End-of-Day Friday, 10/20/2017

Markets stopped falling around midday, leaving MBS to close down -27 bps on this volatile Friday. Next week, the economic calendar slows down with Friday's GDP data the highlight. Markets could get an announcement from President Trump about the next Fed Chair and geopolitical tensions between Washington and North Korea will continue to weigh on investors' minds.

Have a great weekend.

Tuesday, October 10, 2017

What's going on and why does it matter? This holiday-shortened trading week will be a busy one for the bond market. There are several key economic reports scheduled for later in the week, the Fed minutes from last month's meeting are scheduled to be released on Wednesday, there will be a flurry of speeches from Fed policymakers throughout the week, and third-quarter earnings reports will likely impact the stock market and may cause repercussions in the bond market. Of course, there are also some geopolitical events for the market to digest, including ongoing tensions between the US and North Korea and escalating political infighting in Washington. There is also the possibility that Catalonia may decide to announce it's independence from Spain, which could impact the European markets and have a ripple effect here in the US.  As for today, there are a few Fed policymakers who are scheduled to give speeches, and the Fed will be purchasing up to $500 million of 15-year conventional mortgages. What should you do about it? Watch for mortgage bonds to continue trading in a range between their 100-day and 200-day moving averages, but be prepared to lock your rate quickly if bond prices start sliding back down. ..... ..... Economic reports that may impact mortgage rates this week: Date Report Period Prior Est. Actual Wed 11 Oct JOLTS Job Openings Aug 6.17M 6.138M Wed 11 Oct Fed Minutes Sep - - Thu 12 Oct Initial Jobless Claims Week of Oct 2 260k 252k Thu 12 Oct PPI Sep 0.2% 0.4% Fri 13 Oct Core CPI Sep 0.2% 0.2% Fri 13 Oct Retail Sales Sep -0.2% 1.7% Fri 13 Oct Business Inventories Aug 0.2% 0.7% Fri 13 Oct U of Mich Consumer Sentiment Oct 95.1 95.1

Thursday, October 5, 2017 - Mid Day Update

Mortgage bond prices are getting hit hard this morning as investors prepare for a series of Fed speakers that some expect to deliver hawkish views on the future of interest rates. MBS is down -22 bps this morning as the 10-year benchmark yield has climbed to 2.35%. The economic calendar is playing second fiddle to the Fed speeches today but nonetheless factory orders that came out this morning showed capital goods orders rose slightly more than expected, adding to market sentiment that the economy is in very strong condition and the time for hiking rates more aggressively is nearing. Rate Sheet Impact: Worsening heading into the afternoon.

Monday, October 2, 2017

MBS is starting the week up a few bps. With the 10-year floating at 2.33%, Fannie 3.5's and 4.0's are up +6 bps.

This morning kicked off a busy week on the economic calendar. First up, PMI came in on the higher end of economists' estimates with very little to no effects visible in the data from the Hurricanes. Second, the ISM manufacturing index beat expectations at 60.8 vs. 58.0 consensus. New orders were a particularly bright spot as the economy continues to gather steam. Lastly, construction spending also beat, up 0.5% month-over-month.

Rate Sheet Impact: Neutral.