It happened again this morning; the 10 yr note at 7:00 am this morning traded down to 1.86% then stalled on CPI data at 8:30. CPI increased 0.2% as expected but the core also was +0.2%, higher than 0.1% expected; yr/yr CPI unchanged however the core yr/yr +1.8%. By 9:00 the 10 was unchanged from yesterday at 1.90%. Yesterday Stanley Fischer, Vice Chair of the Fed said he sees inflation moving closer to the 2.0% but also led with concerns about the economic growth. “The inflation rate was coming up reasonably well, and I think most of us thought we were going to get to 2% quite soon, possibly by next year,” Mr. Fischer said. But, he said, inflation was pushed down by falling gasoline prices, and also restrained by a stronger U.S. dollar.
Data for March and February are coming in weaker than expectations increasing the view the Fed will not increase rates in June. Looking at all of the recent comments frm numerous Fed officials there is no consensus and together the back and forth opinions are keeping markets on edge. No movement for three weeks at the long end of the curve, the 10 1.98% to 1.86%. MBS prices in a 80 bp price range. No firm consensus frm all of the speeches but one thing is constant in all of the opinions; the Fed won’t begin increasing rates until the incoming economic news begins to turn more positive. So far this year most sector reports have been less than what economists and the Fed had expected. Weather still a scape goat but that will change when new measurements are gathered, no weather excuses. Back in Dec Yellen set the table for June as a target for the first increase, since then the economy has softened more than the Fed thought it would so June stuck in markets’ minds but it will not happen in June.
The DJIA opened -172, NASDAQ -44, S&P -13. 10 yr 1.90% unchanged, 30 yr MBS price -8 bp frm yesterday’s close and -3 bp frm 9:30 yesterday.
US stocks following markets in China and Europe. Chinese regulators saying its markets are becoming too frothy, opening the two exchanges making it easier to short Chinese markets. The China Securities Regulatory Commission, warned small investors, who have been big drivers of the rally, not borrow money or sell property to buy stocks, ratcheting up its rhetoric about the market. “Margin business has been growing rapidly but short-selling business has been developing slowly,” a statement from the exchanges said.
Greece moving closer to default. Yesterday Christine Lagarde commented that she isn’t going to relent on Greece’s austerity movement to increase more help for the country. Creditors are losing hope that Athens will do what is needed to unlock bailout funds before it runs out of money, and Greek government bond prices plunged as concerns rose about default and an exit from the Eurozone. Investors keeping an eye on the situation. Greece has been on the verge of default and exiting the EU for over a year, but it is still there even with all the saber rattling from the IMF, ECB and Germany’s leaders.
The U. of Michigan consumer sentiment index expected at 95 frm 93 at the end of March; the index increased to 95.9. March leading economic indicators expected +0.3% was up 0.2% and Feb was revised from +0.2% to +0.1%.
No safe haven moves into the arms of US treasuries even with equity markets trading lower hear and around the world. I realize it gets boring to hear the same stuff everyday but anytime the 10 yield falls to 1.86% in the last three weeks the door has closed. No matter other global and domestic news and events buying dries up at 1.86%. Our work is still bullish based on our models and key technical readings; that said, we won’t add new buying in the bond or MBS markets until the 10 breaks out and moves below 1.86%.
