UMBS opened down 5 bps. Stock futures up 17.75
Bonds were sideways to slightly stronger in the overnight session with 10yr yields near their best levels of the day before the 8:30am data. There hasn’t been a major reaction by any means, but modest gains have given way to modest weakness.
Durable Goods = 1.4 vs 1.1 f’cast, [-6.9 prev]
Jan revised down from -6.2% to -6.9%
US stocks were set to rebound from two days of losses as investors looked toward US data for pointers on whether the recent rally has room to run. organ Stanley and JPMorgan Chase & Co. strategists were the latest to warn that lofty valuations will be hard to justify if they’re not accompanied by an acceleration in company profits. The S&P 500 is up almost 10% this year on a combination of healthy US economic data, Fed rate-cut wagers and optimism about artificial intelligence.
Home prices fell 0.1% in January, according to the FHFA House Price Index. On a year-over-year basis, home prices rose 6.3%.
Home prices rose 6% year-over-year according to the Case-Shiller Home Price Index. While there is a large disparity between leaders such as San Diego versus laggards such as with Portland, the broad market performance is tightly bunched up. This is also true of high and low tiers. The average annual gains between high and low tiers across cities tracked by the indices is just 1.1%. Low price tiered indices have outperformed high priced indices for 17 months.
The Air BnBust continues in Florida, where condo prices are falling as costs rise. The difficulty of getting homeowner’s insurance is raising maintenance fees, and many owners who bought property as a potential Air BnB are looking for the exits. Inventory is up, and sales are down. This is largely a condo phenomenon; single family prices are still strong.
In the bigger picture, bonds found resistance before 10yr yields managed to break below 4.19, but remained well under the 4.32% ceiling after yesterday’s weakness. Today began slightly stronger, but shifted weaker after the Durable Goods data. The home team rallied after the 1pm Treasury auction came out on the strong side and trading levels trickled just barely into positive territory. Wednesday is the quietest day of the week for econ data, but also the last day of Treasury auctions and the last full trading day of the month/quarter. Translation: data driven volatility is unlikely, but random volatility surrounding the auctions and month-end trading could make things interesting.
UMBS ended the day down 2 bps, at 100.95