May 16th, 2017
The housing market received a blow today after newly constructed housing fell to a six-month low, due in part to a plunge in rental construction. April Housing Starts fell 2.6% from March to an annual rate of 1.172 million units, below the 1.26 million expected. Single-family construction, which makes up a large portion of the residential market, rose 0.4% to an annual pace of 835,000 units. The rental construction sector plunged 9.2% and have declined four straight months, which could suggest that the rental markets is beginning to peak.
Government sponsored entity and secondary mortgage market provider Fannie Mae released its Economic & Strategic Housing Outlook for May on Tuesday. The report showed that housing was a bright spot during the first quarter, and home sales performed well going into the spring season, thanks to solid labor market conditions and a recent retreat in mortgage rates. On the economic front, Fannie Mae says that current data suggests that consumer spending growth will pick up in the second quarter, while businesses will likely increase production in an effort to rebuild inventories.
Mortgage modification rates declined in the past week after hitting an 18-month high back in January. Fannie Mae and Freddie Mac recently cut the rate to modify a mortgage from 4.25% to 4.125%. The modification program is designed to help those borrowers who are ineligible for the Home Affordable Modification Program. The decrease came after mortgage rates recently declined.
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.
MBS were able to edge higher in today's session due in part to the major Stock indexes closing near unchanged along with weak Housing Starts. The Fannie Mae 30-yr coupon 3.5% coupon closed at 102.69, +16bp and just above the resistance of the 25 day moving average (102.67) . Stocks closed near unchanged. The Dow at 20,979.75, the S&P at 2,400.67, while the NASDAQ closed at 6,169.87, +20.19 points. WTI oil closed at $48.66/barrel, down $0.19. 10-yr T Note yield 2.32%. There are no major economic reports due for release tomorrow.
|Tue, May 16 3:46 PM Stocks continue to hover near unchanged at all-time high levels.|
|Tue, May 16 2:28 PM The 3.5% Fannie Mae 30-yr coupon flirts with resistance at the 25-day Moving Average of 102.67, now at 102.72.|
|Tue, May 16 1:40 PM With all of the big U.S. economic releases for this week out of the way and no new Treasury supply, traders will focus on the decline in the U.S. dollar and stocks.|
|Tue, May 16 1:39 PM The probability for a Fed rate hike on June 14 is now 74%.|
12:49 PM ET 3.5% Fannie Mae 30-yr coupon up 13 bp at a price of 102.66 up 3 bp when rates were set today at 10:00 am Open 102.47 High 102.78 Low 102.44
Numbers to watch for:
102.28 50 & 100 day moving average the market considers a buying opportunity
102.67 25 day moving average the market considers a selling opportunity
|Tue, May 16 12:10 PM|
Fannie Mae and Freddie Mac recently cut the rate to modify a mortgage from 4.25% to 4.125%.
|Tue, May 16 11:32 AM|
Fannie Mae - the tight supply of homes for sale continues to act as both a boon to home prices and an impediment to affordability.
|Tue, May 16 11:22 AM Fannie Mae reports that housing was a bright spot in the first quarter, and home sales performed well going into the spring season due in part to a solid market market and a decline in mortgage rates.|
|Tue, May 16 10:33 AM MBS edge higher on Stock weakness.|
|Tue, May 16 10:27 AM Stocks slip into negative territory.|
|Tue, May 16 9:32 AM Stocks open modestly higher aided in part by strong earnings from Home Depot.|
|Tue, May 16 8:47 AM Eurozone economic data better than expected. U.K. inflation runs a bit hotter.|
|Tue, May 16 8:40 AM Not much reaction to the Housing Starts miss for MBS.|
|Tue, May 16 8:36 AM April Building Permits -2.4% from March to an annual rate of 1.229 million vs 1.260 million expected .|
|Tue, May 16 8:33 AM April Housing Starts -2.6% from March to an annual rate of 1.172 million, below the 1.255 million expected.|
|Tue, May 16 8:29 AM The New York Fed will purchase up to $1.625B in Fannie/Freddie 30-yr 3.5% and 4% coupons.|
|Tue, May 16 8:26 AM U.S. dollar index 98.35, -0.44, a six-month low.|
|Tue, May 16 8:26 AM WTI oil $49.17/barrel, +$0.32.|
|Tue, May 16 8:24 AM 10-yr yield 2.35%.|
|Tue, May 16 8:22 AM Stock futures higher after the S&P (2,402) and the NASDAQ (6,149) both closed at record highs yesterday.|
Tue, May 16 8:20 AM MBS open near unchanged ahead of the 8:30 a.m. ET release of April Housing Starts and Building Permits.
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