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You are viewing Micro News from Tuesday, Apr 2, 2013 - View all recent Micro News
  • 4/2/13
    Fed's Kocherlakota repeats call for more policy easing
    (Reuters) - Minneapolis Federal Reserve Bank President Narayana Kocherlakota on Tuesday repeated his call for more monetary policy easing, urging the central bank to leave interest rates near zero until the unemployment rate falls to 5.5 percent.

    Doing so would give the economy a bigger boost than the Fed's current promise to keep rates low until unemployment falls to 6.5 percent, he argued in remarks prepared for delivery to the Grand Forks/East Grand Forks Chamber of Commerce in Grand Forks, North Dakota.

    His prepared remarks were virtually identical to those he delivered last week in Edina, Minnesota, and echo the thrust of an argument he first made last October.

    "(M)y outlook implies that monetary policy is currently not accommodative enough," Kocherlakota said, forecasting unemployment, now at 7.7 percent, to fall only slowly to 7 percent by the end of 2014, and for inflation to continue to lag below the Fed's 2-percent target. "Monetary policy should be more accommodative."
    Category: MBS, FED, INDUSTRY
    Share:   
  • 4/2/13
    Fed may be able to pull back on stimulus this year-Lockhart
    The Federal Reserve may be able to reduce its bond-buying stimulus plan before the end of this year if economic growth continues to pick up and employment improves further, a top central bank official said.

    Dennis Lockhart, president of the Atlanta Fed, said on Tuesday he expects the U.S. economy to expand a bit over 2 percent this year, though he does see some chance that the expansion could prove even stronger.

    At the same time, Lockhart flagged short-term budget cuts from Washington as a risk to near-term economic performance. He also noted that the U.S. labor market, while better, remains only a shadow of its pre-recession self.
    Category: MBS, FED, INDUSTRY
    Share:   
  • 4/2/13
    MBS Continue Holding, But Just Barely
    It continues to be a woefully sideways day for MBS. While this isn't a terrible thing, considering we're right in line with 1-month highs, it's not without its baggage. That baggage is currently being provided by the nearness of benchmark Treasuries to several relatively important technical levels

    Yields of roughly 1.87% have come into play several times in the past week as support (meaning that 10's have encountered ceiling bounces around 1.87). More quantitatively, the 100 day moving average is 1.866, right on top of current levels. 10's have bounced around here incessantly since noon and while there's no major significance implied by volume (which is only "OK" today vs non-existent yesterday), it makes for a bit of tension in the air.

    If 10's broke higher today, they might not do so in a major way, but it would beg the question: is this just the beginning? With more and more data and volume returning to markets post-Holiday, we've had more weakness in bond markets. The skeptical take on bond markets could quickly become something like this: "we only got another test of those 1.83+ long-term technical barriers heading into and coming out of low-volume, global holiday breaks, and with the pick up in data and activity, if the data is bond-market negative, yet another bounce at 1.83+ will be firmly reinforced. This would reinforce a ceiling bounce for MBS around 103-10 as well."

    We're not saying that's what today's price action necessarily means, but simply pointing out the reason it makes us uneasy to be sideways at these levels. Tension is mounting for the rest of the week, which contains an ECB Announcement and Non-Farm Payrolls.
    Category: MBS, UPDATE
    Share:   
  • 4/2/13
    ECON: Factory Orders Slightly Higher Than Expected
    - Factory Orders +3.0 vs +2.9 Consensus
    - January revised from -2.0 to -1.0
    - Excluding Defense Sector +2.4 vs +1.0 in Jan
    - February Durable Goods revised to 5.6 from 5.7
    - Excluding Transportation +0.3 vs +2.0
    Market Reaction: stocks are slightly higher and bond markets weakened initially, but are now back at pre-data levels.

    New orders for manufactured goods in February, up two of the last three months, increased $14.5 billion or 3.0 percent to $492.0 billion, the U.S. Census Bureau reported today. This was at the highest level since the series was first published on a NAICS basis in 1992 and followed a 1.0 percent January decrease. Excluding transportation, new orders increased 0.3 percent.

    Shipments, up five of the last six months, increased $4.3 billion or 0.9 percent to $489.3 billion. This was at the highest level since the series was first published on a NAICS basis and followed a 0.4 percent January increase.

    Unfilled orders, up five of the last six months, increased $9.3 billion or 0.9 percent to $999.7 billion. This followed a slight January decrease. The unfilled orders-to-shipments ratio was 6.28, up from 6.25 in January.

