MBS are up 5 bps on the morning. Stocks up small.
It was a fairly straightforward overnight session with bonds holding perfectly flat in Asia and then following EU yields steadily higher. EU bonds took a hit from higher-than-expected Producer Prices while elevated supply made for an unsupportive backdrop. Then, in domestic session, market saw some improvement on the JOLTS numbers
JOLTS: 9.931m vs 10.4m f’cast [10.824m prev]
This is a big drop in job openings, and a sign that the labor market may finally be softening.
US Feb. Factory Goods Orders Fall 0.7%; Est. -0.5%
ISM Manufacturing Index fell from 47.7 to 46.3 in March. Estimates of 47.5. Not including COVID, WE have to go back to 2009 to see a figure that soft.
Home prices rose marginally in February, according to Black Knight. This was the first increase in 8 months. Black Knight attributes this to the decline in rates in the beginning of February bringing buyers back into the market. That said, inventory remains extremely tight and isn’t improving. Some of the usual suspects – places like Miami – saw increases.
Overall prices rose 0.16% MOM and rose 1.94% YOY
CoreLogic reported that home prices rose 0.8% MOM and 4.4% YOY in February.
You would think with such low inventory that the homebuilders would step into the breach, but their cancellation rates were pretty elevated in their fourth quarter numbers, and many are in the process of just burning off their backlog.
Private residential construction fell 0.6% month-over-month / 5.7% year-over-year in February. Single family construction was down big: 1.8% MOM and 21.4% YOY. On the other hand multifamily was up big: 1.4% MOM and 22.% YOY
Reserve Bank of Australia joined the Bank of Canada in holding rates steady.
Mortgage rates are still riding high on the idea that the Fed will have to cut rates in 2023, but that sentiment is slipping away like sands in an hourglass. Friday’s jobs data could give bonds a bit of a boost and therefore pricing a bit of a boost, but I don’t trust it and wouldn’t take the chance.