MBSQuoteline – News & Analysis : Today’s Market – Mortgage Backed Securities – www.mbsquoteline.com
HEY, WAKE UP!!!!! INFLATION IS HERE AND RATES GOING UP!!!!!
Tuesday 02-15-11 Wednesday February 16, 2011
Morning Analysis: 02-16-11 09:45am
MBS prices are down -7/32 (FNMA 30-yr 4.5 at 100.26), which is about 2/32 higher than yesterday at this time. Favorable repricing took place yesterday. The 30-yr fixed FNMA required net yield (60 day) is now at 4.75%, from 4.80% yesterday. Early investors may have priced at higher levels.
Today’s economic data caused a significant reaction in MBS markets, and it has been a volatile morning. January PPI rose 0.8% from November, above the consensus forecast of 0.7%, and was 3.6% higher than one year ago. Core PPI, which excludes food and energy, rose 0.5% from last month, the largest increase since October 2008, and was 1.6% higher than one year ago. January Housing Starts jumped 15% to an annual rate of 596K units, above the consensus forecast of 540K. The strength was found in multi-family units and was partly due to a change in building requirements at the end of last year. Building Permits, a leading indicator, declined 10%. MBS prices moved lower after the PPI data was released. A little later, January Industrial Production showed a decline of -0.1%, below the consensus for an increase of 0.5%. MBS markets briefly rallied after the news, but then fell back to the levels seen before the data. The Dow is up 50 points. The FOMC Minutes will be released at 2:00 et.
The Mortgage Bankers Association weekly purchase activity index fell 6%, while the refinancing activity index decreased by 11%. Average reported rates for the prior week fell to 5.12%, from 5.13% for 30-yr fixed mortgages.
02-16-11 09:45am 30yr 4.5 15yr 4.0
FNMA 100.260 -0.070
Update: 02-16-11 09:02am
MBS prices have moved lower after the stronger than expected PPI inflation data, and are now down -5/32, from unchanged levels earlier.
Update: 02-16-11 08:41am
MBS prices are unchanged. PPI was higher than expected, while Housing Starts were mixed, but there was little immediate reaction.