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Listen Live
Saturday’s: 9AM 1590 AM/97.9 FM KVTA
Sunday’s: 7AM K-EARTH 101 FM
MBS OVERVIEW
4:00 EST – Our benchmark FNMA MBS 6.00 February Coupon is up +1 BPS with 60 minutes left to trade.
Taking it to the House: December Building Permits had an annualized pace of 1.330M vs. est. of 1.370M. But Housing Starts were 1.382M vs. est. of 1.359M…so a mixed bag there.
Jobs, Jobs, Jobs: Initial Weekly Jobless Claims gave us yet another head-scratcher, falling to only 190K vs. est. of 214K. The more closely watched 4 week moving average dropped to 206K. Continuing Claims were 1.647M vs. est. of 1.660M.
Rosie the Riveter: January Philly Fed Manufacturing was bad but less-worse than expected, contracting at -8.9 vs. est. of -11.
The Talking Fed: One and done? That’s not what Fed Governor Lael Brainard thinks. She said that “We are determined to stay the course,” and that “Even with the recent moderation, inflation remains high, and policy will need to be sufficiently restrictive for some time to make sure inflation returns to 2% on a sustained basis.”
On Deck For Tomorrow: Peoples Bank of China Interest Rate Decision, Existing Home Sales.
Rate markets generally unchanged today; the stock indexes began lower (-180 DJIA) but inched back this afternoon until the close when indexes got hit again.
If you haven’t heard enough, more Fed speak today from Lael Brainard vice chair at the Fed. Although she avoided comments on what the FOMC will do at the coming meeting, she said interest rates will need to stay elevated for a period to further cool inflation that’s showing signs of slowing but is still too high. “Even with the recent moderation, inflation remains high, and policy will need to be sufficiently restrictive for some time to make sure inflation returns to 2% on a sustained basis,” Brainard said that economic data in the past few months shows cooling consumer demand and wages and tighter financial conditions, all welcome outcomes for policymakers. Just about every Fed official is saying the same thing. It is becoming boring and unnecessary but if that is the bible then I guess, preach it.
Another pain in the behind, the annual sweat over the debt ceiling that expired today, as if the US would default. Treasury sec Janet Yellen made it clear a week ago that she can continue paying bills until June. And it is incomprehensible the US will ever default. The political parties can agree, Republicans want spending caps, Democrats want to keep spending. Here is a comment worth not saying; Jamie Dimon said the government shouldn’t play games with the debt ceiling, the same thing he says every year when we go through this; “We should never question the creditworthiness of the US government. That is sacrosanct and it should never happen,”… and it never happens.
Mortgage rates in the US decreased for the second week in a row, reaching a four-month low. The average for a 30-year, fixed loan fell to 6.15% from 6.33% last week, Freddie Mac said in a statement Thursday. At the current 30-year average, a borrower with a $600,000 mortgage would pay roughly $3,655 a month, about $940 more than a year ago, when rates were 3.56%.
Tomorrow Dec existing home sales (3.970 mil from 4.090 mil).
The 10 yr. note continues to find support at 3.40%, until it falls below it we want to keep locked. The 9 day RSI (relative strength remains in positive territory under 50 at 37. I could go on with a number of neutral technical indicators, but all are teetering at pivotal levels. MBS prices are 10 bps better than 9:30. Last night before the US opened the 10 yr. fell to 3.32%, in the US trade it didn’t hold.