    Inventories, up three consecutive months, increased $1.1 billion or 0.2 percent to $620.0 billion. This was at the highest level since the series was first published on a NAICS basis and followed a 0.6 percent January increase. The inventories-to-shipments ratio was 1.27, down from 1.28 in January.
    Category: MBS, ECON
    Share:   
  • 4/2/13
    Moderately Weaker Overnight, Europe Leads The Way
    Europe doesn't mess around when it comes to taking time off surrounding the Easter Holiday. Until about 3am this morning, they've been out since Thursday. As European markets got back to business, it's been largely a risk-on affair, but nothing too lop-sided (risk-on = favoring riskier assets like stocks and/or selling risk-free assets like German / US sovereign debt, thus raising rates).

    The healthy dose of European data was fairly balanced though Italian Unemployment improved slightly and German inflation remained in check. And it's those two countries leading the gentle charge slightly weaker overnight. 10yr Bunds pushed higher, moving away from 8 month lows at the end of last week. Italian credit spreads (a measure of perceived risk in Italy) fell after topping out at 5 month highs late last week.

    Considering all of the above, it's not unlikely that there was a good measure of defensiveness heading into the 4-day weekend which is now being unwound. This could continue to pose challenges for domestic bond markets to whatever extent it continues. US 10's followed Bunds overnight, moving from mid 1.82's at the European open to 1.86 currently. To make matters worse, from a technical standpoint, yesterday looks like another bounce on a floor of resistance at mid 1.83's.

    MBS opened a few ticks weaker, but thus far, aren't as bad off as Treasuries. Fannie 3.0's are currently down 3 ticks at 103-08, similarly capping out at recent resistance levels of 103-10. There's no massively significant domestic economic data today, but February Factory Orders hit at 10am. Between now and then (and for a few hours after as well) European markets continue to be the driving force. As long as Bunds are able to hold under their 1.31+ ceiling, we should be able to hold our ground reasonably well, but are certainly playing defense so far this morning.
    Category: MBS, UPDATE
    Share:   
  • 4/2/13
    Fed's Kocherlakota repeats call for more policy easing
    (Reuters) - Minneapolis Federal Reserve Bank President Narayana Kocherlakota on Tuesday repeated his call for more monetary policy easing, urging the central bank to leave interest rates near zero until the unemployment rate falls to 5.5 percent.

    Doing so would give the economy a bigger boost than the Fed's current promise to keep rates low until unemployment falls to 6.5 percent, he argued in remarks prepared for delivery to the Grand Forks/East Grand Forks Chamber of Commerce in Grand Forks, North Dakota.

    His prepared remarks were virtually identical to those he delivered last week in Edina, Minnesota, and echo the thrust of an argument he first made last October.

    "(M)y outlook implies that monetary policy is currently not accommodative enough," Kocherlakota said, forecasting unemployment, now at 7.7 percent, to fall only slowly to 7 percent by the end of 2014, and for inflation to continue to lag below the Fed's 2-percent target. "Monetary policy should be more accommodative."
    Category: MBS, FED, INDUSTRY
    Share:   
  • 4/2/13
    Fed may be able to pull back on stimulus this year-Lockhart
    The Federal Reserve may be able to reduce its bond-buying stimulus plan before the end of this year if economic growth continues to pick up and employment improves further, a top central bank official said.

    Dennis Lockhart, president of the Atlanta Fed, said on Tuesday he expects the U.S. economy to expand a bit over 2 percent this year, though he does see some chance that the expansion could prove even stronger.

    At the same time, Lockhart flagged short-term budget cuts from Washington as a risk to near-term economic performance. He also noted that the U.S. labor market, while better, remains only a shadow of its pre-recession self.
    Category: MBS, FED, INDUSTRY
    Share:   
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  • 4/2/13
    (Reuters) - Minneapolis Federal Reserve Bank President Narayana Kocherlakota on Tuesday repeated his call for more monetary policy easing, urging the central bank to leave interest rates near zero until the unemployment rate falls to 5.5 percent.

    Doing so would give the economy a bigger boost than the Fed's current promise to keep rates low until unemployment falls to 6.5 percent, he argued in remarks prepared for delivery to the Grand Forks/East Grand Forks Chamber of Commerce in Grand Forks, North Dakota.

