Monday – February 20, 2023 – Presidents Day

from “Discipline Equals Freedom” by Jocko Willink

This isn’t punch the clock and go home for the day.

You don’t get weekends off.


Here there’s no such thing as the weekend. Your life is an everyday gig:  Every day is Monday.

and you might not like that.  Me?  I love it.

To me, every day is a beginning.  A New Day.  A new week.  A new shot at life

An opportunity to come out of the gate like a man possessed and attack the day: Without Mercy.

Today: I’m taking scalps.

I’m putting the pressure on.

I’m the aggressor. I’m on the attack. and of course:  I will get tired.

I will get beat up. I will get knocked down and drained. and I will have some bad days.

But I





Tuesday – February 21, 2023

And the hits just keep on a coming. MBS down 48 bps on the open. 10yT up 5 bps.

Pretty clear the market has moved to a whole new pricing philosophy.

Heading into the 3 day weekend, we knew there was a risk that Friday’s rally was driven by position squaring (i.e. traders buying bonds in order to cover short positions).  Heading into the new week, new short positions are back in fashion. From a data standpoint, a series of stronger Eurozone services PMIs pushed EU yields quickly higher overnight, greatly adding to the selling pressure.

MBS and blowing through floors at a startling clip. 4 floors in the last 5 trading days.

Markit Services PMI:  50.5 vs 47.2 f’cast 46.8 prev

Investor purchases of U.S. homes fell by 45.8 percent on a year-over-year basis, with the largest declines occurring in pandemic boomtowns such as Las Vegas and Phoenix

Almost the entire month of February has been a mad dash from the lowest rates in months to the highest rates in months.  The whole ordeal can be traced back to several key economic reports with mid-tier reports occasionally piling on.  Today saw a surprisingly large reaction to mid-tier data (S&P/Markit PMI). The only way to reconcile the disproportionate reaction would be to add some extra overseas selling from the holiday closure and the overnight session (which also saw similarly strong PMIs in Europe).

While rent growth has been slowing, it still rose at more than double the pre-pandemic rate. Rental price gains began increasing near the end of 2020 and have risen by about an average of $300 in the past two years. Annual single-family rent growth is projected to slow throughout 2023, but it will likely not decline by enough to wipe out gains from the past two years.

Existing home sales fell 0.7% MOM to a seasonally-adjusted annual pace of 4 million units. This is down 37% compared to a year ago. The median home price came in at $359,000 which is an increase of 1.3% compared to a year ago. Prices rose everywhere except the West.

Inventory increased slightly from 970k to 980k.  Down 15.3% from last year.    2.9 mos supply

But only 626,000 of that is available and NOT under contract.

FTHB are 31% of sales.  Cash Buyers are 29%

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