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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 up +18 with 60 minutes left to trade.
Rosie the Riveter: The preliminary Markit Manufacturing PMI was better than expected (46.8 vs. est. of 46.1) but still well below 50. Same story with Services, 46.6 vs. est. of 44.5. Richmond Fed Manufacturing Index tanked to -11 vs. -4.
On Deck for Tomorrow: Bank of Canada Interest Rate Decision, Weekly Mortgage Applications, 5 year Treasury Note Auction.
Nice bounce today, the 10 began unchanged, increased 6 bps to 3.55% then declined this afternoon. MBS prices began lower then followed the 10 higher. Still waiting for key data on Thursday and Friday, getting closer to the PCE on Friday that is expected to reveal another inflation decline; technical support for the 10 at 3.40%. The start today choppy today but once it settled after three days of increasing rates the improvement brought the key 10 yr. back within range of support. The rebound didn’t take long, the low yield for the 10 3.46%.
This afternoon the 2 yr. auction continued the recent strong demand for treasuries, the softening dollar has increased demand. Another auction after 3s, 10s and 30s two weeks ago. The rate for the 2 today 4.139% down from 4.152% in WI trading prior to the auction. The bid/cover saw huge bidding at 2.94 up from the last 12 auction average of 2.61. Indirect bidders, foreign investors took 65.0% of the auction compared to the average of 59.3% while domestic investors lagged at 18.7% against 20.9% average.
The stock market was jolted on the open this morning with 40 S&P stocks halted, dozens of the largest companies in the US seemed to erase billions of dollars in market value for no apparent reason, the closure rattled traders but the chaos but took just 30 seconds and everything returned to normal after 20 minutes. Wells Fargo appeared to have crashed 15%, Wal-Mart Inc. looked like it wiped out $46 billion, and AT&T Inc. seemingly swung between a 20% gain and a 21% tumble in a matter of seconds.
Another regional manufacturing index from the Richmond Fed didn’t meet forecasts at -3 from +1 in Dec, the index dropped -11. Most regional and national measurement of manufacturing has been weaker than forecasts, and not small misses, the exception was this morning’s report from PMI FLASH report that was expected at 46.5, reported at 46.8 but under 50 is contraction.
Tomorrow another day with no key data, weekly MBA mortgage applications and $43B of 5s at auction at 1 pm.
Friday’s PCE is expected to confirm more inflation declines, if the estimates are lower than forecasts the 120 yr. note could break 3.40% and move quickly to 3.30% taking mortgage rates close to 6.00%.
