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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 up +0 BPS with 60 minutes left to trade.
Taking it to the House: Another round of bad housing news today. December YOY Case Shiller Home Price Index tanked from an appreciation rate of 6.8% in November down to only 4.6% in December. The FHFA Housing Price Index showed that home prices fell by -0.1% on a MOM basis in Dec after falling -0.1% in Nov.
Rosie the Riveter: Chicago PMI continued the trend of very weak economic news with a contractionary reading of 43.6 in February vs. est. of 45.0. This makes the 6th straight month of below 50 readings in this index. We have NEVER not had a recession with that trend. The Feb Richmond Fed Manufacturing Index also tanked, dropping to -16 vs. est. of -5
The Consumer: Consumer Confidence dropped in February from a downwardly revised 106 in January to 102.9.
On Deck for Tomorrow: Weekly Mortgage Applications, Construction Spending, ISM Manufacturing
The 10 improved a little today but continues within its tight 7 bp trading range, volume thin and bolstered by a soft Feb consumer confidence report this morning, also the Feb Chicago purchasing mgrs. index didn’t meet estimates at 45.0 (43.6). Consumers have been holding nicely compare4d to other sectors but today the weakness in the report suggests a slowing, the key takeaway from the report is that the monthly decrease was driven entirely by consumers’ short-term outlook, which entailed becoming considerably less upbeat about their short-term income prospects. That view is cutting into plans to buy homes, autos, and major appliances. It was also reported that vacation intentions declined in February. at least that is a good reason for the 10 year note to fall to the lowest read since over the last week…got to have a reason although not much of one.
Tomorrow begins the month of March, good riddance to February. Interest rates increased almost daily in Feb before entering a narrow trading range over the last week. The 10 year note yield increased 50 bps in the month.
Data tomorrow; key releases. The final PMI manufacturing index expected at 47.8. The Feb ISM manufacturing index expected at 48.0 from 47.4. Weekly MBA mortgage applications of course.
Federal Reserve Bank of Chicago President Austan Goolsbee in his first speech since leaving Wall Street, he acknowledged it was tempting to lean on the instant reaction of investors to incoming news, because economic data arrives with a delay. “But it is a danger and a mistake for policymakers to rely too heavily on market reactions,”… “Our job is ultimately judged by what happens in the real economy.”… “So, it’s important to supplement these traditional data with observations on the ground from the real economy,” he said. “This is especially true when things are as strange and up in the air as they have been through much of the pandemic times.”
Today the 10 year note traversed its trading range that has contained it since 2/21. It hit 3.97% this morning, after the weak consumer confidence index dropped; this afternoon to 3.90%. MBS prices at 4 pm -15 bps from 9:30 am.
