Tame Inflation & Lower than expected Retail Sales

Tame Inflation & Lower than expected Retail Sales

May 12th, 2017

April Retail Sales rose 0.4% versus the 0.6% expected, while x-autos gained 0.3%, below the 0.5% expected. The 0.4% was an improvement from the 0.1% reported in March, which was also revised higher from -0.3%. Consumers spent at auto dealers, hardware stores and e-commerce sites.

The inflation reading Consumer Price Index was up 0.2% in April, in line with estimates. The year-over-year number declined to 2.2% from 2.4%, which was bond friendly. When stripping out food and energy, the Core CPI saw a 0.1% gain in April, just below the 0.2% expected. Year-over-year slipped to 1.9% from the +2% that has been the norm over the past 12 months.

The Census bureau shows that 854,000 new-owner households were formed during the first quarter of 2017 versus the 365,000 new rental households. It's the first time in 10 years that there were more new buyers than renters, per Trulia. Seeing such a shift from buying a home rather than renting is a very good sign. 

 

 

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.

newsletter chart 170512

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MBS rose today due in part to tame inflation and lower Stock prices. The Fannie Mae 30-yr 3.5% coupon gained 41bp to end at 102.59. Stocks were mixed in sympathy with weak department store earnings. The Dow lost 22.81 points to 20,896.61, the S&P 500 lost 3.54 points to 2,390.90, while the NASDAQ was up 5.26 points to end at 6,121.23. WTI oil was last seen at $47.91/barrel, near unchanged. 10-yr T Note yield fell to 2.32%. Next week's economic calendar is on the light side with just a few reports. Have a great weekend!

Fri, May 12 3:08 PM Trading slows as the day comes to an end. MBS holding gains, Dow. S&P lower, NASDAQ holding meager gains.
Fri, May 12 12:51 PM Preliminary May Consumer Sentiment 97.7 vs 96.5 expected, no impact.
Fri, May 12 12:31 PM The Atlanta Fed's GDPNow forecast for Q2 2017 at 3.2%.
Fri, May 12 12:30 PM Fed's Harker says two more rate hikes this year seems appropriate.
Fri, May 12 10:47 AM MBS rise to session highs.
 

9:58 AM ET  3.5% Fannie Mae 30-yr coupon up 31 bp at a price of 102.50  up 38 bp when rates were set on Wednesday  at 10:00 am Open 102.25 High 102.50 Low 102.25

Numbers to watch for: 102.26 50 day moving average Traders consider this a buying opportunity

                                102.65  25 day moving average the market considers a selling opportunity

Fri, May 12 9:37 AM Stocks open modestly lower.
Fri, May 12 8:40 AM The New York Fed will be purchasing up to $1.625B in Fannie/Freddie 30-yr 3.5% and 4% coupons beginning at 11:15 a.m. ET.
Fri, May 12 8:37 AM Tame inflation and lower-than-expected Retail Sales data gives MBS a slight boost.
Fri, May 12 8:33 AM April CPI 0.2%, inline, year-over-year 2.2% from 2.4%. Core CPI 0.1% vs 0.2%, year-over-year 1.9%.
Fri, May 12 8:32 AM April Retail Sales 0.4% vs 0.6% expected, x-autos 0.3% vs 0.5% expected.
Fri, May 12 8:25 AM The Fannie Mae 30-yr 3.5% coupon hovers near support at the 50- and 100-day Moving Averages .
Fri, May 12 8:18 AM WTI oil $47.83/barrel, unchanged.
Fri, May 12 8:17 AM U.S. dollar index 99.51, unchanged.
Fri, May 12 8:16 AM Dismal department store earnings weigh on S&P futures.
Fri, May 12 8:11 AM Markets look to the 8:30 a.m. ET release of April CPI and Retail Sales.
Fri, May 12 8:11 AM 10-yr yield unchanged at 2.39%.
Fri, May 12 8:10 AM MBS open flat with a slight positive bias with little headlines overnight.

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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