MBS down 3 bps so far. Stocks down 9 pts

Wonders never cease, and there is a first time for everything. Today’s example of those claims is as follows: we are going to mention Canadian retail sales and entertain the possibility that it contributed to some bond-friendly momentum this morning.

Canada Retail Sales = -0.2 vs +1.6 m/m [ -0.7 vs +0.9 m/m excluding autos ]

To be fair, this actually probably doesn’t account for the gains seen over the past hour, but the fact that we’re even entertaining such things is a sign of the sideways times.

S&P Services PMI = 53.7 vs 51.5 f’cast, 52.6 prev

S&P Manufacturing PMI = 50.4 vs 49.0 f’cast, 49.2 prev

Once again, the market is showing us how data-hungry it is with a bigger-than-normal reaction to the S&P PMI data.

The outlook for next week is that we will see a lot of economic data, and if it shows a slowing economy we could see rates improve a bit further but not any big drops in rates. Fed members are also gagged after today ahead of the Fed meeting, so their influence on rates won’t be felt next week.

The national delinquency rate fell below 3% for the first time, according to the latest info from Black Knight. There is generally a seasonal aspect to this as DQs fall in March due to tax refunds. Foreclosure starts and rates increased however we are still well below pre-pandemic levels. I suspect that mortgage forbearance is still playing a part in distorting the numbers.

The Fed is re-thinking its decision to loosen the stress test requirements for banks with under $250 billion in assets. Under the relaxed rules, only the bigger banks were required to add unrealized gains / losses to their portfolio of available for sale securities. The Feds think this might have allowed Silicon Valley Bank to hide its problems. That said, Silicon Valley Bank wasn’t hedging the interest rate risk on its portfolio and that was the issue. The rule change might have tipped off regulators and the markets that something was wrong a bit earlier but the bank would still have failed.

The “data dependent” theme kept on rockin’ all week.  Traders even let the lowly S&P Global (previously Markit) PMI get in on the action today.  After opening in slightly stronger territory, a better-than-expected Services PMI reading pushed bonds immediately and obviously into weaker territory.  The rest of the day was very flat with yields hitting 5pm at almost the exact same levels seen 5 minutes after the PMI data.  Same story for MBS and an even flatter trajectory throughout the day.  Bonds continue waiting on headier events of early May, but they could make an exception for PCE and ECI at the end of next week.

A new housing report by the National Association of Realtors® reveals middle-income homeowners accumulated $122,100 in wealth as their homes appreciated by 68 percent in the last 10 years. Ten years is a long time to make $122k, but it is a move in the right direction and a selling point for loan officers working with renters

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