Markets see a minor rebound

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Published Date 4/17/2024

Overnight a little volatility but well within the narrow range, the 10 year note hit a low of 4.64% -3 bps and a high at 4.69% +2 bps. At 8:30 am ET the note traded at 4.65% -2 bps from yesterday. MBS prices began the day +15 bps from yesterday.

This morning MBA released applications for last week, yesterday we said applications would likely decline, we were wrong. Composite applications last week increased 3.3% from the prior week, purchase apps +5.0% and re-finance apps +0.5%.

Yesterday Jerome Powell said what markets were already aware of, the Fed is a long way from lowering rates, his remarks had no direct impact on markets. The economic outlook improving according to the IMF’s most recent global forecasts; US GDP increased to +2.7% from +2.1% at its January forecast. The Atlanta Fed’s GDPNow for the Q1 shows growth in the quarter at 2.9% from 2.6% last week. The growth in the US economy continues to baffle, increasing rates don’t appear to matter in this growth spurt. The growth at least at 2.0% is in the seventh quarter, the longest growth trend going back to 2003/04.

At 9:30 am the DJIA opened +219, NASDAQ+68, S&P +22. 10 year at 9:30 am 4.62% -5 bps. FNMA 6.0 30 year coupon +26 bps from yesterday’s close and +30 bps from 9:30 am yesterday.

We reported the IMF global forecast yesterday. Here is more, the IMF really driving home the exploding fiscal debt, saying the US needs to get it under control. The debt to GDP in 2023 +8.8% up from +4.1% in 2022 even as the economy grows. The deficit, as previously noted is going to keep rates much higher than many now believe. Income down 3.1% while spending increased 1.3%.

At 1 pm Treasury will sell $13B of 20 year bonds, usually the 20 year borrowing doesn’t get much attention from traders.

At 2 pm the Fed’s Beige Book, details from the 12 Fed districts. Some tidbits but nothing new overall.

Source: TBWS

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