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You are viewing Micro News from Thursday, Jan 16, 2014 - View all recent Micro News
  • 1/16/14
    Bond Markets Stay Strong Following Mixed 10am Econ Data

    10am economic data included the Philly Fed index and NAHB's Housing Market Index.  The latter isn't typically much of a mover, but it's also typically more upbeat than the rest of the housing metrics.  The fact that it missed forecasts doesn't hurt.

    The Philly Fed index was slightly stronger than expected at the headline level, but New Orders and the 6-month outlook were significantly weaker.  On balance, the day of data now has no compelling counterpoint to last Friday's weak Payrolls number.  As long as the door for economic tepidity remains open, bond markets can keep cautiously exploring this corrective range.

    Philly Fed Index

    • Headline index (business conditions) 9.4 vs 8.6 forecast
    • New Orders 5.1 vs 12.9 previously
    • Employment 10.0 vs 4.4 previously
    • 6-month outlook 34.4 vs 44.8 previously, lowest since April
    • Our take on share of market movement among 10am data: 8/10
    • Full Release

    NAHB Housing Market Index

    • 56 vs 58 forecast
    • Prospective Buyer index 40 vs 43 previously
    • 6-month index 60 vs 62 previously
    • Our take on share of market movement: 2/10
    • Full Release

    The reaction hasn't been extreme for bond markets, and it shouldn't be, considering the Philly headline was actually stronger.  Fannie 4.0s have scratched out another few ticks of improvement to sit 8 ticks (.25) higher on the day at 103-28.  That's only 3 ticks higher than 9:30am levels so we're not quite into positive reprice territory yet.

    10's improved 1bp to 2.84, which was a total drop of just over 4bps on the day, but they bounced there and are back up to 2.847.  Keep in mind that 2.84 has recently come into play as resistance.  It's hard to see this on the charts, because 10's crossed below 2.84 on Monday, but the 2 bounces on either side of that (Mon and Tues morning) came during higher volume and more active trading.  It's a roadblock that's worthy of consideration.

    Category: MBS, UPDATE
    Share:   
  • 1/16/14
    Bond Markets Stronger After First Round of Economic Data

    It was another extremely flat overnight session.  10yr Treasuries again held inside a 2bps range (2.87-2.89 this time) and again began to improve just slightly heading into the 830am data.  Unlike yesterday, today's data was bond-friendly.

    Consumer Prices were perfectly on target and not a big market mover.  Jobless Claims were also very close to consensus, but the Continued Claims component was significantly higher.  Take a look:

    continued claims

    Initial Jobless Claims

    • 326k vs 328k forecast, 328 previously
    • Continued Claims 3.03 mln vs 2.848 forecast
    • Continued Claims highest since July 6, 2013
    • Our take on share of market movement: 9/10
    • Full Release

    Consumer Price Index

    • CPI +0.3 vs +0.3 forecast
    • Core CPI +0.1 vs +0.1 forecast
    • Our take on share of market movement: 1/10
    • Full Release

    Fannie 4.0s were already improving somewhat at the open, but have added another 4-5 ticks since the data, currently up 6 on the day at 103-26.  10yr yields dropped from 2.878 to 2.853. 

    Category: MBS, UPDATE
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  • 1/16/14

    10am economic data included the Philly Fed index and NAHB's Housing Market Index.  The latter isn't typically much of a mover, but it's also typically more upbeat than the rest of the housing metrics.  The fact that it missed forecasts doesn't hurt.

    The Philly Fed index was slightly stronger than expected at the headline level, but New Orders and the 6-month outlook were significantly weaker.  On balance, the day of data now has no compelling counterpoint to last Friday's weak Payrolls number.  As long as the door for economic tepidity remains open, bond markets can keep cautiously exploring this corrective range.

    Philly Fed Index

    • Headline index (business conditions) 9.4 vs 8.6 forecast
    • New Orders 5.1 vs 12.9 previously
    • Employment 10.0 vs 4.4 previously
    • 6-month outlook 34.4 vs 44.8 previously, lowest since April
    • Our take on share of market movement among 10am data: 8/10
    • Full Release

    NAHB Housing Market Index

    • 56 vs 58 forecast
    • Prospective Buyer index 40 vs 43 previously
    • 6-month index 60 vs 62 previously
    • Our take on share of market movement: 2/10
    • Full Release

    The reaction hasn't been extreme for bond markets, and it shouldn't be, considering the Philly headline was actually stronger.  Fannie 4.0s have scratched out another few ticks of improvement to sit 8 ticks (.25) higher on the day at 103-28.  That's only 3 ticks higher than 9:30am levels so we're not quite into positive reprice territory yet.

    10's improved 1bp to 2.84, which was a total drop of just over 4bps on the day, but they bounced there and are back up to 2.847.  Keep in mind that 2.84 has recently come into play as resistance.  It's hard to see this on the charts, because 10's crossed below 2.84 on Monday, but the 2 bounces on either side of that (Mon and Tues morning) came during higher volume and more active trading.  It's a roadblock that's worthy of consideration.

    Category: MBS, UPDATE
    Share:   
  • 1/16/14

    It was another extremely flat overnight session.  10yr Treasuries again held inside a 2bps range (2.87-2.89 this time) and again began to improve just slightly heading into the 830am data.  Unlike yesterday, today's data was bond-friendly.

    Consumer Prices were perfectly on target and not a big market mover.  Jobless Claims were also very close to consensus, but the Continued Claims component was significantly higher.  Take a look:

    continued claims

    Initial Jobless Claims

    • 326k vs 328k forecast, 328 previously
    • Continued Claims 3.03 mln vs 2.848 forecast
    • Continued Claims highest since July 6, 2013
    • Our take on share of market movement: 9/10
    • Full Release

    Consumer Price Index

    • CPI +0.3 vs +0.3 forecast
    • Core CPI +0.1 vs +0.1 forecast
    • Our take on share of market movement: 1/10
    • Full Release

    Fannie 4.0s were already improving somewhat at the open, but have added another 4-5 ticks since the data, currently up 6 on the day at 103-26.  10yr yields dropped from 2.878 to 2.853. 

    Category: MBS, UPDATE
    Share:   
 
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