Mortgage rates are moving higher so far today, leaving
the 2017 lows behind them. Equity
markets following through from yesterday’s rally into trading this morning. The
10yr yield hit 2.30% yesterday but then backed off to 2.27% at the end of the
day. This morning it started at 2.30%
and at 11AM, it is at 2.31%, with MBSs trading at a negative 18 BPS. We had two housing price data points this
morning, the February Case/Shiller and February FHFA, both showing large price
increases of homes. This is old data but still important indicating home prices
continue to improve.
The weekend vote in France still resonating around the
world that Le Pen the right winger that would take France out of the EU and
likely shake the EU to its core will not likely win in two weeks in the run-off
against the centrist Macron. According to the latest poll, Emmanuel Macron
leads National Front candidate Marine Le Pen by 22 points for the run-off vote
on May 7.
Trump wants a 15% tax rate for corporations, down from
22% now and is saying he is not concerned that tax cuts will increase the
Federal debt. He will focus on corporate and small-business taxes, while
leaving for 2018 individual tax cuts that will require much more debate and
rancor. He is expected to release his tax cut framework tomorrow. On the debt
ceiling that must be increased by the end of the week, he also is saying he may
remove his demand for funding the border wall for the time being from the
budget debt extension. In the end, there'll likely not be another government
shutdown due to debt limits, we went through that a few years ago and no one in
Congress or any administration wants that again.
Two major reports at 9:00AM, March new home sales
expected down, came out better than forecasted even with the revision that saw
February numbers decrease. This increase
adds more confirmation that NAHB is correct advocating better sales this year.
April consumer confidence expected higher results, but was weaker than
anticipated but not too much of a worry came out of such – as the number still
shows a very strong level of confidence. There was no noticeable market
reaction to the two data points.
Today, we kick off three straight sessions of dumping
our short-term debt into the eager beaks of the marketplace. Today's 2-year
note is too short of a term to impact the longer end of the yield curve. North Korea holds its largest ever military
drill as our U.S. Naval Nuclear Sub docks in South Korea. President Trump looks
to hit Canada with soft lumber and dairy measures, also said to be willing to
put the wall on the back burner to avoid government shutdown and is looking to
release more tax info tomorrow.
The bond market at critical technical support at
2.30%/2.32%. Have to be concerned at this level for mortgages and bonds as the
technicals are back to neutral after being bullish the past two weeks. The data
came out and what is left, I am not expecting any move higher from where we are
now.
Comments
Post a Comment