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
4:00 EST – Our benchmark FNMA MBS 6.00 May Coupon is down -28 BPS with 60 minutes left to trade.
Rosie the Riveter: The April ISM Manufacturing PMI continues to show manufacturing contraction with readings below 50, this time 47.1 but that a lil better than expectations of 45.5. Prices Paid jumped up to 53.2 vs. Feb’s 49.2. The only bright spot was that the Employment Index broke above 50 (50.2). The final revised March S&P Markit PMI dropped from 50.4 to 50.2
Hard Hat: March Construction Spending increased by 0.3% vs. est. of -0.1%
On Deck for tomorrow: Reserve Bank of Australia Interest Rate Decision, FOMC starts two days of meetings, JOLTS and Factory Orders.
Interest rates increased today; the FOMC, April employment weighing heavy on rates with the Fed expect4d to increase rates on Wednesday. The keys are what the policy statement implies and what Powell has to say at his press conference. That is old news, it’s been an issue with traders and investors for the last two weeks. The 10 year traded at 3.47% +5 bps to start the session, at 4:00 pm 3.58%.
The new news pressured rates even higher this morning when the April ISM manufacturing index was released. The report was released at 10:00 am, since then rates increased through the rest of the day. The headline index still under 50 as were the other components but the increases from April will add top pressure for the FOMC. Manufacturing took off from March, although still considered contraction as the index components all under 50, except employment at 50.2 indicating expansion.
The April ISM Manufacturing registered 47.1 percent, 0.8 percentage point higher than the 46.3 percent recorded in March. Regarding the overall economy, this figure indicates a fifth month of contraction after a 30-month period of expansion. The New Orders Index remained in contraction territory at 45.7 percent, 1.4 percentage points higher than the figure of 44.3 percent recorded in March. The Production Index reading of 48.9 percent is a 1.1-percentage point increase compared to March’s figure of 47.8 percent. The Prices Index registered 53.2 percent, up 4 percentage points compared to the March figure of 49.2 percent. The Backlog of Orders Index registered 43.1 percent, 0.8 percentage point lower than the March reading of 43.9 percent. The Employment Index elevated into expansion territory, registering 50.2 percent, up 3.3 percentage points from March’s reading of 46.9 percent. The Supplier Deliveries Index figure of 44.6 percent is 0.2 percentage point lower than the 44.8 percent recorded in March; this is the index’s lowest reading since March 2009 (43.2 percent). The Inventories Index dropped 1.2 percentage points to 46.3 percent, lower than the March reading of 47.5 percent. The New Export Orders Index reading of 49.8 percent is 2.2 percentage points higher than March’s figure of 47.6 percent. The Imports Index remained in contraction territory, though just barely, at 49.9 percent, 2 percentage points above the 47.9 percent reported in March.
The 10 now at the top end of its 20 bp range, up 17 bps since last Wednesday.
Tomorrow March JOLTS job openings (9.560 mil from 9.931 mil.)
The ISM data this morning turned the table, at least for now, that the Fed may not pause its increases after the meeting next week. The improvement in manufacturing, the sector that has been the drag in the economy knocked traders back and investors running to cover. The trading range though still intact at 3.60%, mid-Feb since the note has traded above it, the range has held since mid-March.
