Mortgage bond prices closed slightly below the levels where daily pricing was set applying upward pressure to mortgage rates. Trade was volatile all day tied to the movement in stocks. Equity and bond prices were yo-yoing with each snippet of news out of Europe. Tomorrow brings weekly jobless claims and Q3 advanced GDP before lenders set pricing. Prepare yourself and your borrowers for a wild ride. Regardless of what happens in Europe stocks and bonds will most likely be EXTREMELY volatile.
The head of the National Transitional Council military arm announced on Al Jazeera Arabic that Gadhafi is dead. The report hasn’t been confirmed.
Mortgage bonds are weaker at the open pushing rates higher as news out of Europe indicates the euro zone’s bailout facility will be able to buy EU bonds on the secondary market. The US debt market was weaker heading into the jobs data and didn’t move move following it.
Stock futures are higher adding addition pressure to mortgage bonds. The flight to quality buying of US debt instruments continues to fluxuate as hopes of a European debt solution increase. AS WE CONTINUE TO STATE….the trouble in Europe is far from over and we have been on this roller coaster for some time so expected more volatility to come!!!
Weekly jobless claims @ 403k, expected @ 400k, relatively in line with expectations
MARKET WRAP: Bond markets stabilized today and pushed higher despite better than expected news from initial claims, pending home sales and not-so-good results from the $29B 7-yr note auction. Whispers of a lower than expected 1st read on Q2 GDP could have helped to lend support to Bonds. Stocks traded higher for the most of the session but fell in the last hour of trading ahead of this evenings House vote on the debt ceiling due around 5:45pm ET. The 4% coupon jumped 47bp to end the session at 100.75. The Dow fell 62.44 to 12,240.11, the S&P 500 Index lost 4.22 to 1,300.67 while the Nasdaq was near unchanged at 2,766.25. Oil was slightly lower in after hours trading at $97.19/barrel. Along with GDP, Chicago PMI, Employment Cost Index and Consumer Sentiment will be released tomorrow.
MARKET WRAP: The announcement from the Treasury that it will begin selling $10B in Mortgage Backed Securities each month starting this month sent MBS prices lower today. The total amount the Treasury owns is $142B. The news sent MBS and Treasuries considerably lower but they did manage to pare some of those losses by the close of trading. The 4% coupon fell 34bp to end the session at 98.97, despite a weak read on Existing Home sales. A big M&A deal and a somewhat stabilization of Japan’s nuclear reactor problems helped to boost Stock prices today and as money came out of the Bond markets. AT&T announced it will purchase T-Mobile in a deal worth $39B. The Dow surged 178.01 to 12,036.53, the Nasdaq rose 48.42 to 2,692.09 while the S&P 500 gained 19.18 to 1,298. Oil prices rose as the US and western allies launched an air attack on Libya in an effort to oust Gadhafi settling at $102.33/barrel up $1.26. There are no major economic reports due for release tomorrow.
Mortgage Bonds moved higher today on the devastating news out of Japan and as the unrest in the Mid East continues but they closed well off the best levels of the session halted by resistance and as Stocks were able to pair 2/3s of the days losses. The 4% coupon finished at 98.66 up 22bp. There were no economic reports today. As mentioned, Stocks were able t pare some losses as investors bought on the dips. The Dow fell 51.24 to 11,993.16, the S&P lost 7.89 to 1,296.39 while the Nasdaq dropped 14.64 to 2,700.97. Oil traded below the $100 mark today but was able to reverse course and move higher as news that the rebels in Libya were being defeated settling at $101.19/barrel near unchanged after trading as low as $98.47. The Fed will have a 1-day FOMC meeting tomorrow with the statement being delivered at 2:15pm ET. The only major economic report will be the NY State Empire Manufacturing Index.
