Daily Market Report 5/29/20

http://MikesDailyMarketReport.com: Personal Income rose 10.5% in April.  We think this anomaly is due to the disparity based on the lower pay scale employees losing work during the pandemic.  Consumer Spending dropped 13.6% in April, as much of the economy was closed.  The Personal Consumption Expenditure (PCE) dropped 0.5% in April, while it's YoY dropped from 1.3% to 0.5%; similarly, the Core PCE (which removes food & energy; and Fed's favorite gauge for inflation) dropped 0.4%, and it's YoY dropped from 1.7% to 1.0%.  The Fed's target rate for Core PCE is 2.0%, which this new numbers greatly distances from it.  The manufacturing sector in the Chicago region continued to decline in May, as the Chicago PMI reported it dropping from 35.4 to 32.3.  There wasn't much movement from Consumers, as Consumer Sentiment remained fairly idle.  It rose from 71.8 to 72.3.  Stocks are Down this morning on an upcoming news conference with President Trump, whom will talk about China.  This has investors a bit on edge.  Fed Chair Powell was webcasted this morning, while he did an Q&A at Princeton.  He mentioned that he has plenty of tools to help the economy and isn't currently looking to go into a negative interest rate environment.  MBS is in a very tight range and currently Up 14bps, so Mortgage Rates will have a little improvement in pricing this morning.  The president's news conference could be a catalyst to which direction MBS will move, as it's becoming squeezed between it's 25 DMA and 50 DMA.  Yields are down and sitting just atop it's 25 DMA at 0.66%.

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Daily Market Report 5/28/20

http://MikesDailyMarketReport.com: Initial Jobless Claims continued the lower trend when it was reported that 2.12 million people applied for unemployment benefits last week, which is down from 2.45 million the week prior.  The 2nd look at the Q1 GDP worsened, going from -4.8% to -5.0%.  We'll get our final number for GDP next month.  Durable Goods Orders dropped 17.2% in April; however, when you remove Transportation from the equation, then it dropped 7.4%.  Interruptions in the Housing Market really showed in April, as NAR reported that Pending Home Sales dropped by 21.8%.  This is the biggest decline on record.  Stocks are Up on optimism of the economy reopening; and shrugging off the tensions between US and China.  This euphoria will probably be short-lived, as they realize it will take time for the economy to rebound and the tensions with China are real.  Meanwhile, MBS is Down 3bps and just under the 50 DMA.  The 50 DMA is a floor of support, but MBS is running out of room between the 25 DMA and 50 DMA.  If we can get MBS to break above the 25 DMA, then we can see some improvement with Mortgage Rates; however, if it breaks below it's 50 DMA, then we'll see Mortgage Rates worsen.  So far, Mortgage Rates seem to be Unchanged from yesterday.  Yields are facing similar conundrum, as it's Up against it's 50 DMA at 0.70%.

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Daily Market Report 5/27/20w

http://MikesDailyMarketReport.com: We'll be able to get a better view of the US Economy when the Fed releases their Beige Book around 11am PST today.  This provides a Micro view of each region of the US.  Stocks started the morning off in Positive Territory; however, Technology Stocks started to go into the Red, as tensions continue to mount with China and the concerns with protests in Hong Kong.  This brought the NASDAQ into Negative Territory.  MBS also, started in the Red and just above it's 50 DMA this morning, but has since moved upwards (Up 13bps currently) against it's 25 DMA now.  As the 25- and 50- DMA begin to tighten, the MBS will need to choose which side of the lines it will move.  We'll be watching this very carefully!  Yields have slipped down to 0.67%.

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Daily Market Report 5/26/20

http://MikesDailyMarketReport.com: The Case Shiller HPI rose from 4.2% YoY in February to 4.4% in March; however, the FHFA HPI dropped from 6.1% in February to 5.9% in March.  Consumer Confidence began to rise in May, as it went from 85.7 to 86.6.  Also, a bit of a surprising report, is New Home Sales, which went from 619k annualized units in March; with forecasts calling for 480k units in April, but the actual number of annualized units in April rose to 623k.  Stocks are well into Positive Territory this morning, as optimism grows on possible vaccines and data reporting improvement in the economy after states begin to reopen.  However, it's not quite affecting the Markets today, but tensions continue to mount between US and China.  MBS is Down 8bps and is currently sitting just above it's 50 DMA.  Mortgage Rates remain Unchanged.  However, there will be a movement coming soon, as both the 25 DMA and 50 DMA begin to squeeze it's movement, which will push MBS in either direction.  This will cause MBS to either improve or worsen.  If they break below the 50 DMA, then there's a lot of room for Mortgage Rates to rise.  Meanwhile, Yields are Up against it's 50 DMA and sitting at 0.70%.