    His prepared remarks were virtually identical to those he delivered last week in Edina, Minnesota, and echo the thrust of an argument he first made last October.

    "(M)y outlook implies that monetary policy is currently not accommodative enough," Kocherlakota said, forecasting unemployment, now at 7.7 percent, to fall only slowly to 7 percent by the end of 2014, and for inflation to continue to lag below the Fed's 2-percent target. "Monetary policy should be more accommodative."
    Category: MBS, FED, INDUSTRY
    Share:   
  • 4/2/13
    The Federal Reserve may be able to reduce its bond-buying stimulus plan before the end of this year if economic growth continues to pick up and employment improves further, a top central bank official said.

    Dennis Lockhart, president of the Atlanta Fed, said on Tuesday he expects the U.S. economy to expand a bit over 2 percent this year, though he does see some chance that the expansion could prove even stronger.

    At the same time, Lockhart flagged short-term budget cuts from Washington as a risk to near-term economic performance. He also noted that the U.S. labor market, while better, remains only a shadow of its pre-recession self.
    Category: MBS, FED, INDUSTRY
    Share:   
  • 4/2/13
    It continues to be a woefully sideways day for MBS. While this isn't a terrible thing, considering we're right in line with 1-month highs, it's not without its baggage. That baggage is currently being provided by the nearness of benchmark Treasuries to several relatively important technical levels

    Yields of roughly 1.87% have come into play several times in the past week as support (meaning that 10's have encountered ceiling bounces around 1.87). More quantitatively, the 100 day moving average is 1.866, right on top of current levels. 10's have bounced around here incessantly since noon and while there's no major significance implied by volume (which is only "OK" today vs non-existent yesterday), it makes for a bit of tension in the air.

    If 10's broke higher today, they might not do so in a major way, but it would beg the question: is this just the beginning? With more and more data and volume returning to markets post-Holiday, we've had more weakness in bond markets. The skeptical take on bond markets could quickly become something like this: "we only got another test of those 1.83+ long-term technical barriers heading into and coming out of low-volume, global holiday breaks, and with the pick up in data and activity, if the data is bond-market negative, yet another bounce at 1.83+ will be firmly reinforced. This would reinforce a ceiling bounce for MBS around 103-10 as well."

    We're not saying that's what today's price action necessarily means, but simply pointing out the reason it makes us uneasy to be sideways at these levels. Tension is mounting for the rest of the week, which contains an ECB Announcement and Non-Farm Payrolls.
    Category: MBS, UPDATE
    Share:   
  • 4/2/13
    - Factory Orders +3.0 vs +2.9 Consensus
    - January revised from -2.0 to -1.0
    - Excluding Defense Sector +2.4 vs +1.0 in Jan
    - February Durable Goods revised to 5.6 from 5.7
    - Excluding Transportation +0.3 vs +2.0
    Market Reaction: stocks are slightly higher and bond markets weakened initially, but are now back at pre-data levels.

    New orders for manufactured goods in February, up two of the last three months, increased $14.5 billion or 3.0 percent to $492.0 billion, the U.S. Census Bureau reported today. This was at the highest level since the series was first published on a NAICS basis in 1992 and followed a 1.0 percent January decrease. Excluding transportation, new orders increased 0.3 percent.

    Shipments, up five of the last six months, increased $4.3 billion or 0.9 percent to $489.3 billion. This was at the highest level since the series was first published on a NAICS basis and followed a 0.4 percent January increase.

    Unfilled orders, up five of the last six months, increased $9.3 billion or 0.9 percent to $999.7 billion. This followed a slight January decrease. The unfilled orders-to-shipments ratio was 6.28, up from 6.25 in January.

    Inventories, up three consecutive months, increased $1.1 billion or 0.2 percent to $620.0 billion. This was at the highest level since the series was first published on a NAICS basis and followed a 0.6 percent January increase. The inventories-to-shipments ratio was 1.27, down from 1.28 in January.
    Category: MBS, ECON
    Share:   
  • 4/2/13
    Europe doesn't mess around when it comes to taking time off surrounding the Easter Holiday. Until about 3am this morning, they've been out since Thursday. As European markets got back to business, it's been largely a risk-on affair, but nothing too lop-sided (risk-on = favoring riskier assets like stocks and/or selling risk-free assets like German / US sovereign debt, thus raising rates).