MARKET WRAP: Mortgage Bonds had their monthly coupon rollover after the close of trading today. The effect of this rollover was minus 34bp points for the 4% coupon. Therefore, while the Bond quote for today shows minus 59bp closing at 97.66, the minus 34bp rollover adjustment must be accounted for. This means that pricing actually closed down 25bp on the day. A report out from think-tank group Medley Group Advisors, fueled concerns that the Fed may start withdrawing monetary stimulus earlier than expected and pushed Treasury prices lower and spilled over into Mortgage Backed Securities. Stock markets moved higher today as money shifted from the Bond markets and as oil moved a bit lower, Boeing received a $10B from 2 airlines in China, B of A hinted of a possible dividend hike and allies of Gadaffi said were looking at exit plans for the leader. The Dow rose 124.35 to 12,214.38, the Nasdaq jumped 20.14 to 2,765.77 while the S&P 500 Index rose 11.69 to 1,321.82. Oil settled at $105.02/barrel down 42 cents after key oil producers considered increasing output. There are no major economic reports due for release tomorrow. The Treasury will sell $21B 10-yr notes.
MARKET WRAP:Today was fueled by geopolitical news and the Bond was halted by resistance at the 50-Day Moving Average. Oil prices were on a roller coaster ride today trading as high as $103.41 and as low as $95.62 on the geopolitical news out of North Africa. The news went from the extreme that Gaddafi was about to employ chemical weapons to rumors that the dictator had been shot dead. The rumors were unfounded as oil closed near the bottom end of today’s range at $97.28/barrel down 82 cents. The Bond markets were able to push higher on the unrest in Libya as the 4% coupon rose 22bp to 98.28. Stocks spent most of the day well underwater on the Libyan news despite lower Initial Jobless Claims and a jump in Durable Orders but were able to pare those losses. The Dow fell 37.28 to 12,068.50, the S&P 500 Index lost 1.30 to 1,306.10 while the Nasdaq gained 14.91 to 2,737.90. Tomorrow’s economic data includes GDP – 2nd estimate and Michigan Sentiment.
MARKET WRAP: Mortgage Bonds traded higher for the 3rd straight session on Stock weakness and after softer than expected economic data. Retail Sales were a bit lower than expected, which also helped to boost Bond prices. The 4% coupon rose 25bp to end the session at 97.38. Stocks ended lower today as the recent rally seems to be losing some steam. The Dow dropped 41.55 to 12,226.64, the S&P 500 Index slipped 4.30 to 1,328.01 while the Nasdaq lost 12.83 to 2,804.35. Oil settled at $84.32 down 42 cents and represented an 11th week low. Tomorrow’s economic data includes the Producer Price Index along with Housing Starts/Building Permits.
MARKET WRAP: Mortgage Bonds were finally able to put together a meaningful rally today after several failed attempts the past few days as investors went bargain hunting. The 4% coupon rose 53bp to end the session at 97.00 finishing near the highs of the session despite a rise in the Stock markets. The Dow rose 43.97 to 12,273.26, the S&P 500 gained 7.28 to 1,329.15 while the Nasdaq 2,809.44 up 18.99 on the Mubarek resignation. Oil ended at $85.88/barrel down $1.15 to its lowest level in 10 weeks on the Egyptian news resting concerns of a threat to oil.
MARKET WRAP: The Bond markets hopped on the roller coaster today as volatility continues to dominate trading. Mortgage Bonds opened higher this morning after 7 straight days of losses, then fell, but were able to surge after the strong results from today’s 10-yr note auction. The 4% coupon rose 34bp to end the session at 96.78 and just below the daily high. Stocks spent most of the session near unchanged levels as investors took some profits after their recent run higher but the Dow did manage to squeak out a gain for its 8th straight winning session. The Dow rose 6.74 to 12,239.89, the Nasdaq fell 7.98 to 2,789.07 while the closely watched S&P 500 Index lost 3.69 to 1,320.88. Oil settled near unchanged at $86.71/barrel up 23 cents. The Treasury will sell $16B in 30-yr Bonds tomorrow while weekly initial claims will be reported at 8:30am ET.