Recap of Yesterday
- I played golf all day...YAY day off!
- Services sector grew in September. ISM services index rises from 48.4 in August to 50.9 in September....first indication of growth in services industry since August 2008.
- Stocks higher after four consecutive RED sessions. S&P +1.49% to 1040. DOW +1.18% to 9559. NASDAQ +0.98% to 2068
- Dollar weaker. Oil more expensive. Gold near $1016
- Benchmark yields rise in slow data, range trading environment. Post-NFP, pre-TSY auction corrections take place as stocks make gains
- Expensive dollar prices AND looming prepay tape keep MBS trading flows quiet
- Rate sheets marginally improved
So far this AM
- CHINA NOT WORKING. HANG SENG +1.87%, NIKKEI +0.18%, TOPIX +0.50%, CAC +1.46%, DAX +1.65%, FTSE +1.56%
- Australia unexpectedly raises cash interest rate 0.25% to 3.25%. Australia dollar rallies to 14month high.
- US dollar index is -0.36% to $76.36, Oil more expensive at $71.25. Gold at $1,036 after ending NY session near 1016 yesterday
- US Stock futures following global equity markets higher. S&P +0.82%.
- TSY yields rising again...range breakout not compromised though, still trading under 3.27%....range bound trading expected to continue
The FN 4.5 is -0-02 at 101-22 yielding 4.292%. The FN 4.0 is -0-02 at 99-15 yielding 4.062%. The secondary market current coupon is 4.12%
Here is the FN 4.5's recent range...
Slow data day for markets. TSY auctions and stock lever are setting up to be the directional guidance givers for rates market today
The TSY will auction $39 billion 3 yr notes at 1pm
The September Prepay Report will be released tonight...we are not expecting a large enough pick up in payoffs to warrant a move down in coupon, traders wont risk it though...most accounts will wait for confirmation of continually slow speeds before resuming UIC strategies. (Plus prices are too expensive)
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