Wednesday, March 19, 2014

Mortgage News

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Bob Rosenbaum
The Rosenbaum Lending Group
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Wednesday, March 19, 2014

Daily Market Analysis

What's on the agenda for today?

The mortgage backed security world was not impacted by this morning's domestic economic data and was up only +4BPS in early trading as our 10 year Treasury note claws its way back to 2.700%.

The Federal Reserve Open Market Committee (FOMC) starts two days of meetings and then will make their interest rate announcement and policy statement tomorrow afternoon.

Today is once again all about Putin. The bond market is taking a very cautious breather this morning after Russian President Vladimir Putin stated that Russia is not looking to split up Ukraine further now that they will annex Crimea. The market was fearing that this would be a prolonged advance by Russia to take over the whole area (and it still could be) but for now....the market is calming down on his comments.

Building Permits: Broke back over a million (1.018M vs est of 960K). While actual Housing Starts just missed market expectations with a reading of 907K vs est of 910K, plus the prior period was revised upward. This looks to be fairly decent news for the Spring but not a major factor in MBS pricing today.

Consumer Price Index: This morning's data was very tame which is great for bonds but it did match market expectations across the board so it has had little to no impact on pricing. Headline CPI hit 0.1% vs est of 0.1% and Core CPI was also 0.1% vs est 0.1%.
Total Net TIC Flows: Treasury International Capital showed a lot of money flowing into the U.S. plus the prior reading was significantly improved. This is to be expected given the global uncertainty and not a factor in pricing today.

What happened yesterday?

There are no major economic releases today or Treasury auctions for the MBS traders to absorb.
Today is all about the Fed. should be but unrest in Ukraine is still a significant factor in pricing.
The Federal Reserve Open Market Committee (FOMC) concludes their two days of meetings and then will make their interest rate announcement and policy statement at 2:00EDT today. Most economists and bond traders believe that the Fed will taper an additional $10 billion. But the most volatility this afternoon could come from Janet Yellen's press conference following the FOMC statement. Her comments and answers to questions will give traders the ammunition that they need to try to front-run the Fed moving forward.

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