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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 April Coupon is down -17 BPS with 60 minutes left to trade.
Taking to the House: The February Annualized Pace of Existing Home Sales hit 4.58M units vs. est. of 4.20M
Treasury Dump: We had a 20 year Treasury bond auction today at 1 pm. $12B went off at a high yield of 3.909% with a bid-to-cover ratio of 2.53 and had solid buy-side demand.
The Talking Fed: Today started two days of FOMC meetings that will culminate in tomorrow’s Federal Reserve’s latest interest rate decision and policy statement as well as their Economic Projections which the bond market will look at for forward guidance on the pace of future hikes and they “terminal” rate which is the max rate before the Fed pivots towards lowering rates in the future.
Yellen is Yelling: Treasury Secretary Janet Yellen addressed bank leaders from across the country at the ABA summit in Washington at 10 am. She said “the government’s recent actions have demonstrated our resolute commitment to take the necessary steps to ensure that depositors’ savings and the banking system remain safe.”
Canada, eh: CPI MOM 0.4% vs. est. of 0.6%
On Deck for Tomorrow: FOMC Interest Rate Decision and Policy Statement, Economic Projections and live presser with Fed Chair Powell, Weekly Mortgage Applications.
What will the Fed do tomorrow? The FOMC policy statement likely to be vague, but J Powell’s press conference won’t be able to dodge key questions, there are two of them. What can markets take away from the banking crisis as it eases today with strong support from regulators and a couple of big money center banks. How will Powell address the questions about inflation now that the view grows that the Fed may have been too aggressive and too quick to hike rates that was one reason some banks are having trouble. The FOMC is expected to increase the FF rate by 25 bps tomorrow that is discounted, but inflation still at 6.0%. will central banks slow the inflation attack? ECB went 50 bps last week.
There is an increasing credit crunch coming and the prospects of recession have increased the past few days. Swaps are priced for just an 80% chance of a quarter-point rate hike. That marks a departure from every other Fed meeting over the past year, in which traders have fully priced at least one such move. Instead, the debate until now has been over whether rate hikes would be in 25-, 50- or 75-basis-point increments. There is a building case for the Fed to pause, inflation is slowing, the Fed should relax and take a moment to assess the potential of much tighter credit coming and increasing fears of a recession.
Feb existing home sales increased 14.5% from Jan ending a 12 month decline. The median existing-home sales price decreased 0.2% from the previous year to $363,000. The inventory of unsold existing homes was unchanged from the prior month at 980,000 at the end of February, or the equivalent of 2.6 months’ supply at the current monthly sales pace. Year-over-year, sales fell 22.6% (down from 5.92 million in February 2022). Properties typically remained on the market for 34 days in February, up from 33 days in Jan. According to Freddie Mac, the 30-year fixed-rate mortgage(link is external) averaged 6.60% as of March 16. That’s down from 6.73% from the previous week but up from 4.16% one year ago January and 18 days in February 2022. Fifty-seven percent of homes sold in February were on the market for less than a month. All-cash sales accounted for 28% of transactions in February, down from 29% in January but up from 25% in February 2022. Single-family home sales soared to a seasonally adjusted annual rate of 4.14 million in February, up 15.3% from 3.59 million in January but down 21.4% from the previous year. The median existing single-family home price was $367,500 in February, down 0.7% from February 2022. Homebuilders are rising as much as 1.7% Tuesday after data showed previously owned home sales snapped a yearlong slide, rising in February by the most since mid-2020.
FOMC at 2 pm tomorrow, 2:30 pm J Powell press conference. The key technically is 3.40% on the 10 yr.
