the S&P 500, Dow and NASDAQ closing near unchanged. There were no economic reports due for release today. The Fannie Mae 30-yr 3.5% coupon closed at 102.50, -9bp. The U.S. Labor Market Conditions Index (LMCI) rose to 3.5 in April from 0.4 in March. The New York Fed's Survey of Consumer Expectations for April showed median one-year-ahead inflation expectations rising to 2.8%. Both news items capped prices. The Dow closed at 21,012.28, the S&P at 2,399.38, while the NASDAQ settled at 6,102.66, a record high. WTI oil closed at $46.43, +$0.21. 10-yr T Note yield rose to 2.38%. There are no major economic reports due for release tomorrow
|Mon, May 08 4:01 PM S&P closes near unchanged.|
|Mon, May 08 2:55 PM Mot much movement in MBS nor Stocks today as investors look to the next catalyst to move prices one way or the other.|
|Mon, May 08 1:14 PM At midday, not much action in Stocks and Bonds as both asset classes trade near unchanged.|
|Mon, May 08 11:33 AM Fed Fund Futures show an 83% chance of a hike to the Fed Funds Rate in June.|
|Mon, May 08 11:30 AM Stock and Bond prices trade near unchanged.|
|Mon, May 08 11:11 AM Fannie Mae reports housing sentiment in April rebounded following the March dip.|
|Mon, May 08 9:37 AM The S&P 500 opens near unchanged.|
9:02 AM ET 3.5% Fannie Mae 30-yr coupon down 0 bp at a price of 102.59 up 6 bp when rates were set on Friday at 10:00 am Open 102.69 High 102.72 Low 102.53
Numbers to watch for: 102.72 25 day moving average
103.12 the market considers a selling oportunity
103.47 200 day moving avererage
|Mon, May 08 8:42 AM This week the Treasury will sell $24B three-year notes on Tuesday, $23B 10-year notes on Wednesday and $15B 30-year Bonds on Thursday.|
|Mon, May 08 8:41 AM MBS quickly give up gains.|
|Mon, May 08 8:32 AM U.S. dollar index 98.83, +0.29.|
|Mon, May 08 8:30 AM 10-yr yield 2.34%.|
|Mon, May 08 8:30 AM WTI oil at $46.16/barrel, near unchanged.|
|Mon, May 08 8:27 AM There are no economic reports due for release today.|
|Mon, May 08 8:23 AM S&P futures near unchanged as the market looks for a new catalyst after the french election with prices near record highs.|
|Mon, May 08 8:20 AM MBS open near modestly higher after the French election was won by Emmanuel Macron, which was expected.|
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