With no resolution in sight on the government shutdown, the debt ceiling deadline (OCT 17th) fast approaching and, to top things off, the crazy lady car chase near Capitol Hill, things are pretty tense in DC right now. Yesterday we saw a decline in the ISM services number (54.4 vs. a projected 57) and coupled with continued weakness in MBS sales from originators (that’s me!), rate sheet prices rose for the second straight day. Also, the DOW closed under 15000 for the first time in over a month. To add a bit of perspective to the average MBS supply seen each day from originators, yesterday it tallied just a bit below $1 billion, which is down from the $1.7 billion per day that’s been flowing through the markets earlier this week. Furthermore, the latest report from the NY Fed Reserve is that the Fed purchased an average of $2.9 billion per day – an almost a 3 to 1 ratio of Fed vs. originator supply. Now imagine what will happen to MBS prices when the Fed begins its tapering of MBS purchases and you can see why that’s such a scary thought for the markets. Since October 2011, the Fed has bought nearly $1.2 TRILLION is agency MBS ! The Department of Labor officially announced yesterday, that they will not publish the employment results today due to the government shutdown. Well, we already anticipated that, but this is what I love about the markets, people are still releasing their expectations on what the number would be if they were to announce it today. IFR Markets is looking for a rise in payrolls of +165k and the unemployment rate to be 7.3% in Sept which is a little lower than some economists believe, but overall I don’t think it shouldn’t affect the FOMC’s current tapering policy should those numbers hold true. Again, we don’t even know what the Sept number is, but by George we have opinions and we’re sticking to it. With little to no economic direction except for a few Fed speeches for the markets to grab hold of, MBS are a bit lower this morning and I would expect a quiet day going forward. Have a great weekend and as always, should you need anything please don’t hesitate to contact me. Jim Janik "The Mortgage Guy" 414-241-9883
Posted on: Sat, 05 Oct 2013 02:21:17 +0000
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