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 May Coupon is down -20 BPS with 60 minutes left to trade.
Rosie the Riveter: The April Empire State Manufacturing Index surprised to the upside with a very respectable reading of 10.8 vs. est. of -18.0 following March’s massive loss of -24.6.
Taking it to the House: The April NAHB Housing Market Index remained below 50 which is negative but it increased from 44 to 45 and marks the fourth straight month of incremental improvements.
On Deck for Tomorrow: Housing Starts and Building Permite, China: GDP, Retail Sales and Production.
Interest rates continued to digest last Friday’s news; the unexpected increase from the U. of Michigan consumer sentiment index in two weeks (since the final March data), and comments from the Fed (Austin Goolsbee) and Fed governor Christopher Waller speaking; “Monetary policy needs to be tightened further,”… Consumer strength still holding well, the Fed would like to see slow to add the inflation fights. Countering those issues that tilt towards anther 25 bp increase at the May meeting; retail sales have been less than expected in the last two months. At the end of the day, markets still uncertain what the Fed will to at the FOMC meeting.
Economic data has been marginal at best, some beating forecasts, others failing to reach levels analysts expected. This morning the NY Empire State manufacturing index, the weakest regional manufacturing measurements compared to the rest, was released. The estimate for the April index, -18.3 from -24.6 in March; the index increased to +10.8, the first positive index read in five months; adding to the continual mixed pictures the data has been providing. This morning Richmond Fed President Thomas Barkin said he wants to see more evidence that US inflation is easing back to the central bank’s goal of 2%.
The NAHB housing market index increased 1 point to 45, under 50 is considered contraction. Presently one-third of the housing inventory is new construction, compared to historic 10%. 30% of home builders are cutting prices, 31% in March, and 35% in February. The average price reduction in April was 6%, the same as in February and March but lower than in December (8%). The share of builders using incentives to bolster sales has edged up from 57% in February, to 58% in March to now 59% in April, but it’s still lower than it was last December (62%). The HMI index gauging current sales conditions in April rose two points to 51 and the component charting sales expectations in the next six months increased three points to 50. This marks the first time these components both returned to the 50+ range since June 2022.
Tomorrow, the only data, March housing starts and permits (starts 1.400 mil from 1.450 mil; permits 1.431 mil from 1.524 mil).
The 10 year note yield hit our first technical resistance at 3.60% this afternoon, the next upside is 3.64%. Our various near term technical indicators had been neutral, Friday and today’s increases on the 10 year note has pushed into a more negative near-term outlook. This is earnings season for equity markets,, banks reporting this week after Citi reported stronger than expected earnings. The recent banking turmoil has calmed, any dustups will reignite safety movement into treasuries That dropped rates the past two weeks.
