Listen Live
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
Taking to the House: February New Home Sales hit 640K on annualized basis vs. est. of 650K.
Jobs, Jobs, Jobs: Initial Weekly Jobless Claims were lighter than expected, 191K vs. est. of 201K. The more closely watched 4 week moving average dropped to 196,250. Continuing Claims were higher than the prior month but lower than the consensus estimates, 1.694M vs. est. of 1.701M.
Central Bank Palooza: The Swiss National Bank increased their interest rate 50BPS to 1.50%. The Bank of England also increased their rate but by 25% to 4.25%, the vote was 7-2.
Since the beginning of Dec (4 months ago) the 10 year note has not been unable to break below 3.40%, we have mentioned it numerous times. 3.40% has survived several events and news, has hit 3.40% at least 10 times, over the last seven sessions 4 times. Here we are once again, will the 10 crack it this time? Trading was volatile today, at 3 pm3.40%. Markets uncertain today, the DJIA at one point +420 points. Still about the credit issues with banks, traders on edge not sure how strong the credit tightening coming will get the Fed’s full focus and cease increasing rates. J Powell said yesterday the Fed hasn’t changed its goal to lower inflation although allowing coming information to dictate.
We focus much of our attention to the 10 year note as it best reflects when mortgage rates will do, but turning to the low end of the curve where Fed focus is key, the rate has crumbled since yesterday. 3.79% today, down from 4.24% yesterday morning. That major decline suggests traders are less certain about what we can expect from the Fed and how this bank situation runs its course. The note down 40 bps in less than 48 hours. Swap traders getting their workout as the outlook whips around daily. Swaps today indicate the Fed by the end of this year will have cut rates by 75 bps from current levels.
Feb new home sales this morning increased 1.1%. 640,000 seasonally adjusted annual rate from a downwardly revised reading in January, 633K from 670K. New single-family home inventory fell for the fifth straight month. The February reading indicated an 8.2 months’ supply at the current building pace. A measure near a 6 months’ supply is considered balanced. However, single-family resale home inventory stands at a reduced level of 2.5 months. The median new home sale price rose in February to $438,200, up 2.5% compared to a year ago. Elevated costs of construction have contributed to a rise in home prices. A year ago, roughly 15% of new home sales were priced below $300,000, while that share is now just 10% of homes sold. Regionally, on a year-to-date basis, new home sales fell in all regions, down 29.2% in the Northeast, 21.3% in the Midwest, 7.3% in the South and 40.6% in the West.
The average for a 30-year, fixed loan was 6.42%, down from 6.6% last week, Freddie Mac said in a statement today. It was the biggest one-week decline since mid-January. For the housing market, “the news is more positive” as demand ticks up and prices stabilize, Sam Khater, Freddie Mac’s chief economist, said in the statement. “If mortgage rates continue to slide over the next few weeks, look for a continued rebound during the first weeks of the spring homebuying season.” At the current 30-year average, the monthly payment on a $600,000 loan would be $3,761. That’s up from $3,012 a borrower would have paid a year ago, when rates were two percentage points lower.
Tomorrow Feb durable goods orders expected +1.5% m/m after falling 4.5% in Jan,ex transportation orders +0.3% m/m from +0.7% in Jan.
At 4 pm the 10 traded at 3.39%, we will call it holding 3.40%. The 2yr betting on a Fed easing later this year, down 14 bps today. Want to hold today’s locks, MBSs traded a little better than 9:30 am for most of the session then slipped about 3:30 pm. We will maintain discipline and lock, those with an appetite for risk float.