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Daily Market Report 5/22/20

http://MikesDailyMarketReport.com: There are no economic data to report today.  Stocks are Down this morning after reflecting on this week's events and heading into a long weekend.  President Trump was asked a question regarding a possible 2nd wave, which he responded that we'll put out fires, but we won't be closing the economy.  MBS is currently Down 2bps, so Mortgage Rates continue to be Unchanged.  Yields are Down to 0.65% and trying to remain above it's 25 DMA.  If it breaks below it, then it could be a good sign to push MBS upwards and see improved pricing in Mortgage Rates.  Fingers crossed!

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Daily Market Report 5/21/20

http://MikesDailyMarketReport.com: Initial Jobless Claims continued it downward trend in people applying for unemployment benefits, as it dropped from 2.69 million in last week's report to 2.44 million in this week's report.  The Philly Fed improved from -56.6 April to -43.1 in May.  This index reports the activity level of manufacturing in the Philadelphia area.  Meanwhile, Markit PMI released their 2 reports (Manufacturing and Services) for May.  Markit Manufacturing PMI improved from 36.1 in April to 39.8 in May; and Markit Services PMI improved from 26.7 to 36.9.  These last few indices indicate that we bottomed out in April and on way to recovery, but how long it will take is uncertain.  Also, we have the Existing Home Sales for April, which dropped from 5.27 million annualized units in March to 4.33 million, which is approximately 18% drop.  Leading Economic Indicators improved from -7.4% in March to -4.4% in April.  Stocks are Down so far today on the economic data; corporate earnings reports and building tensions between US and China (again).  MBS is currently Down 5bps, but Mortgage Rates remain Unchanged from yesterday's pricing.  Yields are down to 0.67%.

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Daily Market Report 5/20/20

http://MikesDailyMarketReport.com: The FOMC Minutes will be released around 11am PST today, but we don't anticipate any news from these notes.  Stocks are Up this morning on good earnings reports from retailers (like Target and Lowes).  MBS is currently Up 11bps, and yesterday, it closed Up 27bps, so you can expect better pricing with Mortgage Rates today.  The Fed is purchasing up to $4.5 Billion of MBS today.  There is a Bond Auction today, so it's possible to have an adverse reaction to the Market, if it isn't successful.  Yields are currently sitting at 0.71%

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Daily Market Report 5/19/20

http://MikesDailyMarketReport.com: As expected, Housing Starts dropped in April, as it was reported at 891k annualized units (just under forecasts).  Building Permits (future Housing Starts) also, dropped in April to 1.074 million (better than forecasts) annualized units.  Stocks are a bit Mixed, as the DOW is currently the only index in the Red.  Both Fed Chair Powell and Treasury Secretary Mnuchin are scheduled to testify before Congress today.  It's expected that they reiterate what they've previously stated in recent comments.  Also, President Trump has threatened to permanently withhold funding to WHO.  MBS is currently Up 11bps, so Mortgage Rates remain Unchanged.  It was close to MBS closing under the 50 DMA, which pricing worsened in the afternoon, before pulling back enough (just above the 50 DMA) before close.  Yields also, broke above it's 50 DMA yesterday; but today, it is under it and sitting at 0.71%.

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Daily Market Report 5/18/20

http://MikesDailyMarketReport.com: The NAHB Home Builders Index rose from a low of 30 in April to 37 in May.  This index indicates the confidence level of Home Builders in the US on the Housing Market.  Stocks are way Up this morning on news that Moderna Pharmaceuticals announced positive results for the vaccines during Phase One testing.  The Fed's Chairman Powell made comments over the weekend that were very  upbeat and indicated plenty of tools to help the economy.  He indicated that he expects the economy to pick up later in the year, and it may be better than pre-pandemic.  As a result of the good news for stocks, MBS is Down 11bps currently and sitting just above it's 50 DMA.  Mortgage Rates worsened a little bit.  As long as the 50 DMA holds, then we can keep floating.  The Fed is expected to purchase approximately $4.5 Billion MBS today.  Yields have broken above it's 25 DMA and approaching it's 50 DMA.  It's currently at 0.70%.

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Daily Market Report 5/15/20

http://MikesDailyMarketReport.com: Retail Sales continued their decline in April, as they dropped 16.4%; and when you exclude "big ticket" items, like autos, then it dropped 17.2%.  Manufacturing in the NY region improved some, but the number is still pretty bad, as the Empire State Index webt from -78.2 in April to -48.5 in May.  Industrial Production continued to decline, as it dropped 11.2% in April; and the Capacity Utilization dropped down to 64.9%.  Job Openings dropped from 7.0 million in February to 6.2 million in March.  Consumer Sentiment improved in May, as it went from 71.8 in April to 73.7 in May, as the economy tries to work it's way back.  Business Inventories continues their trend of declines into March, as it dropped 0.2%.  Stocks are in Negative Territory this morning, after making a dramatic U turn yesterday (about a 835 point swing in the red to black at the close).  The data reported today was pretty disappointing to investors, but it also appears that trade tensions with China may be erupting, as the Commerce Dept may be blocking semiconductors to Huawei; and as expected, China is threatening counter-retaliation, if this happens.  MBS is currently Down  9bps, but Mortgage Rates should remain Unchanged from yesterday's pricing.  Yields are Up to 0.64%, but still (just under) it's 25 DMA.

