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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 March Coupon is down -14 BPS with 60 minutes left to trade.
Domestic Flavor:
Jobs, Jobs, Jobs: Initial Weekly Jobless Claims were lower than expected (190K vs. est. of 195K). The more closely watched 4 week moving average is very low at 193K. Continuing Claims were a smidge lower than expected, 1.655M vs. est. of 1.665M.
Rosie the Riveter: 4th QTR Non Farm Productivity was revised the wrong direction. It originally came out at a strong 3.0% but has been revised downward to only 1.7%. The flip side to this is that 4th QTR Unit Labor Costs were revised upward from only 1.1% to 3.2.%.
Across the Pond:
Eurozone: Core EU Inflation surged to a new record high of 5.6% vs. est. of 5.3%
No news today that directly impact interest rates. More talk from Fed officials that echo each other; Federal Reserve Bank of Atlanta President Raphael Bostic said he still prefers to raise rates by another quarter percentage point when officials meet later this month but is mulling whether central bankers need to lift borrowing costs higher than the range of 5% to 5.25% he’s endorsed to defeat inflation.
Redfin reporting home prices hit a turning point last month, dropping from a year ago for the first time since 2012. In the four weeks through Feb. 26, the median price for a typical home was $350,246, down 0.6% from the same period a year earlier according to Redfin. “Prices falling from a year ago is a milestone because it hasn’t happened since the housing market was recovering from the 2008 subprime mortgage crisis,” said Taylor Marr, Redfin’s deputy chief economist. “Prices will probably decline a bit more in the coming months, but first-time buyers hoping to score a major deal this year are likely out of luck.”
Interest rates are going to continue to increase, the 10 is now on the way to its high at 4.20%, it did hit 4.50% for one day back in last October. The path likely to be choppy but that is where we are headed; MBS rates likely exceeding 7.00% and further hamper mortgage lending and home sales. According to NAR first-time buyers made up the smallest share of sales on record last year, at 26%; home prices have topped and, in some regions, declining but being countered by high mortgage rates. At the average sales price it is difficult to expect young buyer to able to afford to buy.
Tomorrow the service sector steps into the data pool. Feb final PMI services at 50.5, the Feb ISM services sector index expected at 54.5 down from 552 in Jan. Service indexes over 50 indicate expansion while manufacturing remains in contraction. For Fed officials on the podiums tomorrow, the message won’t change from other recent Fed remarks.
Guess who is hurting now in the US. Taxpayers, as the debt increases, one of the cornerstones of debt increasing is the 41.9 trillion give away to all Americans because of COVID pandemic. Did anyone think it wouldn’t bite us in the butt later?
