May 15th, 2017
Home builder confidence grew in May as the housing market continues to strengthen. The National Association for Home Builders reported that its May Housing Market Index rose two points in May from April to 70. It was the second highest reading since the housing market downturn back in 2008 - 2009. “This report shows that builders’ optimism in the housing market is solidifying, even as they deal with higher building material costs and shortages of lots and labor,” said NAHB Chairman Granger MacDonald, a home builder and developer from Kerrville, Texas.
Mortgage applications to purchase new homes declined in April, but the decrease could be due in part to the strong numbers in March. The Mortgage Bankers Association reported that applications fell by 20% from march and were down 4.3% from a year ago. The average loan size of new homes decreased from $328,100 in March to $326,284 in March. Breaking down the report it showed that conventional loans composed 68.5% of loan applications, FHA loans composed 17.7%, RHS/USDA loans composed 1.4% and VA loans composed 12.4%.
Manufacturing activity in the New York State region fell into negative territory in May for the first time since October. The New York Federal Reserve reported that its Empire Manufacturing Index fell six points to -1.0, below the +7.5 expected. Within the report it showed that the new orders index fell, shipments edged lower, while the labor market component showed a modest increase in both employment and hours worked.
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.
Commentary at the close: MBS traded in a tight range today ending with just minor losses despite the S&P and NASDAQ closing at record highs. Weak Empire Manufacturing and a strong NAHB Housing Market Index were a wash. The Fannie mae 30-yr 3.5% coupon closed at 102.53, -9bp. The Dow closed at 20,981.94, the S&P 500 settled at 2,402.32, while the NASDAQ finished at 6,149.67, +28.44 points. WTI oil closed at $48.85/barrel, +$1.01. 10-yr yield 2.34%. Housing Starts and Building Permits will be released tomorrow morning.
|Mon, May 15 4:00 PM S&P (2,402) and the NASDAQ (6,149) close at all-time highs.|
|Mon, May 15 2:44 PM The S&P 500 hits an intraday record high of 2,404.|
|Mon, May 15 2:29 PM The national median home price rose nearly 7% in the first quarter of 2017 to $232,100, the sharpest gain in nearly two years.|
|Mon, May 15 2:27 PM Total existing-home sales climbed 1.4% in the first quarter of 2017 quarter to a seasonally adjusted annual rate of 5.62 million, the highest since the first quarter of 2007, according to the National Association of Realtors.|
|Mon, May 15 1:06 PM At midday, MBS flat to slightly lower. Stocks higher. 10-yr yield 2.34%.|
|Mon, May 15 10:27 AM Compared to March 2017, mortgage applications to purchase new homes decreased by 20% relative to the previous month.|
|Mon, May 15 10:22 AM The MBA reports that mortgage applications for new home purchases fell 4.3% in April compared to April 2016.|
|Mon, May 15 10:19 AM The NAHB Housing Market Index +2 points to 70.|
|Mon, May 15 9:31 AM Stocks open higher.|
9:08 AM ET 3.5% Fannie Mae 30-yr coupon up 31 bp at a price of 102.53 down 9 bp when rates were set on Friday at 10:00 am Open 102.53 High 102.56 Low 10250
Numbers to watch for: 102.28 50 day moving average Traders consider this a buying opportunity
102.66 25 day moving average the market considers a selling opportunity
|Mon, May 15 8:54 AM No reaction in MBS to the weak Empire Manufacturing report.|
|Mon, May 15 8:42 AM May Empire Manufacturing -1.0 vs 7.5 expected.|
|Mon, May 15 8:40 AM U.S. dollar index 98.70, -0.42.|
|Mon, May 15 8:28 AM WTI oil at $49.49/barrel, +$1.65.|
|Mon, May 15 8:24 AM 10-yr T Note yield 2.34%, near unchanged.|
|Mon, May 15 8:23 AM S&P futures rising as oil prices gush higher offsetting concerns of a massive cyber attack that locked up 200K computers in more than 150 countries.|
|Mon, May 15 8:20 AM There are no Treasury Note or Bond auctions this week.|
|Mon, May 15 8:16 AM April Housing Starts and Building Permits will be released tomorrow, Weekly Claims and the Philly Fed on Thursday.|
|Mon, May 15 8:14 AM The economic calendar is on the light side with just a handful of of reports being released. May Empire manufacturing will be released at 8:30 a.m. ET.|
|Mon, May 15 8:12 AM MBS open flat to lower as the week begins on an unassuming note.|
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