The overnight and domestic bumper crops of economic data were fairly uneventful in the a super-zoomed frame of reference and utterly flat in the bigger-picture. This eventuality is somewhat frustrating due to the absence of any major deviations from economists' forecasts, making it more challenging to place the blame on the equivocal data itself or what we perceive to be an ongoing over-focus on Cyprus. We can be sure of a few things though. Data was bland, and much of the equivocal response is justified. However, Jobless Claims in the 330's would almost certainly be net-negative for bond markets with all other things being equal. European credit spreads, the Euro itself, and German Bunds are all dead giveaways that European uncertainty surrounding Cyprus is helping to keep domestic bond markets contained. This is most noticeable in Treasuries, but the relatively more insulated MBS market is still getting a taste.
MBS Pricing Snapshot
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Pricing as of 11:08 AM EST
Morning Reprice Alerts and Updates
Below is a recap of instant Reprice Alerts
and updates issued via email and text alert to MBS Live subscribers
ECON: Philly Fed Index Slightly Higher Than Expected
- Headline +2.0 vs -2.0 Consensus (-12.5 last month)
- Highest since September 2012
- Employment Index highest since April 2012
- Market Reaction: Bond markets continue to hold ground in moderately stronger territory.
Manufacturers responding to the March Business Outlook Survey reported slight increases in business activity this month. Indicators for general activity and new orders increased notably, following negative readings over the previous two months. Indicators for shipments and employment remained positive and improved slightly this month. Changes in the survey’s broad indicators of future activity were mixed but continued to reflect general optimism about growth over the next six months.
ECON: Existing Home Sales Rise Slightly Less Than Expected
- EHS 4.98 mln Annual Rate
- Highest Since November 2009
- But missed consensus of 5.00 mln
- Inventory at 4.7 Months based on current pace
- 25 pct distressed vs 23 pct previously
February existing-home sales and prices affirm a healthy recovery is underway in the housing sector, according to the National Association of Realtors. Sales have been above year-ago levels for 20 consecutive months, while prices show 12 consecutive months of year-over-year price increases.
Total existing-home sales, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, increased 0.8 percent to a seasonally adjusted annual rate of 4.98 million in February from an upwardly revised 4.94 million in January, and are 10.2 percent above the 4.52 million-unit level seen in February 2012. February sales were at the highest level since the tax credit period of November 2009.
Lawrence Yun , NAR chief economist, said conditions for continued housing improvement are at play. "Job growth in the improving economy and pent-up demand are causing both home sales and rental leasing to rise. Though home prices are rising much faster than rents, historically low mortgage rates are still making home purchases affordable," he said. "The only headwinds are limited housing inventory, which varies greatly around the country, and credit conditions that remain too restrictive."
ECON: FHFA House Price Index Up 0.6 Percent in January
Washington, DC – U.S. house prices rose 0.6 percent on a seasonally adjusted basis
from December to January, according to the Federal Housing Finance Agency’s monthly House
Price Index (HPI). The previously reported 0.6 percent increase in December was revised
downward to a 0.5 percent increase. For the 12 months ending in January, U.S. prices rose 6.5
percent. The U.S. index is 14.4 percent below its April 2007 peak and is roughly the same
as the September 2004 index level. National home prices have not declined on a monthly basis
since January 2012.
For the nine census divisions, seasonally adjusted monthly price changes from December to
January ranged from -0.7 percent in the New England division to +1.6 percent in the Pacific
division, while the 12-month changes ranged from +0.4 percent in the Middle Atlantic division to
+14.1 percent in the Mountain division.
FHFA uses the purchase prices of houses with mortgages owned or guaranteed by Fannie Mae
or Freddie Mac to calculate the monthly index. Monthly index values and appreciation rate
estimates for recent periods are provided in the table and graphs on the following pages. For complete historical data. See:
Bond Markets Hold Firm Against Slight Weakness Overnight
As the first hints of directional movement begin to emerge following Jobless Claims data this morning, Treasuries and MBS are holding their ground in slightly better territory vs yesterday's latest levels. Fannie 3.0 MBS are up 3 ticks at 102-23 and Treasuries are up 1.5 bps at 1.9424. S&P Futures are roughly 2 points lower than yesterday's 4pm levels.
The overnight session began with a bond markets weakening slightly in Asian hours after slightly stronger Chinese manufacturing data, but volume was lighter than average. European data was mostly weaker with the exception of strong Retail Sales in the UK, but to whatever. None of it was of much consequence compared to the incessant focus on Cyprus-related headlines.
To that end, 4:30am comments from Eurogroup's Djisselbloem were a focal point in terms of volume and resiliency for Treasuries. Cyprus's ongoing efforts to strike a deal with Russia were dismissed as an ineffective solution to a problem that would most easily be solved by the proposed bank levy. Djisselbloem even said that "some sort of levy on deposits is inevitable" in the final bailout package.
