Monday

June 19th, 2017

Suggestion: Mortgage Bonds begin the week slightly lower, while Stocks trade well into positive territory. Carefully floating is recommended.

Overview: Housing shortages are increasingly becoming a problem in the markets as would be buyers are finding it more difficult to purchase a home. The National Association of REALTORS® said the shortage problem could soon turn into a "housing emergency if the discrepancy between housing demand and housing supply widens further, " said Lawrence Yun, NARs chief economist. The report went on to say that a lack a skilled workers to build new homes has been a problem over the past year.

The Bond market did lose a bit of ground this morning in response to New York Fed President Dudley's (voter) remarks. He said he is generally pleased with U.S. economy, while the unemployment and inflation levels are good. He added that wage growth and inflation should pick up after hovering at low levels in the past few years. Mr. Dudley went on to say that the recent yield curve flattening is not a negative sign that the Fed is hiking too much.

Despite the summer driving season upon us, which has historically led to higher prices at the pumps, gas prices declined in the latest survey. The national average price for a regular gallon of gasoline fell to $2.29, down from $2.34 a month ago. A year ago, prices were at $2.33. The all-time high was $4.11 recorded back on July 17, 2008. With a great deal of oil flowing through the pipes across the U.S., it does bode well for low gas prices.

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 action for most of the day after early morning strength fizzled out on the words from the Fed's Dudley. There were no economic reports released today. The 3.5% Fannie Mae 30-yr coupon closed at 103.03, -9bp and closed below resistance at the 200-day Moving Average. Stocks rallied as the tech sector rebounded. The Dow closed up 144.71 points to 21,528.99, while the S&P 500 gained 20.31 points to end at 2,453.46, both record closing highs. The NASDAQ surged 87.25 points to end at 6,239.01. WTI oil closed at $44.20/barrel, -$0.54. There are no economic reports due for release tomorrow.
Mon, Jun 19 3:48 PM Residential real estate company Redfin says home prices increased 6.8% in May to a median price of $288,000. Inventories of homes for sale fell to just 2.7 months of supply, the lowest supply Redfin has recorded since it began tracking the market in 2010.
Mon, Jun 19 3:21 PM S&P and the Dow looking to close with fresh record highs.
Mon, Jun 19 1:48 PM Fed's Dudley says tight labor markets should push inflation up. Dudley's words today were not friendly to Bond prices.
Mon, Jun 19 1:37 PM MBS at session lows.
Mon, Jun 19 12:29 PM Treasury yields edge higher after Fed's Dudley's hawk-talk. MBS slightly lower. Stocks holding solid gains. 10-yr yield rises to 2.17% from today's low of 2.13%.
Mon, Jun 19 10:59 AM Stocks holding solid gains led by surging shares of Apple. MBS flat to slightly lower.
Mon, Jun 19 9:30 AM The New York Fed will purchase up to $1.3B in Fannie/Freddie 30-yr 3.5% and 4% coupons beginning at 2:30 p.m. ET.
Mon, Jun 19 9:30 AM Stocks open higher.

9:11 AM ET  3.5% Fannie Mae 30-yr coupon down  7 bp at a price of 103.09  down 6 bp when rates were set Friday at 10:00 am Open 103.19 High 103.22 Low 103.06 

Numbers to watch for:

Currently Buying Opportunities for Traders

102.88 50 day moving average

103.09 25 day moving average

103.00  Traders keep their eye on round numbers and this is one them with lots of zeros 

Currently Selling opportunities for Traders

103.12  Traders keep their eye numbers that have been resistance or support in the past.  This is one of them.

103.13 200 day moving average

103.59  High of 11/17/16

104.12  High of 11/10/16

Mon, Jun 19 8:30 AM Fed's Dudley says he expects 3% wage growth over the next year or two. MBS losing ground.
Mon, Jun 19 8:28 AM There are no scheduled Treasury Note or Bond offerings this week.
Mon, Jun 19 8:28 AM The economic calendar is on the light side with just Existing Home Sales on Wednesday, New Home Sales on Friday.
Mon, Jun 19 8:19 AM WTI oil $44.84/barrel, near unchanged.
Mon, Jun 19 8:19 AM U.S. dollar index 97.19, near unchanged.
Mon, Jun 19 8:18 AM 10-yr T Note yield 2.14%.
Mon, Jun 19 8:16 AM New York Fed President Dudley (voter): Generally pleased with U.S. economy, unemployment and inflation levels are good. Wage growth and inflation should pick up.
Mon, Jun 19 8:15 AM S&P futures are higher as investors seek bargains in the tech and the retail sector.
Mon, Jun 19 8:14 AM MBS begin the week near unchanged as global equity markets advance.

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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