August 29, 2023 – Market Commentary

• August 29, 2023
• realestatelife
• Business & Markets, Fed, Interest Rates, Politics & Economy, Rates, Real Estate, Real Estate Finance, Recession, World News, Your Real Estate Life

MBS OVERVIEW

Taking it to the House: The June FHFA Housing Price Index showed a MOM increase of 0.3% versus estimates of 0.2%. The June Case Shiller Metro City YOY Index dropped by -1.2% versus estimates of -1.3%.

Jobs, Jobs, Jobs: The July Job Openings and Labor Turnover Survey (JOLTS) showed 8.827M unfilled jobs versus estimates of 9.465M.

Consumer Confidence: The Conference Board’s August reading dropped to 106.1 versus estimates of 116.5.

Treasury Dump: We wrap up this week’s Treasury auction schedule with today’s 7 year note auction at 1 pm ET.

Yesterday the 10 year note yield declined 3 bps, this morning at 9 am ET up 3 bps. MBSs yesterday increased 31 bps, at 9 am this morning -19 bps.

Markets continue to digest what J Powell said last Friday at Jackson hole; he didn’t relent or make it clear what the Fed may or may not do at the November FOMC but for the Sept meeting implied there won’t be another increase. It is about the incoming data between now and the end of the year whether the Fed is finished for the present. Powell and other Fed officials are leaning on the idea that the economy hasn’t had sufficient time to work through the rate increases, suggesting inflation will work lower as the impact of the increases make their way through the economy. Inflation has fallen sharply, in June 2022 the CPI inflation was 9.1% by July this year core CPI at 4.7%, caused by the pandemic and the massive money drop from the government ($1.9 trillion) in checks to everyone. The Fed hasn’t been able to increase unemployment as it wants to do, at 3.5% employment has historically been considered full employment. Summing it up, nothing new with the Fed. (see below for morning data).

At 9 am June Case/Siller home price index, expected +1.1% increased 0.9%, year/year thought to be -1.1% reported -1.2%.

At 9:30 am the DJIA opened -3, NASDAQ -19, S&P -1. 10 year 4.23% +3 bps. FNMA 6.0 30 year coupon at 9:30 am -12 bps from yesterday’s close and -1 bp from 9:30 am yesterday.

At 10 am two very key data points. July JOLTS job openings wasn’t good for interest rates, job openings are declining adding to the view the Fed is still facing a problem as employment remains strong, openings were expected at 9.559 mil, openings declined to 8.827 mil and June openings originally reported at 9.582 mil to 9.165 mil. Also at 10 am August consumer confidence index, estimates 116.5 from revised 114.0 in June from 117.0. Like the U. of Michigan’s consumer sentiment index last week the confidence index plunged to 106.1. We will have the complete details this afternoon (the Conference Board’s site is down).

At 1 pm $36B 7 year note auction.

At 9:30 am MBS prices -12 bps, at 10:15 am +25 bps, 12:53 +35 bps.