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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
Three Things: These are the three areas that have the greatest ability to impact your backend pricing this week. 1) The Talking Fed, 2) Treasury Dump, and 3) Central Bank Palooza
1) The Talking Fed: After last week’s shift from unconditionally-hawkish to conditionally-hawkish, the markets have hedged (bet) that they FOMC would need to moderate their policies this year. Now that the FOMC meeting is over, so it the media blackout period among Fed speakers and we will have a slew of them this week.
02/07 Fed Chair Powell
02/08 Williams, Waller, Barr, Bostic
02/09 Kashkari, Waller, Fed Balance Sheet
02/10 Harker
2) Treasury Dump: While the political theater continues to unfold as the government attempts yet another debt ceiling raise, the Treasury will conduct three auctions with the most important (for backend pricing) being Thursday’s 30 year bond auction.
02/07 3 year note
02/08 10 year note
02/09 30 year bond
3) Central Bank Palooza: We get a key interest rate decision out of Australia and we get key speeches out of the Bank of England and the European Central Bank this week.
Huge job increases in January sent interest rates up, MBS prices down. This morning it continued, the 10 year began the session at 3.61% +7 bps from Friday’s 14 bp increase. The 10 never had a chance under 3.40% and with Fed speakers unleashed after being locked down for a week prior to the FOMC, and central banks continuing to chide markets that interest rates will continue to increase. Increasing but still in tight ranges, the 10 at 3.61% at the high of its 20 bp range (3.40% – 3.60%). After three weeks in a tight range, the 120 this morning is the highest since Jan 11th. Stock indexes in futures markets were lower following declines last Friday.
Tomorrow Fed chair Powell will sit with David Rubenstein chair at the NY Economic Club for a discussion, after last week’s FOMC and the January increase in jobs there is a lot to chew on. Ahead of that interest rates and MBSs don’t have much chance improving. Powell is relentless and will stick with his inflation fight even though the markets are believing the Fed is coming to an end of tightening.
This week has very little economic news, but three treasury auctions. Nothing today. Tuesday Dec consumer credit, $40B 3 year note auction. Wednesday weekly MBA mortgage apps, $$35B new 10 year note auction. Thursday weekly jobless claims (190K from 183K), $21B new 30 year bond auction. Friday U. of Michigan consumer sentiment index (65.0 from 64.9 in Jan). The treasury auctions have met with very strong demand over the last month, this week may not be as aggressive bidding with the dollar strength increasing.
At 9:30 am ET the DJIA opened -112, NASDAQ -100, S&P -21. 10 year at 9:30 am 3.62% +8 bps. FNMA 5.5 30 year coupon at 9:30 am -55 bps from Friday’s close and -67 bps from 9:30 am Friday.
