MBS Highway Daily Updates 02/07/2023
Current position: Carefully Floating
Stocks are lower and Mortgage Bonds are slightly higher to start the day. The big potential market mover today will be Fed Chair Jerome Powell's speech between 12:30 and 1:00 pm ET. The last time we heard from Powell at the Fed meeting, the markets liked his comments and rallied. Will he change his tone or address the strong jobs report? We will update you with the results in the market news section of the website.
We also heard from Daly, Bostic, and Kashkari this morning, all of whom were for more rate hikes. Since the release of the January Jobs Report, several central banks have started to talk tougher, including the BOE, ECB, and now the RBA (Reserve Bank of Australia). The RBA hiked rates 25bp as expected, but they were forecast to indicate a pause, but they signaled that they were going to continue hiking. This added a bit of pressure to global yields.
More on the Jobs Report
While the global markets have been reacting to what appeared to be a strong jobs report, we know the adjustments were the reason. Here's another interesting stat: there were more full-time jobs last May than today, meaning that not one full-time job has been created on the net over this time span.
Mortgage Bonds are trying to hold the line at support at 100.758, which is an important Fibonacci level. If bonds can remain above this level, there is room to move higher until reaching the 25- and 50-day Moving Average. The 10-year is also trying to hold the line and remain beneath 3.644. There is also a falling trend line that can be drawn from the high we saw on October 21 to today. The falling trend line, which we are almost up against, has provided a cap on yields. With bonds and yields holding the line, we can begin the day carefully floating but on guard for market movements after Powell.