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Daily Market Report 5/14/20

http://MikesDailyMarketReport.com: The initial Jobless Claims for last week were a little higher than forecasts, but still lower than previous report, and came in at 2.98 million people applying for unemployment benefits for first time.  This trend is lowering, but it's still disturbing to see so many apply, as it's estimated to have reached approximately 36.5 million people applying for unemployment over just the past 2 months.  This should put us pretty much right at the 20% Unemployment Rate.  The one saving grace is probably the PPP, which is allowing small businesses to retain payroll, so those are additional employees whom may have been added to the unemployment number, if not for the PPP.  Also, a minor report, The Import Price Index dropped 2.6% in April, as we've mentioned that prices in many sectors has been dropping due to the pandemic.  Stocks are Down this morning on the Jobs data; and possible worries over President Trump's comments directed at China that seemed a bit hawkish.  MBS is Up 11bps, so Lenders will be in better place to price Mortgage Rates a bit better today.  Yields are Down to just under 0.62% and below it's 25 DMA.

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Daily Market Report 5/13/20

http://MikesDailyMarketReport.com:  The Producer Price Index, which is inflationary data on the Wholesale Sector, dropped 1.3% in April, as it's YoY dropped from 0.7% in March to -1.2% in April.  It's Core PPI (excluding food and energy) dropped 0.3%; and it's YoY went from 1.4% in March to 0.6% in April.  Stocks are in Negative Territory this morning on sombering comments by Fed Chair Powell.  He had mentioned that the current state is unprecedented and we could see over the duration of recovery that liquidity problems can turn into solvency problems.  Also, he suggested that another stimulus package may help the economy and keep us in a prolonged state of depression.  The mood was only continued on the heels of Dr Fauci's testimony before the Senate yesterday, as he indicated that re-opening the economy may result in another outbreak.  MBS is Up only 2 bps so far this morning, so Mortgage Rates remain unchanged.  Yields are trying to stay above it's 25 DMA, and has currently slid just under it at 0.64%.  We'll see if it remains below it.

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Daily Market Report 5/12/20

http://MikesDailyMarketReport.com: The NFIB Small Business Index dropped from 96.4 in March to 90.9, which many thought it would dive down into the 80s.  This report represents the confidence in Small Businesses.  The Consumer Price Index dropped 0.8% in April and it's YoY dropped from 1.5% to 0.3%; and when you exclude food and energy from the equation, which are uncontrollable variables, then we have the Core CPI.  The Core CPI dropped 0.4% in April and it's YoY dropped from 2.1% to 1.4%.  You can see the difference, especially for April, the impact that food and energy can have, as Oil dropped to negative in April for the first time.  The CPI is one of two inflationary data that we review on the basis for Consumers.  The other, is the PCE, which is the Fed's favorite gauge for inflation.  Stocks are trading in Mixed Territory again today, as Investors received a report that there were 6 new cases of coronavirus in Wuhan; and Dr Fauci is providing his testimony before the Senate with warnings of re-opening the economy too soon.  The Fed will be purchasing Corporate Bonds today in order to assist with Businesses surviving this current period.  Corporations generally prefer to issue bonds in lieu of bank loans.  MBS is currently Down 2bps, so Mortgage Rates remain Unchanged.  Yesterday's Bond Rollover pushed us further down the graph and closer to the 50 DMA, which acts as our floor of support.  The question will be if it holds as a floor and gives us a bounce higher, or do we break below it.  Yields remain steady and currently sit around 0.69%

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Daily Market Report 5/11/20

http://MikesDailyMarketReport.com: There are no economic data to report today.  Stocks are trading in Mixed Territory this morning.  NASDAQ is the only index in positive territory.  There are some reports out that there may be some increased levels of coronavirus around the different parts of the world, as many are trying to re-open their economies.  MBS is also Down 9bps, so coupled with Fridays slide, then Mortgage Rates have worsened some since last Friday morning's position.  Yields have worked their way back above it's 25 DMA and sitting at 0.69%.

