http://MikesDailyMarketReport.com: The ISM Manufacturing PMI dropped from 58.8 in December to 57.6 in January. Anything above 50 is considered expansion with this index. Construction Spending rose only 0.2% in December (missing forecasts of 0.6%). If you look inside the ISM Manufacturing PMI data, then you will find that there was a big spike with "prices paid", which is concerning the Markets, as this is inflationary data; and inflation is the aforementioned concern (along with the Fed's reaction to it). This piece of data and comments by Fed's Harker reversed what appeared to be a good day for MBS. MBS started off higher than yesterday's close, only to drop well into negative territory. Harker mentioned that the Fed could start off with a 0.5% rate hike in March, which will be dependent upon inflaion data; and looking into the possibility of selling off it's Balance Sheet (earliest this would happen after June). MBS has since subsided; and is currently Down between 5-9 bps. Mortgage Rates are a little higher today, but if the MBS continues to pull back a bit more, then Lenders may reprice to Unchanged levels. Like MBS, Yields started below a tough Technical floor and broke above it and tested the Technical ceiling. Currently, it's residing between both Technical levels at 1.80% range.
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