Tuesday's Suggestion: Float Until Fed Release 2 PM ET Wednesday

June 13th, 2017

Suggestion: Mortgage Bond prices are flat as the two-day Fed meeting kicks off this morning. Carefully floating is recommended.

Overview: Foreclosure filings edged higher in May from April, but are significantly lower from last year this time, reports ATTOM Data Solutions. Filings rose to a total of 81,495, up 5% last month from April, but down 19% from a year ago. One out of every 1,636 housing units had a foreclosure filing in May 2017. There were 27,086 completed foreclosures on properties in May, up 4% from April but a decline of 20% from last year.

Real estate website Zillow reported on Tuesday that owning a home is getting more and more expensive for people seeking the American dream. The report showed that homes listed for sale in more than half of the nation's 35 largest markets will require a greater share of income than the median-valued home required historically. "Homes have gotten so expensive in many major cities that even with low mortgage rates, monthly costs for homes that are currently for sale are starting to be unaffordable," said Zillow Chief Economist Dr. Svenja Gudell.

Inflation at the wholesale level was unchanged in May, due in part to lower energy costs. The headline May Producer Price Index (PPI) was unchanged after spiking in April. However, when stripping out food and energy, the Core PPI rose 0.3% versus the 0.2% expected. In addition, year-over-year PPI was up 2.4%and Core PPI came in at 2.1%, slightly elevated. On a year-over-year basis, the Producer Price Index has heated up from last year coming in at 2.4% in May, which is up from 0.0% in May 2016. 

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:Not much movement in Mortgage Bond prices today as traders positioned themselves ahead of the Fed statement. Today's tame headline PPI helped to somewhat support Bond prices. The Fannie Mae 3.5% 30-yr coupon closed up 6bp to 103. Stocks rose as technicals rebounded and as bank shares were higher. The Dow gained 92.80 points to 21,328.47, a record high close, the NASDAQ was up 44.90 points to 6,220.36, while the S&P 500 was higher by 10.96 points to 2,440.35, also a record high close. WTI oil closed at $46.46/barrel, +$0.38. 10-yr yield 2.21%. Tomorrow's economic data includes CPI and Retail Sales. The Fed statement will be released at 2:00 pm.m ET with a press conference by Fed Chair Yellen at 2:30. As always, be sure to read tomorrow morning's Daily Market Update ahead of the statement release.
Tue, Jun 13 4:06 PM Stocks end higher as tech shares bounce, bank stocks rise. Dow +92 points.
Tue, Jun 13 2:30 PM Wall Street gains as tech stocks recover, banks rise. Dow +90 points.
Tue, Jun 13 2:21 PM The National Federation of Independent Business reports that its Small Business Optimism Index hovers near record high levels at 104.5.
Tue, Jun 13 1:15 PM The $12B 30-yr Bond auction garners a "C+" rating.
Tue, Jun 13 1:00 PM The Dow hits an all-time high of 21,326.
Tue, Jun 13 12:43 PM Near midday, MBS near unchanged. Stocks higher. 10-yr yield 2.21%.
Tue, Jun 13 12:35 PM The Bond markets await the 1:00 p.m. ET results of today's $12B 30-yr Bond auction. 
Tue, Jun 13 12:12 PM MBS continue to trade in a tight range ahead of tomorrow's Fed statement.
Tue, Jun 13 11:17 AM Bond guru Bill Gross says all financial markets are "increasingly at risk."
Tue, Jun 13 11:11 AM The Atlanta Fed forecasts that Q2 2017 GDP at 3%, down from 3.4% forecasted on June 2.
Tue, Jun 13 10:55 AM Mortgage delinquencies decline to a 10-yr low.
Tue, Jun 13 9:46 AM Stock gains accelerating.
Tue, Jun 13 9:30 AM S&P opens higher.

 

8:49 AM ET  3.5% Fannie Mae 30-yr coupon down 3 bp at a price of 102.91  down 9 bp when rates were set yesterday at 10:00 am Open 102.97  High 102.97 Low 102.91

 

Numbers to watch for:

Currently Buying Opportunities for Traders

102.83  50 day moving average

102.95 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 on numbers that have been resistance or support in the past.  This is one of them.

103.17 200 day moving average

Currently Selling opportunities for Traders

 

103.59  High of 11/17/16

104.12  High of 11/10/16

 

Tue, Jun 13 8:41 AM Year-over-year PPI 2.4%, Core 2.1%, slightly elevated.
Tue, Jun 13 8:34 AM MBS slip a bit after the slightly hotter Core PPI.
Tue, Jun 13 8:32 AM The Producer Price Index in May unchanged, in line. Core PPI slightly hotter than expected at 0.3% vs 0.2%.
Tue, Jun 13 8:20 AM The number of foreclosure filings increased in May by 5%, but are down 19% from last year, according to ATTOM Data Solutions.
Tue, Jun 13 8:18 AM The Treasury will sell $12B 30-yr Bonds today, results at 1:00 p.m. ET.
Tue, Jun 13 8:17 AM The Producer Price Index will be released at 8:30.
Tue, Jun 13 8:16 AM 10-yr yield unchanged at 2.21%.
Tue, Jun 13 8:16 AM U.S, dollar index 96.96, -0.15.
Tue, Jun 13 8:15 AM S&P futures higher as tech stocks recover.
Tue, Jun 13 8:09 AM MBS open mixed as the FOMC kicks off its two-day meeting with the monetary policy statement being delivered at 2:00 p.m. ET tomorrow.

  

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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