PRICES @ 10:10 AM
10 yr note: +2/32 (6 bp) 1.89% -1 bp
5 yr note: unch 1.30% unch
2 Yr note: unch 0.50% unch
30 yr bond: +14/32 (44 bp) 2.55% -2 bp
Libor Rates: 1 mo 0.180%; 3 mo 0.274%; 6 mo 0.401%; 1 yr 0.692%
30 yr FNMA 3.0 May: @9:30 102.45 -8 bp (-3 bp frm 9:30 yesterday)
15 yr FNMA 3.0 May: @9:30 104.83 -4 bp (+3 bp frm 9:30 yesterday)
30 yr GNMA 3.0: @9:30 103.48 +5 bp (+13 bp frm 9:30 yesterday)
Dollar/Yen: 119.00 -0.02 yen
Dollar/Euro: $1.0773 +$0.0012
Gold: $1202.10 +$4.10
Crude Oil: $56.18 -$0.53
DJIA: 17,838.31 -267.46
NASDAQ: 4934.19 -73.60
S&P 500: 2081.66 -23.33
Data for March and February are coming in weaker than expectations increasing the view the Fed will not increase rates in June. Looking at all of the recent comments frm numerous Fed officials there is no consensus and together the back and forth opinions are keeping markets on edge. No movement for three weeks at the long end of the curve, the 10 1.98% to 1.86%. MBS prices in a 80 bp price range. No firm consensus frm all of the speeches but one thing is constant in all of the opinions; the Fed won’t begin increasing rates until the incoming economic news begins to turn more positive. So far this year most sector reports have been less than what economists and the Fed had expected. Weather still a scape goat but that will change when new measurements are gathered, no weather excuses. Back in Dec Yellen set the table for June as a target for the first increase, since then the economy has softened more than the Fed thought it would so June stuck in markets’ minds but it will not happen in June.
The DJIA opened -172, NASDAQ -44, S&P -13. 10 yr 1.90% unchanged, 30 yr MBS price -8 bp frm yesterday’s close and -3 bp frm 9:30 yesterday.
US stocks following markets in China and Europe. Chinese regulators saying its markets are becoming too frothy, opening the two exchanges making it easier to short Chinese markets. The China Securities Regulatory Commission, warned small investors, who have been big drivers of the rally, not borrow money or sell property to buy stocks, ratcheting up its rhetoric about the market. “Margin business has been growing rapidly but short-selling business has been developing slowly,” a statement from the exchanges said.
Greece moving closer to default. Yesterday Christine Lagarde commented that she isn’t going to relent on Greece’s austerity movement to increase more help for the country. Creditors are losing hope that Athens will do what is needed to unlock bailout funds before it runs out of money, and Greek government bond prices plunged as concerns rose about default and an exit from the Eurozone. Investors keeping an eye on the situation. Greece has been on the verge of default and exiting the EU for over a year, but it is still there even with all the saber rattling from the IMF, ECB and Germany’s leaders.
The U. of Michigan consumer sentiment index expected at 95 frm 93 at the end of March; the index increased to 95.9. March leading economic indicators expected +0.3% was up 0.2% and Feb was revised from +0.2% to +0.1%.
No safe haven moves into the arms of US treasuries even with equity markets trading lower hear and around the world. I realize it gets boring to hear the same stuff everyday but anytime the 10 yield falls to 1.86% in the last three weeks the door has closed. No matter other global and domestic news and events buying dries up at 1.86%. Our work is still bullish based on our models and key technical readings; that said, we won’t add new buying in the bond or MBS markets until the 10 breaks out and moves below 1.86%.
PRICES @ 10:10 AM
10 yr note: +2/32 (6 bp) 1.89% -1 bp
5 yr note: unch 1.30% unch
2 Yr note: unch 0.50% unch
30 yr bond: +14/32 (44 bp) 2.55% -2 bp
Libor Rates: 1 mo 0.180%; 3 mo 0.274%; 6 mo 0.401%; 1 yr 0.692%
30 yr FNMA 3.0 May: @9:30 102.45 -8 bp (-3 bp frm 9:30 yesterday)
15 yr FNMA 3.0 May: @9:30 104.83 -4 bp (+3 bp frm 9:30 yesterday)
30 yr GNMA 3.0: @9:30 103.48 +5 bp (+13 bp frm 9:30 yesterday)
Dollar/Yen: 119.00 -0.02 yen
Dollar/Euro: $1.0773 +$0.0012
Gold: $1202.10 +$4.10
Crude Oil: $56.18 -$0.53
DJIA: 17,838.31 -267.46
NASDAQ: 4934.19 -73.60
S&P 500: 2081.66 -23.33