    The healthy dose of European data was fairly balanced though Italian Unemployment improved slightly and German inflation remained in check. And it's those two countries leading the gentle charge slightly weaker overnight. 10yr Bunds pushed higher, moving away from 8 month lows at the end of last week. Italian credit spreads (a measure of perceived risk in Italy) fell after topping out at 5 month highs late last week.

    Considering all of the above, it's not unlikely that there was a good measure of defensiveness heading into the 4-day weekend which is now being unwound. This could continue to pose challenges for domestic bond markets to whatever extent it continues. US 10's followed Bunds overnight, moving from mid 1.82's at the European open to 1.86 currently. To make matters worse, from a technical standpoint, yesterday looks like another bounce on a floor of resistance at mid 1.83's.

    MBS opened a few ticks weaker, but thus far, aren't as bad off as Treasuries. Fannie 3.0's are currently down 3 ticks at 103-08, similarly capping out at recent resistance levels of 103-10. There's no massively significant domestic economic data today, but February Factory Orders hit at 10am. Between now and then (and for a few hours after as well) European markets continue to be the driving force. As long as Bunds are able to hold under their 1.31+ ceiling, we should be able to hold our ground reasonably well, but are certainly playing defense so far this morning.
    Category: MBS, UPDATE
    Share:   
  • 4/2/13
    ECON: Factory Orders Slightly Higher Than Expected
    - Factory Orders +3.0 vs +2.9 Consensus
    - January revised from -2.0 to -1.0
    - Excluding Defense Sector +2.4 vs +1.0 in Jan
    - February Durable Goods revised to 5.6 from 5.7
    - Excluding Transportation +0.3 vs +2.0
    Market Reaction: stocks are slightly higher and bond markets weakened initially, but are now back at pre-data levels.

    New orders for manufactured goods in February, up two of the last three months, increased $14.5 billion or 3.0 percent to $492.0 billion, the U.S. Census Bureau reported today. This was at the highest level since the series was first published on a NAICS basis in 1992 and followed a 1.0 percent January decrease. Excluding transportation, new orders increased 0.3 percent.

    Shipments, up five of the last six months, increased $4.3 billion or 0.9 percent to $489.3 billion. This was at the highest level since the series was first published on a NAICS basis and followed a 0.4 percent January increase.

    Unfilled orders, up five of the last six months, increased $9.3 billion or 0.9 percent to $999.7 billion. This followed a slight January decrease. The unfilled orders-to-shipments ratio was 6.28, up from 6.25 in January.

    Inventories, up three consecutive months, increased $1.1 billion or 0.2 percent to $620.0 billion. This was at the highest level since the series was first published on a NAICS basis and followed a 0.6 percent January increase. The inventories-to-shipments ratio was 1.27, down from 1.28 in January.
    Category: MBS, ECON
    Share:   
  • 4/2/13
    Fed's Kocherlakota repeats call for more policy easing
    (Reuters) - Minneapolis Federal Reserve Bank President Narayana Kocherlakota on Tuesday repeated his call for more monetary policy easing, urging the central bank to leave interest rates near zero until the unemployment rate falls to 5.5 percent.

    Doing so would give the economy a bigger boost than the Fed's current promise to keep rates low until unemployment falls to 6.5 percent, he argued in remarks prepared for delivery to the Grand Forks/East Grand Forks Chamber of Commerce in Grand Forks, North Dakota.

    His prepared remarks were virtually identical to those he delivered last week in Edina, Minnesota, and echo the thrust of an argument he first made last October.

    "(M)y outlook implies that monetary policy is currently not accommodative enough," Kocherlakota said, forecasting unemployment, now at 7.7 percent, to fall only slowly to 7 percent by the end of 2014, and for inflation to continue to lag below the Fed's 2-percent target. "Monetary policy should be more accommodative."
    Category: MBS, FED, INDUSTRY
    Share:   
  • 4/2/13
    Fed may be able to pull back on stimulus this year-Lockhart
    The Federal Reserve may be able to reduce its bond-buying stimulus plan before the end of this year if economic growth continues to pick up and employment improves further, a top central bank official said.

    Dennis Lockhart, president of the Atlanta Fed, said on Tuesday he expects the U.S. economy to expand a bit over 2 percent this year, though he does see some chance that the expansion could prove even stronger.

    At the same time, Lockhart flagged short-term budget cuts from Washington as a risk to near-term economic performance. He also noted that the U.S. labor market, while better, remains only a shadow of its pre-recession self.
    Category: MBS, FED, INDUSTRY
    Share:   
 
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