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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 up +12 with 60 minutes left to trade.
Taking it to the House: Weekly Mortgage Applications were up for the 2nd straight week. This time by 7.0%. Refinances were up 14.6% and Purchases were up 3.4%
Treasury Dump: We had a record setting, strong 5 year note auction at 1:00. $43B went off at a high yield of 3.530% and a bid-to-cover ratio of 2.64
Geopolitical: Yesterday afternoon’s improvement in pricing was largely due to the uptick in concern over Ukraine/Russia escalating as both the U.S. and Germany has finally confirmed that they will send highend tanks and equipment directly to Ukraine. This instability has continued to support bonds today.
Central Bank Palooza: The Bank of Canada raised their key interest rate by 25 BPS to 4.50% but signaled that they would be “pausing” or “holding” rates at this level for awhile while they access the situation.
On Deck for Tomorrow: Initial Weekly Jobless Claims, prelim 4th QTR GDP, Durable Goods Orders, New Home Sales and a 7 year Treasury note auction.
The 10 ending the session unchanged after beginning +2 bps higher and sliding to 3.43%. MBS prices slightly better but no significance. Stock under pressure this morning, down 700 points but the DJIA climbed back.
Finally, tomorrow we’ll get some data, Friday though is the elephant with inflation on the personal consumption expenditures. The 10 is at critical technical levels at 3.40%, if inflation is lower than the already low forecasts the 10 will break down and lead to 3.30% with mortgage rates dropping with it, conversely if inflation is stronger than forecasts look for the 10 to run up to 3.60%
Treasury sold $43B of 5 yr. notes this afternoon, another very strong auction; auctions the last three weeks have drawn very strong bidding, particularly from foreign investors. In WI trading at 3.554%, at the auction 3.53%. The cover 2.64 up from the average of 2.42, indirects took 75.7% up from 63.8% average, direct bidders took 15.4% and as has been the case domestic bidders have reduced their bidding, the average 18.4%
Tomorrow at 8:30 am: starts with Dec durable goods orders expected +2.8% from -2.1% in November, ex transportation -0.2% from +0.2% in November; core capital goods -0.2% from +0.2%. Weekly jobless claims (202K from 190K). Q1 advance GDP (+2.7% from 3.2%). Dec US advance trade deficit (-$88.5B from -$82.9). At 10:00 am tomorrow Dec new home sales (614K from 640K in Nov). At 1;00 pm tr4esury will auction $35B of 7 yr. notes, should be another strong auction driven by the softer dollar.
Friday’s PCE estimates: m/m 0.0% from +0.1%, yr./yr. 5.0% from 5.5%; core PCE +0.3% from 0.2%, yr./yr. 4.4% down from 4.7%.
