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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
4:00 EST – Our benchmark FNMA MBS 6.00 June Coupon is up +26 BPS with 60 minutes left to trade.
Domestic Flavor:
Jobs, Jobs, Jobs: Initial Weekly Jobless Claims were higher than expected, up 261K vs. est. of 235K. The more closely watched 4 week moving average inched upward to 237K. Continuing Claims “dropped” to 1.757M vs. est. of 1.800M
Across the Pond:
Eurozone: Employment Change 0.6% vs. est. of 0.6% and GDP 1st QTR -0.1% vs. est. of 0.0%
On Deck for Tomorrow: There are no domestic events on Friday
Prior to 8:30 am ET release of weekly jobless claims the 10 traded at 3.82% the high since last March. Jobless claims increased 28K to 261K with forecasts at 235K, the increase together with technical support at 3.82% turned the 10 yr. note around and began improving through the morning, by early this afternoon the note down 8 bps. MBSs prices increased this afternoon with treasury yields slipping. Also support came from news that the US and Iran may offer sanctions relief to Iran, but the White House refuted the report.
Claims the highest in 19 months encourages the idea the Fed may have finally turned inflation to a lesser degree. Doesn’t equate though, last Friday’s May employment report showed huge increases in both NFP jobs and private jobs compared to forecasts; (Non-farm jobs expected 190K increased 339K and April jobs originally reported at 253K revised to 294K. Private jobs thought to be at 165K increased 283K and April revised from 230K to 253K).
Canada and Australia both increased rates this week and the ECB has made it clear it will raise rates next week at its meeting. The FOMC still expected to pause and the weekly claims this morning added to that view. The movement today was technical, not a change in the outlook or the level of rates. There is nothing on the calendar tomorrow, but next week is full of key data. Beside the FOMC and ECB. May CPI and PPI, May retail sales, May export and import prices, and the U. of Michigan consumer sentiment index.
A few lenders improved pricing this afternoon, but not many so far. Today’s volatility still kept the 10 in its tight range. With everything coming next week we don’t look for much improvement tomorrow. If you have unrealized gains from re-pricing you can hold those locks but we remain cautious that rates won’t improve much. That is what we said this morning, still the way we see it, although didn’t expect the big swing to lower rate in our morning report.
