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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 +9 BPS with 60 minutes left to trade.
Taking it to the House: December Pending Home Sales Index rose by 2.5% vs. est. of a decline of -1.0%
Inflation Nation: December headline PCE increased by 0.1% on a MOM basis, the market was expecting 0.0%. YOY, it was up 5.0% which matched expectations but is down from November’s pace of 5.5%. Core (ex food and energy) PCE MOM hit 0.3% vs. est. 0.2% and YOY it was up 4.4% vs. est. of 4.4% but is down from November’s Pace of 4.7%
Taking it Personally: December Personal Incomes increased by 0.2% which matched expectations, November was revised lower from 0.4% to 0.3%. Personal Spending dropped by -0.2% vs. est. of -0.1%. November was revised down to -0.1% so this makes two straight months of negative spending data.
Consumer Sentiment: The final January UofM Consumer Sentiment Index was revised from 64.6 to 64.9
PCE inflation was right where estimates were expecting this morning, interest rates began under some pressure and held that through the day, but this afternoon some minor improvement. This morning the 10 at 3.55% +5 bps, by 3 pm ET 3.52%. MBS prices at 9:30 am -9 bps, at 3 pm +13 bps.
Consumer spending declined in Dec even with holiday shopping at the end of last year, cutting spending 0.2% during the holiday shopping and increasing savings. The pullback came as inflation cooled to its slowest pace since October 2021. The second straight monthly drop following solid spending increases during several months last year. Adjusted for inflation, spending fell 0.3% last month. Households cut spending on goods, gasoline and other energy products. Commerce Dep said increased spending on services, where prices climbed. The idea consumers increased savings is off the mark, consumers have run out of COVID money and recent data indicates credit card use has increased.
Dec pending home sales increased 2.5% the first increase since last May. Year-over-year, pending transactions dropped by 33.8%. An index of 100 is equal to the level of contract activity in 2001. The Northeast PHSI dropped 6.5% from last month to, a decrease of 32.5% from December 2021. The Midwest index shrank 0.3% in December, a decline of 30.1% from one year ago. The South PHSI rose 6.1% in December, dropping 34.5% from the prior year. The West index advanced 6.4% in December, decreasing 37.5% from December 2021. NAR saying mortgage rates will be between 5.5% and 6.5% this year.
U. of Michigan consumer sentiment index this morning, fractionally better than 64.6 expected to 64.9.
Next Week: A lot of economic news as well as the FOMC meeting on Wednesday. Monday nothing. Tuesday Jan Chicago purchasing mgrs. index, Q4 employment cost index, Nov Case/Shiller and FHFA housing price indexes, consumer confidence index for Jan. Wednesday MBA mortgage applications, Jan ADP private jobs, Dec construction pending, Jan ISM manufacturing index, Dec JOLTS job openings, FOMC POLICY AND POWELL’S PRESS CONFERENCE. Thursday weekly jobless claims, Q4 productivity and unit labor costs. Friday Jan employment data, ISM services sector index.
This week: The 10 year note rate increased 4 bps this week, MBS prices +16 bps. The DJIA +603, NASDA +482, S&P +98. Gold +$1.00, crude oil -$0.93. The dollar index -0.10, Bitcoin +1,179.
