Fast market conditions exist as the 10 year note has gone from plus 9/32’s to down 9/32’s in the last 15 minutes. Short term patterns that pointed to higher levels (rally), met their objectives and have slipped away from the best levels of the day.
Earlier today, Personal Income hit the tape down .2% while Personal Outlays rose .2%. After adjusting for inflation and taxes, real disposable income fell .4%, the first decline since August. Michigan Sentiment Survey was also released, up .7 to 57.3. The surprise improvement seems to have its roots in recent Fed and Treasury actions, building a little consumer confidence.
Overall, the supply/demand of mortgage back security trading favor steady to slightly improved rates into the foreseeable future. While mortgage banker types like us are selling 3 billion a day, the Fed is in buying 6 billion a day. 2 to 1 ratio is strong, giving traders panic attacks every time they try to short the market. There’s an old saying among traders, “don’t fight the Fed.” Certainly fits in today’s market and maybe we should add “let the big dog eat.” Until their full, it’s steady as she goes.
Have a great weekend.
