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Yesterday the 10 year note ended unchanged for the day, MBS prices improved 12 bps. This morning the 10 year note began +5 bps to 4.66%, MBSs began -12 bps.
Weekly MBA mortgage applications declined last week, down 2.7% from the prior week, purchase apps –1.0% while re-finances declined 5.6%.
March durable goods orders expected +2.3%, increased 2.6% but February orders were revised lower, from 1.4% to 0.7%. Excluding transportation orders thought to be +0.3% increased 0.2% and February revised lower from +0.5% to +0.1%. Core capital goods forecasts was +0.2% and reported +0.2%, February capital goods also revised lower from +0.7% down to +0.4%. Looks like the February gains in orders is now erased.
This afternoon Treasury will auction $70B of 5 year notes, yesterday’s 2 year auction did better than recent treasury auctions, the demand for the $70B will be closely watched as investors have been cooling off buying US debt. Treasury rates have increased each of the last four weeks, so it is a little relief the 2 year found some interest. There is increasing belief now that the Fed is going to hold off rate cuts with inflation showing little progress, in the swap markets yesterday traders were pricing in only about 43 basis points of rate reductions for all of 2024, compared with more than six quarter-point cuts expected at the start of the year. Today’s 5 year and tomorrow’s $44B 7 year note auctions have the potential of moving markets depending on demand. Treasury auctions, as the US debt spirals higher, will be increasingly important and carry more sway in markets.
News from overseas; Bank of England official saying the decline to 2.0% inflation is way off, but that rate cuts can begin before the target is reached. The ECB saying that there needs to be conviction that inflation is slowing toward target before rate cuts start. Very slowly, and with no fanfare, comments from central bank officials are hinting rate cuts may have to be implemented prior to inflation declining to 2.0% as central banks want, so far, our Fed has been mute and officials pushed against that view.
At 9:30 am the DJIA opened -5, NASDAQ +102, S&P +13. 10 year note 4.64% +3 bps. FNMA 6.0 30 year coupon at 9:30 am -13 bps from yesterday’s close +11 bps from 9:30 am yesterday; the 6.5 30 year coupon at 9:30 am -10 bps from yesterday and +8 bp from 9:30 am yesterday.
For the last 9 days the 10 year note as essentially flat-lined in a very narrow range between 4.65% and 4.58%, 7 bps. The narrow range promises to give way on Friday when the Fed’s key inflation data, PCE, is reported. The present estimates: month/month overall +0.3% unchanged from February, year/year +2.6% up from 2.5% in February. Core inflation excluding food and energy where food prices are ignored, month/month +0.3% unchanged from February, year/year +2.7% down from 2.8% in February.
PRICES @ 10:00 AM
10 year note: 4.65% +4 bp
5 year note: 4.68% +4 bp
2 year note: 4.95% +4 bp
30 year bond: 4.78% +4 bp
30 year FNMA 6.0: @9:30 am 99.47 -13 bp (+11 bp from 9:30 am yesterday)
30 year FNMA 6.5: @9:30 am 101.19 -10 bp (+8 bp from 9:30 am yesterday)
30 year GNMA 5.5: @9:30 am 98.27 -17 bp (+11 bp from 9:30 am yesterday)
Dollar/Yuan: $7.2460 -$0.0004
Dollar/Yen: 154.97 +0.14 yen
Dollar/Euro: $1.0691 -$0.0012
Dollar Index: 105.79 +0.11
Gold: $2,335.60 -$6.50
Bitcoin: 66,223 -245
Crude Oil: $82.87 -$0.49
DJIA: 38,585 -18
NASDAQ: 15,790 +94
S&P 500: 5079 +9
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