Wednesday's Suggestion Carefully Floating

June 7th, 2017

Suggestion: Mortgage Bonds are near unchanged as Stocks try to rebound after their recent decline. Carefully floating is recommended.

Overview:  The Mortgage Bankers Association (MBA) reported on Wednesday that mortgage rates edged lower in the latest week and remain just above all-time lows. The 30-year fixed conforming mortgage rate declined to 4.14% from 4.17% with 0.32 points on top of that rate. The 30-year jumbo rate fell to 4.08% from 4.11% with 0.21 in points, while FHA loans fell to 4.01% from 4.03% with 0.39 points. The MBAs Market Composite Index, a measure of total mortgage loan application volume, rose 7.1%, while the refinance index rose 3.4% and the purchase index gained 10%.

The National Association of Home Builders (NAHB) recently surveyed 11,300 registered voters on the subject of home ownership. The survey said that more than two-thirds of Americans believe that owning a home is an essential part of the American dream. The NAHB said that a key component in the ability of families of all income levels to become home owners is the mortgage interest deduction, which has been a cornerstone of American housing policy since the inception of the tax code more than 100 years ago.

A newly released white paper by ATTOM Data Solutions revealed that utility costs can add 25% to monthly housing costs and 21% for renters. The paper went on to report that monthly utility costs require 7% of a person's average wages across 931 counties analyzed. When utility costs are included, buying a median-priced home requires more than 43% of a person’s income, the study showed.

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.

At the close MBS continued to be stuck in a range today as the Bond traded sideways just above support at the 200-day Moving Average. There were no economic reports released today. The Fannie Mae 30-yr 3.5% coupon fell by 12bp to end the session at 103.34, this despite a big decline in oil prices, Fed buying and with Stocks stuck near unchanged for most of the session. Stocks were able to squeak out modest gains after Comey's released testimony showed no smoking gun as far as President Trump is concerned. Comey's will be on Capitol Hill tomorrow testifying at 10:00 a.m. ET in front of the Senate Intel Committee. The Dow gained 37.46 points to 21,173.69, the S&P 500 rose 3.81 points to 2,433.14, while the NASDAQ closed higher by 22.32 pints to end the quiet session at 6,297.38. WTI oil closed at $45.72/barrel, -$2.39 on bigger-than-expected crude oil and gasoline supplies. 10-yr Note yield 2.17%. Economic data is limited to Weekly Initial Jobless Claims. In addition to the Comey hearing, the U.K. elections and the ECB meeting could impact the U.S. markets.
Wed, Jun 07 4:02 PM Stocks close with modest gains on the notion that former FBI Director Comey's testimony will be less damaging to President Trump.
Wed, Jun 07 2:09 PM MBS losing the luster.
Wed, Jun 07 2:04 PM Comey's statement for the record released ahead of tomorrow's testimony, so far no smoking gun. Stocks improving.
Wed, Jun 07 1:01 PM At midday, MBS unchanged to slightly lower, Stocks sporting meager losses. 10-yr yield 2.16%.
Wed, Jun 07 12:35 PM MBS able to bounce off lows.
Wed, Jun 07 11:59 AM MBS at session lows. Be on guard for a reversal lower.
Wed, Jun 07 11:23 AM Fed Fund Futures are showing a 98% probabilty of a hike to the short-term Fed Funds Rate at next week's FOMC meeting.
Wed, Jun 07 11:21 AM Stocks and Bonds look to each other for direction in the absence of any data.
Wed, Jun 07 11:16 AM The National Association of Home Builders recently surveyed 11,300 registered voters on the subject of home ownership revealing that more than two-thirds of Americans believe that owning a home is an essential part of the American dream.
Wed, Jun 07 10:40 AM WTI oil plummets $2.13 to $46.05/barrel on a surprise rise in crude stockpiles.
Wed, Jun 07 10:38 AM MBS able to trade back to unchanged levels after some earlier weakness. S&P gives up gains and trades to unchanged.
Wed, Jun 07 9:31 AM Stocks open modestly higher.

9:00 AM ET  3.5% Fannie Mae 30-yr coupon up 0 bp at a price of 103.44  down 3 bp when rates were set yesterday at 10:00 am Open 103.41  High 103.47  Low 103.41

 

Numbers to watch for:

Currently Buying Opportunities for Traders

102.77 50 day moving average

102.88 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.

103.21 200 day moving average

Currently Selling opportunities for Traders

 

103.59  High of 11/17/16

104.12  High of 11/10/16

 

Wed, Jun 07 8:28 AM U.S. dollar index 96.77, +0.18.
Wed, Jun 07 8:27 AM WTI oil slips $0.40 to $47.81/barrel.
Wed, Jun 07 8:23 AM The MBAs Market Composite Index, a measure of total mortgage loan application volume, +7.1%. Refinance index +3.4%, purchase index +10%.
Wed, Jun 07 8:22 AM 30-year jumbo rates at 4.08% from 4.11%, FHA at 4.01% from 4.03%. Those rates carry at least 0.30 in points.
Wed, Jun 07 8:20 AM There are no economic reports due for release today.
Wed, Jun 07 8:20 AM The MBA reports that the 30-yr fixed conforming mortgage rate fell to 4.14% in the latest week from 4.17%.
Wed, Jun 07 8:19 AM 10-yr yield edges higher to 2.15%.
Wed, Jun 07 8:12 AM MBS open near unchanged along with flat S&P futures ahead of tomorrow's ECB meeting, U.K. elections and testimony from fired FBI Director Comey on Capitol Hill.

  

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.

 

 

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