An exclusive Reuters story offered additional details on the Eurogroup call and revealed the attitudes of Finance Ministers to be generally more concerned than trading levels in risk-sensitive markets would seem to suggest. With Russian support uncertain, Cyprus flustered, the Eurogroup insistent on levies that received ZERO votes, and the ECB threatening to cut off emergency lending on Monday if no deal is reached, bond markets managed to muster just enough of a "risk-off" bid to stay in positive territory into US hours.
Jobless Claims were slightly lower than expected, but it was taken in stride, especially against the backdrop of all that moderately concerning "Cyprus stuff." Markit's preliminary (or "Flash") PMI did little to change the "sideways to slightly positive" tone in force thus far in the domestic session. We now wait for the 9:30am equities open followed by Philly Fed and Existing Home Sales at 10am.
ECON: Jobless Claims Slightly Lower Than Expected
- Claims Rise to 336k from 334k, Consensus=342k
- 4-week moving average 339,750, lowest since Feb 2008
- Continues claims 3.053 vs 3.050 Consensus
- Market Reaction: Neither stocks nor bonds seem too impressed or flustered so far, limited movements on either side.
In the week ending March 9, the advance figure for seasonally adjusted initial claims was 332,000, a decrease of 10,000 from the previous week's revised figure of 342,000. The 4-week moving average was 346,750, a decrease of 2,750 from the previous week's revised average of 349,500.
The advance seasonally adjusted insured unemployment rate was 2.4 percent for the week ending March 2, unchanged from the prior week's unrevised rate. The advance number for seasonally adjusted insured unemployment during the week ending March 2 was 3,024,000, a decrease of 89,000 from the preceding week's revised level of 3,113,000. The 4-week moving average was 3,098,250, a decrease of 28,250 from the preceding week's revised average of 3,126,500.
Live Chat Featured Comments
Clayton Sandy : "As mentioned before, banks are sitting and actually renting out their REO's. Some realtors I've talked to have asset manager friends who have been laid off because they are choosing to rent them out instead. We are at a 2 month supply right now in my market. "
Matthew Graham : "Inventory started getting tighter so banks "un-sat" on a few more units?"
B-C : "25% of sales were distressed? that is bad"
Matthew Graham : "RTRS- US NAR SAYS 25 PCT OF U.S. FEB EXISTING HOME SALES WERE DISTRESSED SALES VERSUS 23 PCT IN JAN "
Matthew Graham : "RTRS- US FEB EXISTING HOME SALES +0.8 PCT VS JAN +0.8 PCT (PREV +0.4 PCT)-NAR "
Matthew Graham : "RTRS- US FEB EXISTING HOME SALES 4.98 MLN UNIT ANNUAL RATE, HIGHEST SINCE NOV 2009, (CONS 5.00 MLN) VS JAN 4.94 MLN (PREV 4.92 MLN)-NAR "
Matthew Graham : "they're obviously not naming names. "Senior EZ Official" is the best we'll get. Doesn't sound like anyone from Germany though. ""The German hardliners should start contemplating the pension fund option and the Cypriots have to realize that they have to tax the higher deposits, maybe with a higher rate than 10 percent," the official said.
"The alternative is that all uninsured depositors would lose 30-40 percent in the best scenario of a bail-in."""
Victor Burek : "sorry, eurozone official..that sounds like scare tactics..much like when Obama said the world would end if sequester took effect"
Matthew Graham : "RTRS- CYPRUS SHOULD APPLY 12-13 PCT ONE-OFF LEVY ON LARGE DEPOSITS, NATIONALISE PENSION FUNDS TO GENERATE MONEY FOR BAILOUT DEAL - SENIOR EURO ZONE OFFICIAL "
Matthew Graham : "RTRS- CYPRIOT BANK RESOLUTION COULD ENTAIL AT LEAST 30-40 PCT LOSS ON UNINSURED DEPOSITS- SENIOR EURO ZONE OFFICIAL "
Matthew Graham : "RTRS- COLLAPSE OF FINANCIAL SECTOR IN CYPRUS COULD FORCE IT OUT OF THE EURO ZONE - SENIOR EURO ZONE OFFICIAL "
Matthew Graham : "RTRS- CYPRUS WILL HAVE TO WIND DOWN BIGGEST BANKS, WIPE OUT THEIR DEPOSITORS UNLESS IT AGREES TO SOME FORM OF BANK LEVY QUICKLY- SENIOR EURO ZONE OFFICIAL "
Matthew Graham : "however, I don't know where they have the bar set for Cyprus on that--as in, "deadline for bailout" or simply "parliament passing terms of bailout.""
Matthew Graham : "so they say this AM. That's the cut-off for the ECB's emergency liquidity assistance "
Victor Burek : "thats what the EU says Chris"
Christopher Stevens : "is the drop dead day for Cyprus on Monday?"
