Weekly Mortgage Overview: 2/16/2015

By February 16, 2015Mortgage Overview

MBS Overview

Mortgage backed securities (MBS) have been relegated to trade within the exact same trading channel as Wednesday and Thursday. MBS have moved in a very narrow range all day. The pricing at 10EST, when the first rate sheets hit the street this morning, was -4BPS and not -14BPS, which is only an intra-day change of -10BPS.

There was some domestic economic data but it wasn’t of the ilk and scope to impact pricing. The better than expected data out of Europe continues to weigh on our long bonds.

Domestic Flavor

Import Prices: Were less worse than expected. They dropped only -2.8% on a month-over-month basis vs estimates of a larger drop of -3.2%. Plus the prior month was revised upward from -2.5% all the way up to -1.9%. Generally speaking, MBS improve (and mortgage rates drop) the lower that this number is. Since this was higher than expected, MBS did not improve on this report.

Consumer Sentiment: The preliminary (will be revised one more time) February Consumer Sentiment Index hit 93.6 vs estimates of 98.1. It’s a bit of a miss but it is still a strong reading. It’s just that January was a meteoric reading.

Black Gold, Texas Tea: WTI and Brent Crude are making a run towards higher prices and this is also pressuring MBS today.

Across the Pond:

Eurozone: Their 4th quarter GDP was hotter than expected with a reading of 0.3% vs estimates of 0.2%. Most of the growth was due to strength out of Germany. This is providing some pressure on U.S. bonds.

Greece is still the word: “Greece will make every effort to reach an agreement with its euro zone partners at Monday’s meeting of euro zone finance ministers on how to transition to a new support program,” its government spokesman said on Friday. The market is waiting for many behind the scenes meetings this weekend and Monday to see what deal is made.

The bond market is closed today for President’s Day.