June 5th, 2017
Suggestion: Mortgage Bond prices are near unchanged to begin the week as Stock prices hover near unchanged. Carefully floating is recommended.
Overview: Rental prices in the top 10 markets seem to be cooling down a bit after a long period of increases. Rent Cafe reports that in six of the top ten rental markets, average rents have declined year over year. An industry expert says renters should be more optimistic going forward seeing that rising rents are slowing even is places like San Francisco and New York. One reason for the slowdown is new apartment buildings entering the nation's hottest rental markets.
Mortgage originations continued to decline in the first quarter of 2017 led by a drop in refinancing. Black Knight reports that total originations fell 34% in the first quarter of 2017 from the fourth quarter of 2016 while refinance applications fell 45% during the same time period. Refinance originations are down 20% from last year. In the purchase market, originations rose 3% from last year and are up 21% quarter to quarter.
The June Federal Open Market Committee meeting will take place next week on June 13 and 14 with the monetary policy statement being released at 2:00 p.m. ET on Wednesday. It is most likely that the short-term Fed Funds rate will increase from the 1.0% to 1.25% levels. In addition to a rate hike, the Fed members will most likely discuss ways to begin decreasing its massive $4.5 trillion dollar balance sheet that consists of treasury and Mortgage Backed Securities.
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.
|Not much action in the markets today in both Stock and Bond markets as prices traded close to the flat line throughout the session. Today's Productivity and ISM Services data came in near expectations and had little impact on trading. The Fannie Mae 30-yr 3.5% coupon closed lower by 6bp to end at 103.31, just above resistance at the 200-day Moving Average. The Dow lost 22.25 points to 21,184.04, the S&P fell by 2.97 points to 2,436.10, while the NASDAQ was down 10.11 points to end the session at 6,295.68. WTI oil closed down by $0.26 to $47.40/barrel. 10-yr yield closed at 2.18%. There are no economic reports due for release tomorrow.|
|Mon, Jun 05 4:10 PM Fed Fund Futures show a near 96% probability of a hike to the Fed Funds Rate at next week's FOMC meeting bringing the rate to 1.25%.|
|Mon, Jun 05 2:43 PM Quiet trading in today's session finds Stock and Bond prices near unchanged.|
|Mon, Jun 05 12:39 PM Approaching midday, MBS trade in a tight range. Stocks near unchanged. 10-yr yield 2.17%.|
|Mon, Jun 05 11:17 AM Not much movement seen in MBS as the trade with minor losses. The S&P trades near unchanged.|
|Mon, Jun 05 10:36 AM Five people, including the shooter, are dead after a shooting at an Orlando, Florida business headquarters reports CNN.|
|Mon, Jun 05 10:19 AM The Monthly Bond Rollover will take place after the close of trading on Friday.|
|Mon, Jun 05 10:16 AM The week also features U.k. elections and the ECB decision on interest rates.|
|Mon, Jun 05 10:01 AM May ISM Services 56.9, in line with estimates.|
|Mon, Jun 05 9:50 AM The NASDAQ turns positive. Dow and S&P cutting losses.|
Mon, Jun 05 9:30 AM Stocks open lower.
8:56 AM ET 3.5% Fannie Mae 30-yr coupon down 16 bp at a price of 103.22 down 16 bp when rates were set Friday at 10:00 am Open 103.28 High 103.31 Low 103.22
Numbers to watch for:
Currently Buying Opportunities for Traders
102.71 50 day moving average
102.83 25 day moving average
103.00 Traders keep their eye on round numbers and this is one them with lots of zeros
103.12 Traders keep their eye numbers that have been resistance or support in the past. This is one of them.
Currently Selling opportunities for Traders
103.25 200 day moving average
103.59 High of 11/17/16
|Mon, Jun 05 8:39 AM Rents in the top 10 most expensive cities cooling off.|
|Mon, Jun 05 8:34 AM Black Knight reports that mortgage originations fell 34% in Q1 2017 while refinance originations declined 45% from the fourth quarter of 2016. Purchase originations rose 21%.|
|Mon, Jun 05 8:32 AM Q1 2017 Productivity 0.0% vs -0.2% expected. No reaction in the markets.|
|Mon, Jun 05 8:26 AM MBS edging lower.|
|Mon, Jun 05 8:24 AM U.S. dollar index 96.82, +0.15.|
|Mon, Jun 05 8:23 AM There are no Treasury Note or Bond auctions this week.|
|Mon, Jun 05 8:15 AM Q1 Productivity will be released at 8:30, ISM Services at 10.|
|Mon, Jun 05 8:15 AM WTI oil at $47.23/barrel, -$0.40.|
|Mon, Jun 05 8:12 AM 10-yr T Note yield 2.17% from Friday's close of 2.15% where 2.16% has been seen as a pivot point for higher yields.|
|Mon, Jun 05 8:11 AM MBS flat to lower while Stock futures decline on the headlines out of London.|
|Mon, Jun 05 8:07 AM Terrorism strikes again where three people rammed a van into pedestrians on London Bridge and went on a stabbing spree in nearby Borough Market killing 7 people with 48 injured.|
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 subscribers of www.themortgagemarketguide.com The cost of subscription is very reasonable.