Friday's suggestion Floating

June 16th, 2017

Suggestion:Weak housing data and lower Stock prices are supporting Mortgage Bonds. Carefully floating is recommended.

Overview: The Commerce Department reported on Friday that Housing Starts in May fell 5.5% from April to an annual rate of 1.092 million units, below the 1.227 million expected. It was the lowest rate since September 2016 and the third straight month of declines. Starts are down 2.4% from May 2016. Single-family starts, which account for the biggest share of the residential housing market, fell 3.9% to an annual rate of 794,000 units last month, the lowest level in eight months. Builders cited a lack of skilled workers and a rise in building materials for the decline.

The University of Michigan's Consumer Sentiment Index fell to its lowest level in May since October to 94.5 from the 97.1 recorded in May. The index suggests that there has been a break from the big optimism seen after the presidential election results in November. The decline in sentiment signals a drop in confidence surrounding the economic policies of lower taxes, decreased regulation and infrastructure building that has been slow to come to fruition.

Amazon is now looking to invade the grocery store sector as it announced today that it will be purchasing Whole Foods in a deal worth nearly $14 billion. Wholefoods has hundreds of stores across the U.S. and Amazon will now have a distribution network for groceries. With the announcement, shares of Wal-Mart, Target, CostCo all declined. Buying groceries on line will now most likely become the wave of the not-too-distant future. 

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.

Mortgage Bonds closed right near where they finished last Friday after hitting the week low of 102.88 and a high of 103.59 closing at 103.16, +9bp. The week featured a rise in the Fed Funds Rate by a 0.25% to bring it to the 1% - 1.25% level. In addition, taper talk added some volatility to the Bond market. The S&P ended the week near unchanged at 2,433.14, while the Dow saw a gain of 24.52 points to 21,384.42 and the NASDAQ closed at 6,151.75, -13.74 points. WTI closed at $44.74/barrel, +$0.28. 10-yr T Note yield 2.15%. Next week's economic calendar is light with just New and Existing Home Sales being released. Have a great weekend!
Fri, Jun 16 3:34 PM Trading slows to a crawl.
Fri, Jun 16 1:55 PM Minneapolis Fed President Kashkari (voter): Fed should have waited for higher inflation before hiking rates again; would have liked to specify a start date for unwinding of balance sheet.
Fri, Jun 16 1:55 PM Dallas Fed President Kaplan (FOMC voter): Expects rebound in economic growth for the rest of 2017; inflation is muted right now but some of it may be idiosyncratic.
Fri, Jun 16 1:54 PM Past midday, MBS flat to modestly higher. Stocks slightly lower. 10-yr yield 2.15%.
Fri, Jun 16 12:36 PM The tragic London apartment fire claims 30 lives with dozens hospitalized.
Fri, Jun 16 12:24 PM Dow turns positive. MBS off highs.
Fri, Jun 16 10:54 AM MBS at session highs. Stocks lower.
Fri, Jun 16 10:01 AM Preliminary June Consumer Sentiment 94.5 vs 97 expected, down from 97.1 in May and the lowest for the year.
Fri, Jun 16 9:45 AM Stocks open lower.
Fri, Jun 16 9:24 AM Amazon to buy Whole Foods for nearly $14B.

9:13 AM ET  3.5% Fannie Mae 30-yr coupon up 6 bp at a price of 103.12  up 6 bp when rates were set yester at 10:00 am Open 103.03 High 103.12 Low 103.03

Numbers to watch for:

Currently Buying Opportunities for Traders

102.87  50 day moving average

103.07 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

103.13 200 day moving average

103.59  High of 11/17/16

104.12  High of 11/10/16

Fri, Jun 16 8:45 AM Stock futures cut some gains after the weak housing data.
Fri, Jun 16 8:35 AM May Building Permits -5.0% from April to an annual rate of 1.168M annualized units vs 1.250M expected.
Fri, Jun 16 8:33 AM May Housing Starts -5.5% from April to an annual rate of 1.092M vs 1.227M expected.
Fri, Jun 16 8:20 AM Quadruple Witching takes place today in the equity markets where stock index futures, stock index options, stock options and single stock futures expire. This occurs four times a year on the third Friday of March, June, September and December.
Fri, Jun 16 8:17 AM Housing Starts, Building Permits will be released at 8:30, Consumer Sentiment at 10.
Fri, Jun 16 8:11 AM WTI oil $44.83/barrel, +$0.37.
Fri, Jun 16 8:11 AM U.S. dollar index 97.38, -0.05.
Fri, Jun 16 8:09 AM MBS open near unchanged as the week draws to a close.
Fri, Jun 16 8:09 AM 10-yr T Note yield 2.17% from yesterday's close of 2.16%.
Fri, Jun 16 8:04 AM S&P futures modestly higher trying to rebound from yesterday's marginal losses as the tech wreck somewhat eases.

 

 

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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