Prices

More Signs of Resilience Amid Month-End Buying Spree

More Signs of Resilience Amid Month-End Buying Spree It was a generally resilient day for the bond market after a bit of a scare in the morning.  European inflation data caused a sell-off in EU bonds that spilled over to Treasuries overnight.  Selling continued in the first few hours, but bonds began to recover after a slightly weaker Chicago PMI report.  A calm, sideways mid-day gave way to stronger buying as month-end trades crowded in before the 3pm CME closing bell.  Month-end buying aside, bonds were already showing a good amount of resilience by holding their ground in spite of the European influence.   Econ Data / Events Case Shiller Home Prices -0.5 vs -0.5 f’cast/prev FHFA Home Prices -0.1 vs -0.1 prev Chi PMI 43.6 vs 45.0 f’cast Consumer Confidence 102.9 vs 108.5 f’cast, 106.0 prev Market Movement Recap 08:39 AM Moderately weaker overnight with Europe leading the way.  Slight recovery early.  10yr up 2bps at 3.943.  MBS down 3 ticks (.09). 12:31 PM Nice bounce back after 10am.  10yr up only 1.2bps at 3.934.  MBS down only 1 tick (0.03). 03:23 PM Progressively stronger into the 3pm CME close with month-end buyer helping yields turn green.  10yr near unchanged on the day.  MBS down only 1 tick (0.03). 

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Bonds Hold Ground Despite Onslaught of Corporate Issuance

Bonds Hold Ground Despite Onslaught of Corporate Issuance The day began with bonds rallying back into positive territory after Durable Goods came in slightly weaker than expected.  Some of those gains may be better attributed to the 8:20am CME open and “new week” trades, but the data will take some credit for being at the right place at the right time.  After that, things were refreshingly flat and that’s a victory consider a deluge of corporate bond issuance (something that is normally more likely to put upward pressure on rates). Econ Data / Events Durable Goods -4.5 vs -4.0 f’cast, 5.1 prev Excluding aircraft/defense 0.8 vs 0.1 f’cast, -0.3 prev Market Movement Recap 08:56 AM Modestly weaker overnight, but now rallying after Durable Goods data.  10yr down 3.7bps at 3.91.  MBS up 7 ticks (.22). 11:23 AM Giving up some of the early gains.  10yr still down 1.7bps at 3.93.  MBS still up an eighth of a point. 03:12 PM Fairly flat all day.  No major change from previous update despite some ups and downs in between.

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Bets on the ‘Year of the Bond’ are still on even as losses return

It’s way too soon to abandon hopes for a strong bond-market rebound in 2023. But even if plowing back into Treasuries proves to be a winning trade, sticking with it won’t be for the faint of heart.  A surge in job growth, rising consumer spending and faster-than-expected inflation have sent bond prices sliding again by … [Read more…]

Pending Home Sales Rose Sharply in January

Not only did pending home sales increase for the second month in a row in January, but the increase was the largest since the June 2020 rebound from the pandemic plunge. The National Association of Realtors® (NAR) said its Pending Home Sales Index (PHSI) rose 8.1 percent in January to a reading of 82.5.  This was on top of a 2.5 percent gain in December. [pendinghomesdata] The PHSI is based on contracts to purchase existing single-family homes, townhouses, condominiums, and cooperative apartments. It is a leading indicator of existing home sales over the following one to two months. Prior to the December uptick, pending home sales had fallen for 13 straight months. Last month’s PHSI reading was down 24.1 percent compared to the January 2022 level of 108.7. The Index was benchmarked at 100 in 2001. Analysts polled by both Econoday and Trading Economics had been expecting only a 1.0 percent increase in pending sales. NAR Chief Economist Lawrence Yun said, â€œBuyers responded to better affordability from falling mortgage rates in December and January. Home sales activity looks to be bottoming out in the first quarter of this year, before incremental improvements will occur,” He expects that we will not see an annual gain in home sales until 2024. “Meanwhile, home prices will be steady in most parts of the country with a minor change in the national median home price,” he said. NAR anticipates that the economy will continue to add jobs throughout 2023 and 2024, with the 30-year fixed mortgage rate steadily dropping to an average of 6.1 percent in 2023 and 5.4 percent in 2024.