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Daily Market Report 5/8/20

http://MikesDailyMarketReport.com: The BLS released their Jobs data today, so we'll start with the Non-Farm Payrolls, which lost 20.5 million jobs in April while the Unemployment Rate soared to 14.7%. This is the 2nd Highest Unemployment Rate now on record.  Also, it was just a matter of 2 months ago, that we were at a 50 year low at 3.5%.  The Average Hourly Earnings rose 4.7% in April.  We think this number is a bit skewed.  We think the recent job losses were those in lower paid positions, which their data would help to offset the overall figures.  Stocks are Up despite the disheartening Jobs data because of many of the states' re-opening.  The phone conference between the 2 sets of officials from the US and China was reported to have gone well.  MBS was fighting to break above it's 25 DMA and was up 5bps, but within last few minutes dropped, and is currently Down 5bps.  However, this sideways movements translates to no change in Mortgage Rates.  Yields broke below their 25 DMA and are fighting to break back above it.  It's currently sitting right at the 25 DMA, which is just under 0.66%.

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Daily Market Report 5/7/20

http://MikesDailyMarketReport.com:  Initial Jobless Claims are still reporting high volumes of claims, but it has been trending lower each week, as it report 3.85 million for last week's report to 3.17 million today.  Productivity dropped 2.5% for Q1, however, it exceeded it's forecasts of -5.5%.  Unit Labor Costs rose 4.8% in Q1.  Stocks are Up this morning, as they view the lower trend of people applying for unemployment lessening each week and many state economies beginning to re-open.  China reported positive data (first since December, before pandemic), as forecasts were still calling for a major drop.  US and Chinese Officials will be meeting via conference to discuss Phase One of the Trade Agreement.  MBS is currently Up 5bps, but still below it's 25 DMA ceiling.  Mortgage Rates remain Unchanged from yesterday.  Yields have fallen to just above it's 25 DMA floor at 0.66%.

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Daily Market Report 5/6/20

http://MikesDailyMarketReport.com: The ADP Employment Report had revised it's March numbers from -26k to -149k; while April shows a drop of 20.2 million.  Definitely shows a bleak week for Jobs data this week, as this is the first of 3 Jobs data we'll see this week.  Stocks were in Negative Territory early on the Jobs data, but has since moved into Positive Territory, as many states are beginning to re-open their economies in phases.  The Treasury Dept. announced they would boost the longer termed bond auctions more than expected, which is stressing govt bonds.  As a result, MBS is Down 11 bps and is now below it's 25 DMA with the 50 DMA about 100 bps as next floor beneath it.  Not would be a good time to lock, if you haven't done so.  Mortgage Rates have worsened a bit this morning on this data.  Yields are Up to 0.73% and broke above it's 25 DMA, adding to the pressure on MBS/Bonds.

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Daily Market Report 5/5/20

http://MikesDailyMarketReport.com: The only data being reported today is on the Services Industry.  The Markit Service PMI dropped down to 26.7 in April; while ISM Non-Manufacturing Index dropped down to 41.8%.  Anything below 50 on either index is considered in Contraction/Negative Territory.  Stocks are Up this morning on optimism of global economies beginning to re-open, along with possible vaccines and higher oil prices.  The US Treasury will be looking to borrow $3 Trillion today for the Q2 to meet Congress' Stimulus/Emergency Plans.  This is by far the largest amount they've ever borrowed.  MBS is still hovering above it's 25 DMA and Up 3bps, so Mortgage Rates remain Unchanged.  Yields are just below it's 25 DMA and sitting just under 0.66%.

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Daily Market Report 5/4/20

http://MikesDailyMarketReport.com: Factory Orders dropped by 10.3% in March.  Stocks are mostly down, but Mixed presently, as NASDAQ is the only index to jump into positive territory.  Investors are reviewing the Presidents and other Officials comments about US and China's relationship, which seems to have dissipated further after the coronavirus.  They're concerned over a possible Cold War.  Meanwhile, both MBS and Yields are testing thier 25 DMA.  Let's hope they hold.  MBS is currently Down 8bps; so depending on the Lender, Mortgage Rates have either remained Unchanged or Worsened a little bit.  Yields are currently at 0.63%.

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Daily Market Report 5/1/20

http://MikesDailyMarketReport.com: The Markit Manufacturing PMI dropped down to 36.1 for April; while the ISM Manufacturing Index dropped to 41.5.  Construction Spending rose by 0.9% in March.  Stocks are Down on Corporate Earnings release and outlooks, including 2 Big Tech Companies (Apple and Amazon).  Also, to add fuel to the fire are new threats from President Trump that the US may add tariffs to Chinese imports because of their handling of the pandemic.  MBS is currently Down about 8bps, but sill above it's 25 DMA, which is climbing.  Mortgage Rates remain Unchanged.  Yields are up a bit, coming in just under 0.63%.

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