Listen Live
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 June Coupon is down -17 BPS with 60 minutes left to trade.
Taking it to the House: April Existing Home Sales hit 4.28M units on an annualized basis which was very close to expectations of 4.3M. The median existing-home price for all housing types in April was $388,800, a decline of 1.7% from April 2022 ($395,500). Prices rose in the Northeast and Midwest but retreated in the South and West.
Jobs, Jobs, Jobs: Initial Weekly Jobless Claims were a smidge lighter than expected, 242K vs. est. of 254K. The more closely watched 4 week moving average edged lower to 244,250. Continuing Claims broke back below the important 1.8M mark… but just barely at 1.799M vs. est. of 1.818M.
Rosie the Riveter: The May Philly Fed Manufacturing Survey continued to show major contraction, this time it was -10.4 but that was better (less worse) than estimates of -19.8.
Leading Indicators: The April data contracted another -0.6% which matched estimates.
On Deck for Tomorrow: Fed Chair Powell.
The 10 year note at its highest level since April 19th, mortgage rates have increased about 20 bps over the last week. The idea for what the FOMC will do next month moves back and forth with any data or news that provides pundits a platform to express their view about what the fed will do. A week ago, the preponderance of analysts and money managers were getting on board the outlook the Fed will pause at the meeting. that has changed; inflation still high, Fed officials in their remarks tilting to another rate increase. The sway has sent rates higher along with the debt ceiling default fears that as we have said, won’t happen.
As the debt ceiling date approaches (June 1st or soon thereafter) markets are finally expecting the ceiling will be increased. The details are not worked out between Democrats and republicans but comments coming from those quarters are turning to optimism. The details on an agreement will send up new smoke signals about the budget and its impact on investors and markets. President Biden arrived in Japan for the G7 summit, but at home, optimism kept building for a timely debt ceiling deal.
Weekly jobless claims declined last week, adding to worries the Fed will have to continue to do more to slow employment and wage gains, and further the view the Fed would be lowering rates in Q4 is now being questioned.
April existing home sales declined 3.4% to 4.28 mil. The median existing-home sales price slipped 1.7% from one year ago to $388,800 (April 2022 $395,500) The inventory of unsold existing homes increased 7.2% from the previous month to 1.04 million at the end of April, or the equivalent of 2.9 months’ supply at the current monthly sales pace. All-cash sales accounted for 28% of transactions in April, up from 27% in March and 26% the previous year. Individual investors or second-home buyers, who make up many cash sales, purchased 17% of homes in April, identical to March and one year ago. According to Freddie Mac, the 30-year fixed-rate mortgage averaged 6.35% as of May 11.
There are no economic releases tomorrow. The main event; Jerome Powell and Ben Bernanke in a discussion that is scheduled at 11:00 am
Near term technicals for the 10 have increased to a chart support at 3.65. the 9 day RSI is bumping into overbought region. Look for some improvement in MBSs tomorrow but we won’t take advantage of by floating overnight. Floating in this trading range only benefits if intraday prices improve that provide overnight gains.
