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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 March Coupon is down -5 BPS with 60 minutes left to trade.
Domestic Flavor:
Rosie the Riveter: January Factory Orders decreased by -1.6% vs. est. of -1.8%.
Across the Pond:
Eurozone: Retail Sales were 0.3% vs. est. of 1.0%
On Deck for Tomorrow: Reserve Bank of Australia Interest Rate Decision, Fed Chair Powell Senate Hearing, 3 year Treasury note auction, Consumer Credit Change.
A strange movement this morning in interest rates, the 10 year note yield dropped to 3.90% -6 bps from last Friday, nothing we saw that would justify the improvement with Jerome Powell on deck tomorrow and Wednesday and Feb employment on Friday. Not news that most all Fed officials that were speaking last week were warning markets the Fed would not relax until inflation has turned substantially lower. The prepared statement from Powell delivered to the committees that will hear his testimony was the same as what we have heard now for months. By 11:00 am traders turned on the 10 and its yield increased to 3.97% this afternoon. European Central Bank policymaker Rehn hinted at a “fairly significant” rate hike in March while ECB policymaker Centeno said that the central bank is targeting headline inflation rate instead of the core rate. MBSs never did bite on the treasury improvement, not much change at 9:30 this morning and the rest of the day no movement.
Since the end of the pandemic consumers, flush with cash from the government, were avoiding the need for credit cards; that appears to be coming to an end and that isn’t a good thing with credit card rates at extremes. More consumers are leaning on credit to afford increasingly expensive necessities, like food and rent. That helped propel total credit card debt to a record $930.6 billion at the end of 2022, a 18.5% spike from a year earlier. The average balance rose to $5,805 over that same period, TransUnion found.
Tomorrow is about Jerome Powell’s testimony; Treasury will auction 3 year notes in the afternoon but won’t generate much direct reaction. January consumer credit expected +$26.4B m/m. Dec credit increased just $11.6B.
Stock indexes and interest rates generally unchanged from Friday. No driving news. Waiting for Powell, although we have heard it all before, maybe phrased differently but the same message. Senators’ staffs working hard to find a new issue or reframe the present one. Powell will avoid directly admitting the economic outlook may lead to a recession. No sure what a recession is anymore, Q2 and Q3 last year two consecutive lower GDP growth used to define recession, now we make it up as we go along.
