MBS Highway Daily Updates 04/27/2023
Current position: Carefully Floating
Stocks are higher and mortgage bonds are lower to start the day.
Initial Jobless Claims
Initial Jobless Claims, which measure individuals filing for unemployment benefits for the first time, fell 16,000 to 230,000.
Removing some of the noise, the 4-week moving average continues to be around 236,000.
Continuing Claims, or those that continue to receive benefits after their initial claim, fell by 3,000 to 1.858 million.This metric shows pretty clearly that hiring has slowed, as people are continuing to receive benefits and not finding a new job.
Pending Home Sales
Pending Home Sales, which measure signed contracts on existing homes, fell 5.2% in March, which was weaker than the 0.5% increase expected and follows a downward revision in January from 0.8% to flat. This is the first month-over-month decline since November.
Sales are now down 23% from last year, which is a decline from -21% in the previous report.
NAR's chief economist said, "The lack of housing inventory is a major constraint to rising sales. Multiple offers are still occurring on about a third of all listings, and 28% of homes are selling above list price. Limited housing supply is simply not meeting demand nationally".
Current inventory shows 200k fewer active listings now than in November. This large drop in inventory, along with higher raters, is translating to fewer sales.
CoreLogic Loan Performance
CoreLogic released their loan performance insights for February, showing that overall delinquencies and foreclosure rates improved and remained near record lows. Loans 30 days or more delinquent increased from 2.8% to 3%. Those with 90 days or more remained at 1.2%. Lastly, loans in foreclosure were unchanged at a near multi-decade low of 0.3%.
For all the talk of housing being unhealthy, all the delinquency figures are at very low levels. For perspective, total delinquencies were more than six times higher during the housing crash.
The first reading on Q1 GDP showed further moderation to 1.1%, while markets were expecting between 2-2.5%.
Remember, the Fed's estimate is for the full-year 2023 GDP to be 0.5%, which means that with 1.1% Q1 GDP, everyone's estimates will be lower. This is a clear sign that the economy is slowing.
Mortgage bonds have tested the floor at their 50-day moving average, which has held so far. They are currently trading in a range between the aforementioned floor and a dual ceiling at the 100-day moving average and 100.758 Fibonacci level.
The 10-year has broken above a ceiling at the 25-day moving average and looks like it'll test the all-important 200-day moving average. Begin the day carefully floating.