Weekly Mortgage Overview: 12/1/2014

By December 1, 2014Mortgage Overview

MBS Overview

Mortgage backed securities (MBS) remained at elevated levels all day. They started in positive territory on weaker Chinese and Eurozone Manufacturing data. But that trend started to change on the stronger than expected U.S. manufacturing data and then reached their worst levels of the day as oil made a small rebound.

Chinese Manufacturing: Their PMI fell to an eight month low of 50.3, which was lower than the consensus estimates of 50.5. Still, this reading is above 50 which still shows small expansion. The concern is that China could dip below 50.

Eurozone: Their PMI hit 50.1 which is the lowest reading since June 2013, and new orders fell at the fastest pace in 19 months despite heavy price cutting.

Domestically, our Manufacturing data was better than expected with November ISM Manufacturing coming in at 58.7 vs estimates of 58.0, and is partially offsetting the weaker data from overseas.

Oil: After several days of steady declines, WTI Crude Oil moved from $63.72 to $69.54 in intra-day trading today. MBS, which has temporarily benefited from uber low oil prices, sold off in direct response, also closed up.

Tomorrow will be Construction Spending and Economic Optimism. Historically, these reports have not had a major impact on pricing.