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Bond Markets Stronger Overnight, and Another Boost From Weak Housing Data
Posted to: Micro News
Thursday, July 17, 2014 9:37 AM

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Weak housing data is bittersweet for originators.   On the one hand, it speaks to ongoing stagnation in the demand for our services.  On the other hand, it's helps rates move lower.  Here's a run-down of the weak data in question:

  • June Housing Starts 893k vs 1018k forecast
  • Starts lowest since Sept 2013
  • May revised down to 985k from 1001k
  • Permits 963k vs 1040k forecast.
  • Permits lowest since Jan 2014

This was in stark contrast to the stronger-than-expected Jobless Claims data

  • Claims 302k vs 310k forecast, 305k previously
  • Continued Claims 2.507mln vs 2.575mln forecast, 2.586mln previously

Given that this is "survey week" Claims data (covering the same time period as the next NFP release), markets are giving a good amount of weight to the weaker housing data.  Either that or they data isn't the primary consideration and is simply being used as cover for traders' positional goals.  Reality is usually somewhere in between these days.

Whatever the case, we are in the middle of a nice 2-day reversal from what looked like a broader move higher in yield.  The caveat is that it's more "nice" for Treasuries, which are up 12 ticks in price (down 4bps in yield to 2.496) while MBS are only up 6 ticks to 102-09.

About half of the strength was already intact coming off the overnight session, with the other half showing up after the 8:30am data.  10am brings the only other important data of the morning with Philly Fed.




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Mortgage Rates:
  • 30 Yr FRM 4.20%
  • |
  • 15 Yr FRM 3.35%
  • |
  • Jumbo 30 Year Fixed 4.06%
MBS Prices:
  • 30YR FNMA 4.5 107-29 (-0-01)
  • |
  • 30YR FNMA 5.0 110-12 (0-02)
  • |
  • 30YR FNMA 5.5 111-12 (0-00)
Recent Housing Data:
  • Mortgage Apps -7.23%
  • |
  • Refinance Index -10.65%
  • |
  • FHFA Home Price Index 0.67%