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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
4:00 EST – Our benchmark FNMA MBS 6.00 February Coupon is down -32 BPS with 60 minutes left to trade.
Jobs, Jobs, Jobs: Initial Weekly Jobless Claims once again were below 200K, this time 196K vs. est. of 190K. The more closely watched 4 week moving average dropped down below 190K to 189,250. Continuing Claims rose to 1.688M vs. est. of 1.658M which is just off of the high for the past year.
The Talking Fed: Today we will get the Fed’s Balance Sheet at 4 pm.
Treasury Dump: We had an important 30 year BOND auction today at 1 pm. It was a weak auction and sent your pricing lower (worse). $21B went off at a high yield of 3.686% and a low bid-to-cover ratio of 2.25
On Deck for Tomorrow: Consumer Sentiment, Monthly bond coupon rollover.
Was today the day the tight trading range on the 10 year note broke free and headed higher? Not ready to declare but the 10 year broke a key chart support this afternoon at 3.63%, we showed it to you in this morning’s report. This morning the note began down 4 bps, by 3 pm 3.68% +4 bps. For weeks the 10 and mortgages drifted in narrow ranges, this week hasn’t held with the key 10 increasing since last Friday’s strong January employment data. For weeks markets were hanging on to the idea the Fed would stop increasing rates, the 517K increases in jobs and Chair Powell and other Fed officials pushing back that the Fed is far from finished. Markets slowly coming around, the Fed and other major central banks (except Japan) around the globe all indicating short term rates will continue to increase as tightening continues.
The average rate on the standard 30-year fixed mortgage edged higher to 6.12%,according to a survey of lenders released today by mortgage-finance giant Freddie Mac. It was 6.09% last week and 3.69% a year ago. At the end of 2022, a measure of housing affordability hit the lowest level since the National Association of Homebuilders began to track it in 2012. The mortgage rates are at a key pivot point, either the 10 year note retreats into its narrow range or the note will increase to 3.90% and mortgage rates back to recent highs.
This week hasn’t seen much new economic measurements, tomorrow the mid-month U. of Michigan consumer sentiment index, expected at 65.0 from 64.9 in January.
Yesterday the 10 year note auction met with huge demand, today’s $21B 30 year bond auction saw very little demand. In WI trade this morning the rate traded at 3.654%, at the auction 3.686%. The bid/cover, a measurement of demand 2.25 compared to the average of 2.39, indirect bidders on average took 69.2%, at this auction 65.2%. After the weak auction, the 10 increased in yield and MBS prices declined. The 10 increased driven by the advance of the 2 year auction where the Fed decisions are felt the most, it increased 8 bps and climbed above 4.50%, now the curve is the steepest since 1980 before the Fed squashed inflation. (2 year 83 bps higher than the 10 year note)
