The biggest source of volatility today is the afternoon release of the FOMC minutes

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Published Date 5/22/2024

The 10 year note began up 4 bps from yesterday’s decline of 3 bps. MBS prices yesterday +19 bps, this morning at 9 am ET -20 bps.

Last night two more Fed officials added their take. Cleveland Fed chief Loretta Mester said that she wants to see “a few more months of inflation data that looks like it’s coming down” before cutting interest rates. Boston Fed President Susan Collins commented she wants to see more evidence price pressures are moving toward the central bank’s 2% target. “I think this is a moment or a period when patience really matters. I think the data has been very mixed,”… “I think there are a lot of reasons why special dimensions of this cycle could explain why we’re moderately restrictive and we have perhaps still more in the pipeline.”

Weekly MBA mortgage applications last week improved; re-finances increased 7.4% from the previous week. The composite +1.9% from the prior week and up from +0.5%, purchase apps -1.2% after declining 1.7% the prior week. Re-finances were 21% higher than this time a year ago. Purchase apps 11% lower than a year ago. Three consecutive weeks of increases in apps.

At 9:30 am the DJIA opened -50, NASDAQ +14, S&P -3. 10 year note at 9:30 am 4.45% +3 bps. FNMA 6.0 30 year coupon at 9:30 am -17 bps from yesterday’s close and-14 bps from 9:30 am yesterday. By 9:45 am the 10 year declined from 4.45% to 4.43% just 1 bps higher than yesterday: FNMA 6.0 30 year coupon -11 bps (+6 bps from 9:30 am)

At 10 am April existing home sales expected at 4.195 million from 4.22 million in March, sales reported at 4.14 million. Month/month -1.9% from -3.7% in March, year/year -1.9% from -3.7%.

At 1 pm Treasury will auction $16B of 20 year bonds, normally that auction doesn’t get much focus.

At 2 pm the minutes from the May 1st FOMC meeting. Given that there have been so many Fed officials commenting since the meeting it isn’t likely anything new will cause movement in rates.

Source: TBWS

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