Friday, January 31, 2020

Daily Market Report 1/31/20  The Employment Cost Index rose 0.7% in the 4th Qtr.  Personal Income rose only 0.2% in December (below it's forecast of 0.3%); and it's counter-part, Consumer Spending came in at forecast up 0.3%.  The Fed's favorite gauge for inflation is the Personal Consumption Expenditure (PCE), which rose 0.3% in December, as it's YoY increased from 1.5% to 1.6%.  The Core PCE (excluding food and energy) rose 0.2% and it's YoY remained Unchanged at 1.6%.  We're still under the Fed's Target rate of 2.0%.  The manufacturing in the Chicago region worsened in January, as it dropped from 48.9 to 42.9.  Anything under 50 is in Contraction.  However, Consumer Sentiment rose from it's earlier report of 99.3 to 99.8 in January.  Stocks are down this morning, as the World Health Organization declared the coronavirus a global emergency.  Stocks did a dramatic rebound yesterday, but today's sentiment thus far is negative.  MBS is currently Up 12bps, but Mortgage Rates remain Unchanged; as the stocks rebounded yesterday, the MBS closed unchanged from the previous day's close; so, we're currently at the higher levels when pricing came out yesterday.  Yields were similar, as they're down to 1.53% so far this morning.

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