Daily Market Analysis 05-18-15

Posted by on May 18, 2015 in News | No Comments
Daily Market Analysis
Friday had a very nice rally, MBS price +50 bps on the FNMA 3.0 coupon; the 10 yr note yield dropped 10 bps to 2.14%. Weak data on industrial production, factory use and the U. of Michigan consumer sentiment index declined from 95.9 to 88.6. Earlier last week April retail sales were a disappointment and April export and import prices declined. April data so no excuse about the weather. This morning the interest rate sector opened weaker; the 10 yr at 2.19% +5 bps and MBS prices down 30 basis points after increasing Friday 50 bps Friday. Uncertainty still dominates the bond and mortgage markets. Re-prizing last week’s activity: the 10 yr note yield essentially unchanged (down 1 bp to 2.14%), MBS prices down 23 bps; the 10 2.14%. The DJIA +82, NASDAQ +44, S&P +7. Crude oil +$0.40, gold +$38.00. The dollar/yen -0.40 yen, dollar/euro +$0.0250. Week on week there has been little movement in the bond and mortgage markets but interday and intraday trading has been very volatile trading.

This week will continue the volatility with wide trading ranges for MBSs and Treasuries. This week has three housing reports, and three reports on the manufacturing sector. It is a holiday week with Memorial Day next Monday, the bond and mortgage markets will close at 2:00 pm on Friday and all markets closed next Monday. Trade volume already razor thin will be even more so as the week progresses. Keeping everyone in their seats on Friday, Janet Yellen will speak on the economy at 1:00 pm Friday afternoon; she recently mentioned that a bubble may be forming in the US stock market, and was criticized for commenting directly on markets.

Europe’s stock declined on Greece; There is a summit meeting this week of EU leaders and Greece will be the key topic. Over the weekend, European politicians stepped up pressure on Greece to expedite structural reforms to get further cash from creditors. European Union leaders in Latvia this week is unlikely to bring a breakthrough in talks on continued financing. Greece made last week’s payment to the International Monetary Fund, but investors are questioning how long it will still be able to service its debt for.

At 9:30 the DJIA opened +2, NASDAQ -8, S&P -2. 10 yr 2.19% +5 bps, 30 yr MBS price -27 bps from Friday’s close and +5 bp from 9:30 Friday.

The lone data point today; the May NAHB housing market index was thought to be at 57 from 56 n April; as reported the index declined 2 points to 54; the future sales index at 54 up 1 points, buyer traffic declined 1 point to 39. Like the ISM data, ant reading over 40 is positive. Another weak housing market measurement.

This Week’s Calendar:
Today
– 10:00 am May NAHB housing index (expected at 57 from 56 came at 54)
Tuesday,
– 8:30 am April housing starts and permits (starts +10% at 1.029 mil; permits +2.9% at 1.070 mil)
Wednesday,
– 7:00 am weekly MBA mortgage applications
– 2:00 pm Minutes from the April FOMC meeting
Thursday,
– 8:30 am weekly jobless claims (+6K to 270K)
– – April Chicago Fed National Activity index (0.10 from -0.42)
– 9:45 am May PMI manufacturing index (54.6 from 54.2)
– 10:00 am April existing home sales (+0.6% to 5.22 mil)
– – May Philly Fed business index (8.0 from 7.5 in April)
– – April leading economic indicators (+0.3%, +0.2% in March)
Friday,
– 8:30 am April CPI (+0.1%, ex food and energy +0.1%)
– 1:00 pm Janet Yellen speaking on the economy
– 2:00 pm Bond and mortgage markets close.

PRICES @ 10:00 AM

10 yr note: -18/32 (56 bp) 2.21% +7 bps

5 yr note: -8/32 (25 bp) 1.51% +5 bps

2 Yr note: unch 0.54% unch

30 yr bond: -50/32 (156 bp) 3.01% +8 bp

Libor Rates: 1 mo 0.188%; 3 mo 0.276%; 6 mo 0.412%; 1 yr 0.723%

30 yr FNMA 3.0 June: @9:30 100.98 -27 bp (+5 bps frm 9:30 Friday)

15 yr FNMA 3.0: @9:30 104.40 +2 bp (-3 bps frm 9:30 Friday)

30 yr GNMA 3.0: @9:30 102.17 -27 bp (-2 bps frm 9:30 Friday)

Dollar/Yen: 119.88 +0.63 yen

Dollar/Euro: $1.1351 -$0.0100

Gold: $1227.90 +$2.60

Crude Oil: $59.88 +$0.19

DJIA: 18,268.89 -3.67

NASDAQ: 5050.24 +1.95

S&P 500: 2122.43 -0.30

About Jesse Gonzalez
Jesse is member of the National Ethics Association, a member of the National Association of Realtors, certified with the California Association of Realtors as a Seniors Real Estate Specialist, and Jesse is also proud to be certified as a Military Housing Specialist with USA Cares.
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