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Saturday’s: 9AM 1590 AM/97.9 FM KVTA
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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 +42 BPS with 60 minutes left to trade.
Domestic Flavor:
Taking it to the House: Weekly Mortgage Applications fell again, this time by -3.7%. Refinances were down -6.9% and Purchases were down by -2.5%.
Rosie the Riveter: The May Chicago PMI absolutely CRATERED, hitting 40.4 vs est of 47.0. Any reading below 50 is contractionary. This is the worst reading since November.
Jobs, Jobs, Jobs: The April Job Openings and Labor Turnover Survey (JOLTS) was much higher than expected, showing 10.103M vs est of 9.375M. Plus, the prior month was revised higher from 9.590M to 9.745M
The Talking Fed: Cleveland Fed President Mester said that there was no compelling reason to pause rate hikes at this point. We will hear from Collins, Harker and Jefferson today and get the Fed’s Beige Book at 2:00 pm.
The debt ceiling suspension is in the House ready for a vote. The bill would suspend the debt ceiling through Jan. 1, 2025, moving the next battle over the borrowing limit until after the presidential election. Interest rates continued to decline as haven trades are removed. House GOP leaders said they expect more than half of the 222 Republicans in the chamber to support the package, while many of the 213 Democrats are also expected to back the bill, giving the measure the majority needed to pass. Also helping rates today, Fed officials out speaking. Fed Governor Philip Jefferson signaled the central bank is inclined to keep interest rates steady at its next meeting in June to give policymakers more time to assess the economic outlook, but such a decision wouldn’t mean hikes are finished. Whether the Fed would pause was still up in the air, but with Fed officials now signaling a pause it also adds to the retracement in rates.
The JOLTS job openings this morning higher than forecasts adding to the potential pause at the June FOMC meeting in two weeks. Job opening over 10.0 mil. But also implying the Fed may move rates higher at the July meeting. It is an ongoing situation and won’t dissipate. The May Chicago purchasing mgrs. dropped hard, at 40.4 compared to 47.0 expectations, April 48.6; manufacturing data continues to slow.
Tomorrow weekly jobless claims, expected to increase to 235K from 229K the previous week. ADP will report private jobs for May at 160K. Q1 productivity and unit labor costs; productivity -2.7%, unit labor costs +6.3% (inflation). The May ISM manufacturing sector index, expected at 47.0 from 47.1 in April.
Friday the May employment report.
