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Saturday’s: 9AM 1590 AM/97.9 FM KVTA
Sunday’s: 7AM K-EARTH 101 FM
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 down -9 BPS with 60 minutes left to trade.
There were no domestic events today.
On Deck for Tomorrow: Richmond Fed Manufacturing, 2 year Treasury note auction.
Check the main page for Bryan’s video break down
Nice to have a day like this; no movement in rates, one of the quietest days in months. No change in MBS prices or the 10 yr. note since 9:30 this morning (3.53% at 9:30 3.52% at 3:30). Stock indexes improved. Crude oil and cold also little changed.
There were no data points today to focus on and tomorrow about the same. The key data to digest comes on Thursday and Friday.
An article in the WSJ today echoing inflation will decline very rapidly later this year; as rapidly as it did following the financial crisis in 2008. The article calls the decline a one in a generation decline. When there isn’t anything else to talk about we get at times some very out there comments. Many Wall Street strategists, however, are warning that a painless end to elevated inflation will be difficult to achieve. Previous episodes of inflation suggest that it rarely falls as fast as markets are now forecasting that it will in the absence of a serious recession. Consumers are pulling back, and inflation is slowing, but that kind of outlook is difficult to square, inflation rarely falls that quickly. The consensus remains the Fed will do 25 bps next week, after that it is a toss up. We don’t buy into a rapid decline in rates, although we believe the highest rates have been seen when the 10 yr. note hit 4.30%/4.20%. Can’t blame those that remain so very optimistic, hope they are correct but it’s a climb of Mt. Everest to believe that kind of outlook.
Christine Lagarde said the European Central Bank and other ECB officials still intent on increasing its rate, by 50 bps if Lagarde gets her wish. “We will stay the course to ensure the timely return of inflation to our target,” the ECB president said. “It is vital that inflation rates above the ECB’s 2% target do not become entrenched in the economy.”
Tomorrow a reading on manufacturing from the Richmond Fed January (-3 from +1), Richmond area not known for manufacturing . Also, tomorrow the Jan FLASH PMI composite, (manufacturing 46.5 and services 45.5).
Tomorrow afternoon $42B 2 yr. note auction.
The spread between the 2 yr. note an the 10 +0.70% to the 10; the spread between the 3 mo. T-Bill and the 10 1.14% to the 10. Both are wider today than last week.
