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Saturday’s: 9AM 1590 AM/97.9 FM KVTA
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Listen Live
Saturday’s: 9AM 1590 AM/97.9 FM KVTA
Sunday’s: 7AM K-EARTH 101 FM
MBS OVERVIEW
Jobs, Jobs, Jobs: The 4th QTR Employment Cost Index showed that wages and benefits rose by 1.0% compared to the 3rd QTR which was below estimates of 1.1% and lower that the 3rd QTR gain of 1.2%.
Taking it to the House: The November YOY Case Shiller Home Price Index showed housing prices in their metro city sample size fall from 8.7% in October down to 6.8% in November. The MOM FHFA Housing Price Index fell by -0.1% vs. est. of +0.8%, that was a big miss.
Rosie the Riveter: The bell-weather January Chicago PMI was much better than expected, 44.3 vs. est. of only 41.0. However, it is still another leg lower than December’s reading of 44.9 and is well below the important level of 50.0. This continues the trend of sub-50 readings since September of 2022.
Consumer Confidence: The January reading was lighter than expected, 107.1 vs. est. of 109.00
The Talking Fed: Today starts two days of FOMC meetings. Tomorrow we get their Interest Rate Decision and Policy Statement as well as a live presser with Fed Chair Powell.
Rate markets await tomorrow’s FOMC policy statement; yesterday the 10 yield increased 4 bps, this morning at 8:30 am ET down 4 bps. Today MBS prices began +6 bps after declining 11 bps yesterday. Today likely to be the same with no movement of substance expected until tomorrow afternoon. US stock indexes at 8:30 am slightly lower.
Q4 employment cost index expected +1.1% increased 1.0%, year/year 5.1% from 5.0% in Q3.
Nov Case/Shiller home price index was thought to be -0.5% was -0.5%, year/year 6.8%.
At 9:30 am the DJIA opened +35, NASDAQ +35, S&P +9. 10 year 3.50% -4 bps. FNMA 5.5 30 year coupon at 9:30 am -3 bps from yesterday’s close and +9 bps from 9:30 am yesterday.
At 9:45 am Jan Chicago purchasing managers index was thought to have increased to 45.1 from 44.9, as released the index was 44.3 continuing the contraction.
At 10 am Jan consumer confidence index, expected at 109.0 dropped to 107.1, Dec revised from 108.3 to 109.0.
The FOMC will increase the FF rate by 25 bps to 4.5% -4.75% as widely thought, the increase is already factored into current trading plans and present market rates. Fed officials projected in December that they would pause when rates move above 5%, but Wall Street traders bet they will halt slightly below that level. What will follow is the focus, what Powell and the policy statement tomorrow as usual are focus. With inflation slowing supporting the 10 year and long dated maturities there is little reason to expect mortgage rates to increase much from present levels. Fed Governor Chris Waller saying he and the Fed should want to see six months of data, not three months, to decide when enough is enough. “The argument is just whether you should pause after three months of data or pause after six months of data,” Waller commented. “From the risk management side — I need six months of data, not just three.” If that were to hold true, another 25 bp increase at the march meeting then stopping at the May 3rd meeting.
