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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 April Coupon is down -27 BPS with 60 minutes left to trade.
Jobs, Jobs, Jobs: Initial Weekly Jobless Claims were lower than expected and returned to its trend of sub-200K with 192K vs. est. of 205K. The more closely watched 4 week moving average dropped to 196K. Continuing Claims dropped back below the important 1.7M level with a reading of 1.684M vs. est. of 1.715M
Taking it to the House: Annualized MOM Building Permits were higher than expected, 1.524M vs. est. of 1.340M and Housing Starts were 1.450M vs. est. of 1.310M.
Rosie the Riveter: The March Philly Fed District Manufacturing Survey was dismal, contracting by -23.2 vs. est. of -14.5
Genco Olive Oil: February Import Prices were down -0.1% vs. est. of -0.2% but Export Prices rose, up 0.2% vs. est. of -0.1%
Central Bank Palooza: The European Central Bank raised their interest rate by 50 BPS to 3.50%.
On Deck For Tomorrow: Industrial Production and Capacity Utilization, UofM Consumer Sentiment Index and Leading Economic Indicators
The 10 continued to hold at 3.40%, MBS prices fell; the stock indexes opened lower then turned and improved most of the day. The banking problems continue to dominate although from where we sit the issues have been magnified, especially in the financial press. It is something to be concerned about, that banks were unable to manage their risk. A lot of recriminations being spread around, most of it at the Fed. Someone or entity must be blamed, after all bank leaders didn’t do it, has to be the government and its various regulators babysitting and holding the hands of ill-equipped bank executives.
Lay it on the Fed, it missed the inflation spiral until a year ago as a “transitory” event. Somehow the Fed and all its economists, FOMC members, regional Fed presidents and mix in global central bankers missed it. The Biden administration tossed $1.9 trillion in cash to almost every American breathing, and some that weren’t, when COVID took the world. Inflation ran higher; the Fed totally dove in ending it at whatever costs, inflation got away from the Fed and all central bankers. Stopping inflation was issue number one, Powell and other Fed officials couldn’t have made it plainer. Now market pundits are turning on the Fed as if it itself is COVID. No more rate increases are the increasing talk; the banks can’t handle it as has been demonstrated with just few banks. Everyone missed it, including the Fed; the attitude a year ago was inflation could be tamed with just a tweak of rate increases. At that time no one, no one, had any idea how COVID would damage economies, no supplies, big demand with windfall government money, inflation couldn’t be controlled. Now this week is one that everyone gets to lay blame, panic with just a few banks that have been brought under control; imagine if this were 2008 what pundits would be saying. Banks are safe, no system-wide collapses. What we have now is fear mongers sure that the banking system is on the edge of collapse, mostly coming from bank stockholders.
Today ECB, afraid of the ensuing contagion, felt it had to move forward to demonstrate it isn’t as concerned as has been painted in media and even some that should know better. The bank increased its rate 50 bps. Next week the FOMC meets and the cries from those with vested interests making a lot of noise that the Fed should hold pat and end its rate increases for good. Doesn’t take much to swing lemmings, the Fed may slow but must keep pressing. The thought is the economy will decline in recession and that will cool inflation. Next Wednesday the Fed will increase the FF rate by 25 bps; can Powell deliver a massage that will ease concerns? Financial institutions must learn how to manage the asset/liability conditions (banking 101).
Today once again the 10 held at 3.40% expect rates to begin inching higher; the stock market with its wild emotional swings is finding some stability. Equites driven by the economic outlooks; banks are an issue for investors now, but investors will focus on the potential of a recession that is gaining momentum. By next week the banking panic will have ebbed, interest rate will increase a little, the Fed will be the headliner.
