May 24th, 2017
Overview: The National Association of REALTORS® reported on Wednesday that Existing Home Sales in April fell 2.3% from March to an annual rate of 5.57 million units. This was below the 5.65 million expected. The sales slide was mainly due to low inventories of homes for sale. Inventories are running at a 4.2 month supply, below the six-month supply that is seen as normal. The median sales price rose 6%, marking 62 straight months of price increases.
Housing prices continued to rise in the first quarter of 2017 and from February to March, due in part to limited inventories. The Federal Housing Finance Agency reports that home prices rose 0.6% in March from February and were up 6% from the first quarter of 2016 to the first quarter of 2017. The Home Price Index is calculated using home sales information from mortgages sold to, or guaranteed by, Freddie Mac and Fannie Mae.
No. 2 home improvement chain Lowe's missed on both revenues and earnings per share, which is in stark contrast to rival Home Depot's impressive earnings numbers last week. Lowe's has been trying to cater to the do-it-yourself customer, as opposed to rival Home Depot's focus on high-spending general contractors, which has helped to benefit more from the solid housing market. Shares of Lowe's were down 4% in today's trading session.
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: Mortgage Bonds traded near unchanged up until the 2:00 p.m. ET release of the Fed minutes where they revealed a more gradual approach to trimming its massive balance. The Fed also wants to make sure that economic weakness in the first quarter has not spilled over into the second quarter. In economic news, April Existing Home Sales were weaker than expected. The Fannie Mae 30-yr 3.5% coupon closed at 103.06, up 22bp after hitting a session low of 102.75. Stocks also were giddy over the Fed's balance sheet news. The Dow gained 74.51 points to 21,012.42, the S&P 500 was up 5.97 points to 2,404.39 to a record close, while the NASDAQ gained 24.31 points to end at 6,163.02. WTI oil settled at $51.36/barrel, -$0.11. 10-yr T Note yield 2.25%. Tomorrow's economic data is limited to Weekly Initial Jobless Claims.
3:06 PM ET 3.5% Fannie Mae 30-yr coupon up 12 bp at a price of 102.97 up 16bp when rates were set yesterday at 10:00 am Open 102.81 High 103.00 Low 102.78
Numbers to watch for:
102.52 50 day moving average the market considers a buying opportunity
102.69 25 day moving average the market now considers a buying opportunity.
103.00 Traders keep there eye on round numbers and this is one them with lots of zeros
103.30 200 day moving average the market considers a selling opportunity
|Wed, May 24 2:52 PM When digging onto the Fed minutes, they showed that the Fed's balance sheet may be unwound more slowly than previously thought. MBS get a boost.|
|Wed, May 24 2:43 PM MBS bounce off lows and push into positive territory.|
|Wed, May 24 2:11 PM Stocks quickly push back into positive territory. MBS tried to rally, but now back near unchanged.|
|Wed, May 24 2:05 PM The S&P quickly gives up gains after the Fed minutes revealed that some members felt Stock valuations are high.|
|Wed, May 24 2:03 PM Fed minutes: some members felt asset valuations (Stocks) were high.|
|Wed, May 24 2:01 PM Fed minutes: members need more proof that Q1 weakness was temporary.|
|Wed, May 24 2:00 PM Fed minutes: members agree balance sheet reduction to begin this year.|
|Wed, May 24 1:17 PM The $34B 5-yr Note auction garners an "A" rating.|
|Wed, May 24 12:56 PM At midday, MBS flat to slightly lower. Stocks higher. 10yr yield 2.29%. $34B 5-yr Note auction results a bit after 1:00 p.m. ET.|
|Wed, May 24 11:39 AM Stocks holding modest gains.|
|Wed, May 24 11:31 AM The 3.5% Fannie Mae 30-yr coupon (102.78) edges lower and closer to support one (S1) at the 25-day Moving Average (102.69).|
|Wed, May 24 10:26 AM MBS trade near unchanged with little movement thus far this morning.|
|Wed, May 24 10:02 AM April Existing Home Sales -2.3% from March to an annualized rate of 5.57M units, below the 5.65M due in part to low inventories.|
|Wed, May 24 9:32 AM Stocks open to the plus side though the gains are meager.|
|Wed, May 24 9:31 AM China's debt gets downgraded by Moody's.|
|Wed, May 24 8:43 AM U.S.dollar index 97.18, -0.07.|
|Wed, May 24 8:28 AM April Existing Home Sales will be released at 10:00 a.m. ET.|
|Wed, May 24 8:28 AM The Treasury will be selling $13B 2-year floating Notes this morning and $34B 5-yr Notes, results at 1:00 p.m. ET.|
|Wed, May 24 8:25 AM The MBAs Market Composite Index, a measure of total mortgage loan application volume, rose 4.4%, ref index +10.5%, purchase index -0.8%.|
|Wed, May 24 8:18 AM FHA 30-yr fixed 4.07% from 4.11%. The rates usually come with at least 0.30 points each.|
|Wed, May 24 8:09 AM The MBA reports that the 30-yr fixed conforming mortgage rate fell to 4.17% in the latest week from 4.23%. 30-yr jumbos 4.11% from 4.23%, both lowest since November 2016.|
|Wed, May 24 8:08 AM MBS open near unchanged.|
|Wed, May 24 8:06 AM No. 2 home improvement chain Lowe's misses on both revenues and earnings per share, which is in stark contrast to rival Home Depot's impressive earnings numbers last week.|
|Wed, May 24 8:02 AM The Fed minutes from the May 3 FOMC meeting will be released this afternoon at 2:00 p.m. ET. Fed Fund Futures show a 75% chance of a hike to the Fed Funds Rate.|
|Wed, May 24 7:59 AM MBS look to open near unchanged after the yesterday afternoon swoon.|
|Wed, May 24 7:54 AM Fed's Harker (voter) says Q1 GDP weakness transitory, sees two more rate hikes in 2017.|
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