Thursday

May 18th, 2017

Mortgage rates edged lower in the latest week and remain just above all-time lows. Freddie Mac reported that the 30-year fixed mortgage rate declined to 4.02% from 4.05% in the latest week with 0.5 in points and fees. Mortgage rates continue to remain low, due to low inflation and the political turmoil out of Washington D.C., which pushed Bond prices higher and rates lower. In addition, the U.S. Federal Reserve continues to purchase Mortgage Backed Securities in the open markets, which has a lowering effect on mortgage rates.

Americans filing for first-time unemployment benefits continue to hover near lows not seen since the early 1970s as the labor market continues to strengthen. Weekly Initial Jobless Claims fell by 4,000 to 232,000, below the 240,000 expected. Jobless claims have now remained below the 300,000 level for the longest stretch since 1970. Continuing claims declined 22,000 to 1.90 million in the week ended May 6, the lowest level since November 1988.

Manufacturing activity in the Philadelphia region surged in May signaling that the sector continues to expand. The Philadelphia Fed Index increased from a reading of 22.0 in April to 38.8 this month. The index has been positive for 10 consecutive months. Within the report it showed that current new orders and shipments indexes remained at high readings. In addition, firms reported an increase in manufacturing employment this month.

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.

After hitting six-month highs this morning, the Fannie Mae 30-yr 3.5% coupon fell 38bp from the session high to the low, which prompted our Alert to Lock. The Bond closed at 103.06, -12bp. Stocks rebounded from yesterday's sell-off. The Dow rose 56.09 points to 20,663.02, the S&P 500 was up 8.69 points to 2,365.72 while the NASDAQ gained 43.89 points to end at 6,055.13. WTI oil closed at $49.35/barrel, +$0.28. The 10-yr T Note yield closed at 2.22%. There are no economic reports due for release tomorrow.
Thu, May 18 2:16 PM After the worse day this year for Stocks yesterday, the Dow is up 100 points today.
Thu, May 18 1:56 PM MBS hit session lows as Stocks gain strength. Alert to Lock!
Thu, May 18 1:31 PM Police do not suspect a link to terrorism in the Times Square incident where a driver plowed into pedestrians, killing one and injuring many. The driver has a history of DWI's.
Thu, May 18 12:30 PM Preliminary reports say the incident in Times Square was accidental.

12:12 PM ET  3.5% Fannie Mae 30-yr coupon down 3 bp at a price of 103.19  down 3 bp when rates were set today at 10:00 am Open 103.25 High 103.31 Low 103.03

Numbers to watch for: 102.36 50 day moving average the market considers a buying opportunity

                                 102.67 25 day moving average the market considers a selling opportunity.  

                                             Soon this may become a buying opportunity

                                 103.36 200 day moving average the market considers a selling opportunity

 

Thu, May 18 12:20 PM Speeding vehicle strikes people in Times Square, New York, one person reported dead, multiple injuries.
Thu, May 18 12:08 PM The New York Fed purchased $1.429B Fannie/Freddie 30-yr 3.5% and 4% coupons this morning.
Thu, May 18 10:28 AM Fresh session lows for MBS.
Thu, May 18 10:20 AM Freddie Mac reports that the 30-yr fixed mortgage rate declined to 4.02% this week from 4.05% with 0.5 in points and fees.
Thu, May 18 10:14 AM Stocks turn positive.
Thu, May 18 9:48 AM MBS edging lower and slip into negative territory.
Thu, May 18 9:46 AM The S&P trades near unchanged soon after the open.
Thu, May 18 8:59 AM S&P futures cut some losses after the positive economic data.
Thu, May 18 8:55 AM MBS begin to slip from opening highs.
Thu, May 18 8:37 AM Not much reaction to the economic data, for now.
Thu, May 18 8:33 AM Weekly Initial Jobless Claims 232K vs 240K expected. May Philly Fed surges to 38.8 vs 18.5 expected.
Thu, May 18 8:28 AM The U.S. dollar index continues to push lower now at 97.42, -0.04.
Thu, May 18 8:24 AM Stock futures are lower after yesterday's plunge. Economic data has not deteriorated, but the political turmoil has investors concerned that the administration's pro-growth agenda could be derailed. In addition, with the major Stock indices near all-time highs, it could be an excuse to take some chips off the table. And why not, profit taking is healthy and a wise choice.
Thu, May 18 8:24 AM WTI oil $48.41/barrel, -$0.65.
Thu, May 18 8:19 AM The yield on the 10-yr T Note edges lower to 2.19% and near the 2.16% level, which has been a pivot point for higher yields ... we will see.
Thu, May 18 8:12 AM After yesterday's sharp rally, MBS open slightly higher at 6-month highs, levels they which prices have always reversed lower. Be on guard. We recommended locking in the short-term in yesterday's CLOSING TECHNICAL SIGNAL, at least three weeks out.

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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