Mortgage Backed Securities (MBS) Overview
The stock market (DJIA +228.11) closed way up as once again stocks and MBS moved in the same direction.
This morning’s domestic economic news was weaker than the consensus estimates across the board. But these were lower level economic reports and MBS were not materially impacted. These reports include Empire MFG (6.9 vs estimaes of 8.8), Industrial Production (0.1% vs estimates of 0.3%), Capacity Utilization (78.9 vs estimates of 79.5) and the Home Builder’s Sentiment Index (53 vs estimates of 56). But other than Wednesday’s Fed meeting, our domestic data does not have the gravitas to move MBS.
Oil continued to plunge (WTI down another -2.39%) so far today and that has provided the small amount of lift in MBS pricing today.
MBS are also seeing a small lift in “fear factor” premium over Germany’s shift in sentiment to give Greece “das boot” out of the Eurozone and our very own debt ceiling that we have once again hit.
Tomorrow is another very light day with only Housing Starts and Building Permits. So, it will be external factors from overseas that once again drive pricing.