January 11, 2023 – Economic News

• January 11, 2023
• realestate
• Business & Markets, Fed, Interest Rates, Politics & Economy, Rates, Real Estate, Real Estate Finance, Recession, World News, Your Real Estate Life

MBS OVERVIEW

4:00 EST – Our benchmark FNMA MBS 6.00 February Coupon is up +11 BPS with 60 minutes left to trade.

Domestic Flavor:

Taking it to the House: Weekly Mortgage Applications rose by 1.2% thanks to a big gain of 5.1% in Refinance Applications. Purchase Applications were basically flat at -0.5%

The Talking Fed: The January Atlanta Fed Business Inflation Expectations remained at 3.0% for the year ahead

Treasury Dump: We had a 10 year Treasury note auction at 1:00. $32B went off at a high yield of 3.575%. The bid-to-cover ratio was 2.53

On Deck for Tomorrow: Initial Weekly Jobless Claims, Consumer Price Index, 30 year Treasury Bond Auction.

10 yr. yield 3.54% -8 bps. Stocks improved. MBA mortgage apps increased 1.2% from the prior week. The $32B 10 yr. note auction was well bid this afternoon; the yield 3.575% compared to trading prior to the auction in the WI trading at 3.580%. The demand at 2.53, better than the average of 2.43.

Tomorrow Dec CPI at 8:30 am expected to continue seeing declines in inflation at the consumer level. Did some people know prior to the last CPI release? The Nov CPI was scheduled to be released precisely at 8:30 am as usual. But something odd happened in the 60 seconds leading up to it. Trading volume in 10-year Treasury futures soared, reaching three times the level seen a minute before the release of any of the last 24 CPI reports, Bloomberg Economics analysis showed. (Bloomberg)

Interesting article in Bloomberg today, it never ends with constantly varying ideas. The thrust was that markets are not buying the Fed’s constant comments that there will be no rate cuts in 2023 but believe rates will be coming down in the 4th quarter. A recession is gaining momentum with analysts, earnings looking weak. Powell continues to warn the Fed isn’t going to stop any time soon, traders effectively rejecting his narrative, the risk is that exuberance over monetary easing causes Fed officials to tighten even more — if falling market rates undercut their efforts to cool the economy. “Fed officials have turned more hawkish because investors aren’t listening to their warnings,” Ed Yardeni, the veteran watcher of the bond market who heads his namesake research firm, wrote in a note to clients. “Perhaps, Fed officials should listen to the bond market.” Swaps traders see the Fed boosting its policy rate — now in a 4.25% to 4.5% target range — to just under 5% by June and then cutting it to around 4.5% by the end of December.

Beside Dec CPI tomorrow morning, weekly jobless claims expected 215K. Also, tomorrow afternoon treasury will sell $18B of 30s.

With improvement in MBS prices, we will hold a light long position overnight.