MBS are up 20 bps this morning early. Nice gain. Stocks down 23 points

Bonds rallied to nearly the lowest yields of the day after the Chi-PMI data but have erased all of those gains after the JOLTS job openings data. Trading levels are right in line with the weakest levels of the day for Treasuries.

China’s soft manufacturing data added to concerns about the outlook for global economic growth at a time when central banks are still in tightening mode. Price data from Europe on Wednesday prompted traders to curb bets on European Central Bank

rate hikes, though worries remain about the region’s prospects as demand from its largest trading partner falters.

Chicago PMI = 40.4 vs 47.3 f’cast

JOLTS = 10.103m vs 9.2m f’cast [9.59m prev]

While a compromise debt-ceiling bill is taking shape, its passage is not a done deal. Moreover, despite the heated rhetoric, the current compromise only shaves about 1.5% off the FY2024 spending as it utterly fails to attack the budget’s major cost drivers. If our politicians ever get serious about reducing the deficit it’ll require tax hikes, reductions to entitlements, and cuts to defense. Until then it’s all show and tell.

MBS spreads continue to remain at historically wide levels, which isn’t helping mortgage rates. The avg 30 yr mortgage rate is just under 3% over the 10 yr CMT. 2008 was the only time in the 2000’s that it was near this high.

Cleveland Fed Pres Mester spoke this morning saying she wants to continue to hike rates to 6%. Though she has a pretty terrible track record the last couple of years.

Many inflation components have been heading downward. However, the Fed is relying on old data. Which if furthering the disconnect.

While we can trace some of this morning’s back and forth market movement to domestic economic data (Chicago PMI helped, JOLTS hurt), it was the European market hand-off that set the tone for today’s US rate rally.  The only major contribution from a domestic standpoint would be several Fed speakers hitting the wires talking about “skipping” the next rate hike at the upcoming meeting.

At the end of the day, MBS were up 36 bps.   10 yr treasury down 4 bps.   Stocks lost 25.69 points

There are only about 564,000 active listings. That’s about 11,000 per state. In California, where there are 58 counties, that is an average of less than 200 per county. In Wyoming, the least populated state, there are 58 counties so that’s 190 listings per county. Of course, averages don’t apply like that, but it is important to keep things in perspective