Andrew Horowitz : " regards to Cyprus leaving the EU, would devestate the country and serve as a warning to the other EU countries"
Matthew Graham : "Here are 10yr Italian spreads vs Bunds and US Treasury futures (price): http://tinyurl.com/bwfxp8c"
Matthew Graham : "yeah, i just went to the bat-cave and indeed it looks like the vanguard for that little swing was Italian credit spreads, all but confirming Grilli comments as the source of the spike. I'll put together a chart, just sec..."
Matthew Graham : "ah.. one more wire with Grilli saying Parliament must approve the debt settlement plan. I guess that might tacitly suggest problems getting it approved in the currently 'broken' Italian political system."
Matthew Graham : "RTRS- ITALY ECONOMY MINISTER GRILLI SAYS MEASURES TO SETTLE UNPAID BILLS TO PRIVATE CREDITORS WILL ADD 0.5 PCT TO DEFICIT/GDP, TAKING FINAL DEFICIT/GDP TO 2.9 PCT IN 2013 "
Matthew Graham : "RTRS- ITALY ECONOMY MINISTER GRILLI SAYS SEES DEFICIT/GDP AT 2.4 PCT IN 2013 "
Matthew Graham : "RTRS - ITALY ECONOMY MINISTER GRILLI SAYS REVISES 2013 GDP FORECAST TO -1.3 PCT "
Matthew Graham : "RTRS- U.S. HOME PRICES +6.5 PCT IN 12 MONTHS THROUGH JANUARY - U.S. REGULATOR "
Matthew Graham : "RTRS - U.S. HOME PRICES +0.6 PCT IN JANUARY FROM DECEMBER - U.S. REGULATOR "
Matthew Graham : "RTRS- QUICKEN LOANS ANNOUNCES AGREEMENT TO ACQUIRE $34 BILLION IN MORTGAGE SERVICING RIGHTS FROM ALLY BANK "
Matthew Graham : "RTRS- ALLY BANK REACHES AGREEMENT TO SELL REMAINING MORTGAGE SERVICING RIGHTS "
Jeff Fullmer : "Does anyone have a recommended source for buying quality data to use for a mailer? I'd like to include FICO in my filters. Thanks in advance."
Matthew Graham : "RTRS- MARKIT U.S. MANUFACTURING SECTOR FLASH PMI EMPLOYMENT INDEX FOR MARCH AT 54.6 VS FINAL 53.5 IN FEBRUARY "
Matthew Graham : "RTRS- MARKIT U.S. MANUFACTURING SECTOR FLASH PMI OUTPUT INDEX FOR MARCH AT 56.8 VS FINAL 57.3 IN FEBRUARY "
Matthew Graham : "RTRS- MARKIT U.S. MANUFACTURING SECTOR FLASH PMI FOR MARCH AT 54.9 (CONSENSUS 55.0) VS FINAL 54.3 IN FEBRUARY "
Jeff Anderson : "Plus various legislation that's slowed down the foreclosures in various states."
Robin Baran : "Banks can't afford to hoard inventory just to wait for appreciation. The holding costs, insurance, taxes, maintenance etc will far outweigh the benefits of waiting . The banks are not releasing their inventory because they are still tied up in litigation and sloppy handling of deed transference. "
Craig LaBruno : "Inventory is definitely a problem from what I am seeing and hearing from my realtors but I agree with K.C. that there is a perfect storm brewing for this years busy months (April-July)."
Ken Crute : "We r low on inventory here, most sellers can't get what they need in price so they take their house off the market and refi instead. "
Oliver S. Orlicki : "The reason there is no inventory is that banks are holding their shadow inventories to help drive prices up"
Jeff Anderson : "The inventory is a challenge up here. Keep giving buyers Pre-approval letter after pre-approval letter as they don't get the house they put offers on. Hear that from over 90% of my realtors too."
Matthew Graham : "RTRS- US CONTINUED CLAIMS RISE TO 3.053 MLN (CONS. 3.050 MLN) MARCH 9 WEEK FROM 3.048 MLN PRIOR WEEK (PREV 3.024 MLN) "
Matthew Graham : "RTRS- US JOBLESS CLAIMS 4-WK AVG FALLS TO 339,750 MARCH 16 WEEK, LOWEST SINCE FEB 2008, FROM 347,250 PRIOR WEEK (PREVIOUS 346,750) "
Matthew Graham : "RTRS- US JOBLESS CLAIMS RISE TO 336,000 MARCH 16 WEEK (CONSENSUS 342,000) FROM 334,000 PRIOR WEEK (PREVIOUS 332,000) "
Oliver S. Orlicki : "holding below 1.95 would be nice. Form a ceiling."
Craig LaBruno : "Gm everyone!!! Yesterday was just a knee jerk reaction like we've seen countless times following an FOMC meeting. I only locked my loans closing in 30 days prior to the meeting and left everything else floating."
Andy Pada : "You know the moment when you first log in to MBS Live and the chart is refreshing and you wait to see if we are green or red?"