Wednesday, June 10, 2020

Daily Market Report 6/10/20 The Consumer Price Index dropped 0.1% in May, while it's YoY dropped from 0.3% to 0.1%.  The Core CPI (excluding food & energy) also dropped 0.1% in May, and it's YoY dropped from 1.4% to 1.2%.  The big discrepancy in the YoY between the Headline data and it's Core is due to the drop in Energy (Oil) prices.  Now that the economy is reopening, it's alleviating some concerns of the possibility of deflation.  The Fed will wrap up it's FOMC today and give their announcement around 11:30am PST.  Investors will listen for any comments about last week's Jobs data and any changes or plans with the current actions (like their daily purchase of MBS, which has helped to stabilize the Mortgage Rates).  Meanwhile, MBS had their Bond Rollover yesterday, which was about -22bps.  This has no effect on pricing.  It's basically a reset to the next month's pricing; as this occurs every month, and why we have 30 day locks/pricing.  Currently, MBS is Up 9bps, which will put them in comparable territory, as yesterday's pricing; so, Mortgage Rates remain the Unchanged.  The MBS did pull back a bit in the afternoon yesterday due to a poor Treasury Auction, and closed only +9bps (vs. +23bps earlier in the day).  Yields continue to decline, as it's stochastic chart shows a negative cross-over, which indicates a trend reversal.  They currently sit just under 0.78% so far this morning.

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