Weekly Mortgage Overview: 10/14/2019

By October 14, 2019Mortgage Overview

Market Wrap-up

Overview

Mortgage backed securities (MBS) lost 17 basis points on Wednesday and lost 30 on Thursday. Both were due to a shifting optimism on some sort of agreement between China and the U.S. on trade. And today is no different as there are several photo ops and headlines that make it appear as if there could be a limited trade agreement that while not addressing and solving the major issues, would address several issues that would enable both sides to move forward. Trump and He meet at the White House and there could be an announcement at that time. For now, MBS are feeling the pressure on a big dose of “hopium”. That “hopium” is from positive commentary on Brexit and Trade which are the two largest headwinds to global growth. Look for another down day today (it could get real ugly) in MBS unless trade talks break off at the last minute.

Trade War

President Trump says that a “substantial” Phase I deal has been reached and will be written over the next 3 week period leading up to the meeting in Chile. Not much details are available as of press time, looks like $40B to $50B in agri purchases. The tariff hike scheduled for October 15th will not happen now. They have an agreement for transparency in FX currency. Phase II will begin right after Phase I is actually signed. It is unclear what is in Phase II at this point.

Domestic Flavor

Genco Olive Oil: September Import Prices were a tad better than expected with a MOM gain of 0.2% vs. estimates of 0.0%. YOY Import Prices are down -1.6% vs. estimates of -1.8%. Export Prices fell by -0.2% vs. estimates of 0.0% and YOY are down -1.6% vs. estimates of -1.5%

Consumer Sentiment: The Preliminary UofM Consumer Sentiment Index was much higher than expected (96.0 vs. estimates of 92.0) and is the best reading since July.

Brexit

Hopes of a compromise increased after positive comments by EU council president Donald Tusk, who said he had seen “promising signals” about the chance of a fresh Brexit agreement between the UK and the EU.

Across the Pond

Germany: CPI YOY 1.2% vs. est. of 1.2%.

Canada: Unemployment Rate 5.5% vs. est. of 5.7%.