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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 June Coupon is up +11 BPS with 60 minutes left to trade.
Taking it to the House: Weekly Mortgage Applications dropped by -5.7%. Refinances tanked by -7.7% and Purchases fell by -4.8%. April Building Permits were 1.416M units on an annualized basis, vs. est. of 1.437M. Housing Starts were 1.401M vs. est. of 1.400M.
Treasury Dump: We had a 20 year bond auction today at 1:00. It was a solid auction with $15B going off at a high yield of 3.954%. The bid-to-cover ratio was 2.56
On Deck for Tomorrow: Initial Jobless Claims, Philly Fed Manufacturing, Leading Economic Indicators, Existing Home Sales.
The 10 and mortgage prices a little softer this afternoon.
April permits for future U.S. single-family homebuilding jumped to a seven-month high in April. The tightening credit markets will slow down builders getting financing for future projects. Major obstacles remain for the housing market, with the report also showing the pace of single-family home completions falling to a 15-month low. Single-family building permits rose 3.1% to a seasonally adjusted annual rate of 855,000 units last month, the highest level since last September. Permits in this largest segment of the housing market rose in all four regions. Permits for housing projects with five units or more dropped 9.7% to a rate of 502,000 units, the lowest level since December 2020. The plunge in multi-family approvals led overall building permits to fall 1.5% to a rate of 1.416 million units.
Single-family housing starts climbed 1.6% to rate of 846,000 units last month. The government revised the starts data from January 2018 through March this year. Single-family housing starts plunged 28.1% on a year-on-year basis in April and remain well below their pace of at least one million units between July 2020 and June 2022. With both single- and multi-family homebuilding rising, overall housing starts increased 2.2% to a rate of 1.401 million units in April. The average rate on the popular 30-year fixed mortgage has dropped from a peak of 7.08% in November, which was the highest since 2002. It averaged 6.35% last week, according to data from mortgage finance agency Freddie Mac. Yesterday the NAHB May clawed back to 50 from 45 and the recent low of 31. The S&P Composite 1500 Homebuilding sector hit a new 52-week intraday high Wednesday, nearing an all-time high set in December 2021 and is trading roughly 27% above its 200-day moving average.
The debt ceiling still the primary driver for financial markets. The stock indexes rallied today on optimism that a deal will be reached; that is what will happen in our judgment. A default cannot be in the cards.
Senate Majority Leader Chuck Schumer meeting with big banks today. JPMorgan Chase’s Jamie Dimon and Citigroup Inc. CEO Jane Fraser, according to a person familiar with the plan. Also, this week, Treasury Secretary Janet Yellen is expected to gather with finance chiefs as the clock ticks down to her department potentially running out of sufficient cash to make good on all federal obligations. Biden is headed for a Group of Seven meeting in Hiroshima, Japan, but will return on Sunday instead of taking a more extended overseas trip. Comments today from both parties sounded optimistic and said a deal will be reached, (neither party wants the blame if it isn’t reached, thing is both parties should be blamed).
Tomorrow weekly jobless claims, expected at 255K down from 264 the week before. May Philadelphia Fed manufacturing index, not much of a market mover, expected at -20 from -31.1.
Also, tomorrow April existing home sales expected at 4.295 mil from 4.440 mil.
