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GDP Much Weaker Than Expected; MBS Launch into Positive Territory
Posted to: Micro News
Wednesday, April 30, 2014 8:46 AM

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  • GDP +0.1 vs +1.2 forecast, lowest since Q4 2012
  • Deflator (inflation metric) +1.3 vs +1.6 forecast
  • Business Inventories detract 0.57 percent
  • Big drop in Business Investment, -2.1 vs +5.7 previously, 'Equipment' down 5.5 vs +10.9 previously
  • Big drop in Exports, down 7.6 pct vs +9.5 previously, Imports swing too, -1.4 vs +1.5 in Q4

At most other times in history, this big a miss versus the consensus would make for a bigger market reaction, but as it stands, 10yr yields are only down roughly 3 bps at 2.6.  Fannie 4.0s are now 3 ticks up on the day at 104-17. 

As nice as it is to be moving decisively into positive territory, in a range that's been 2.6 to 2.8, this is a pretty modest movement.  It speaks to the general apathy that has pervaded 2014 and suggests we're still waiting on that special something to bust us out of our range-bound prison (even though we'll wish we could be locked up again if we happen to get busted out in the wrong direction).  That prison-break stands the highest chance of being executed by Friday's NFP--another factor probably serving to mute reactions to data this week.

In the time it took to type that last paragraph, 10's are back up a bp to 2.69.  C'est la vie.  Hopefully just consolidation and not some silly reversal (if it's a silly reversal, that would be a fairly negative hint about underlying predisposition among traders).

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Mortgage Rates:
  • 30 Yr FRM 3.67%
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  • 15 Yr FRM 2.95%
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  • Jumbo 30 Year Fixed 3.62%
MBS Prices:
  • 30YR FNMA 4.5 108-28 (0-00)
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  • 30YR FNMA 5.0 110-17 (-0-04)
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  • 30YR FNMA 5.5 111-30 (0-02)
Recent Housing Data:
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  • Refinance Index 11.33%
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  • Purchase Index 8.43%