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Market Commentary

Market Commentary

February 25, 2015
10-YEAR NOTES   100-04 (-01)
FN 3.5% COUPON   104-24 (+00.5)
SUPPORT   2.40%
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     MBA Mortgage Applications, for the week ended February 20th, fell -3.5% after falling -13.2% the week before. Purchases rose +4.6% vs. -7.1% prior (-1.5% YoY), Refinancing fell -7.5% vs. -16.0% prior (+15% YoY), and the average interest rate for a conventional 30-Year loan rose to 3.99% vs. 3.93% prior (4.53% a year ago). While Home Sales for the month of January were expected to decline following the prior month's jump, sales fell much less than consensus. New Home Sales slipped -0.2% (consensus -2.3%) following January's +11.6% advance.
    Yesterday during her testimony with the Senate Janet Yellen reaffirmed the Fed's view that the economy continues to improve, however we still have a long way to go. She assured leaders that the Fed would remain accommodating until they see continued strength in the data and had reasonable confidence that the U.S. will be able to move back to their 2% annual inflation objective. It was the general consensus that providing the public with a Fed that is transparent in its guidance is essential to Market stability. As a whole the statement portrayed a dovish Fed, willing to keep rates low and provide support to the market as long as they do not see clear signs of reaching their objectives. Treasuries got a boost yesterday following Yellen's dovish remarks pushing 10-Year yields back below the 2% mark, and today the bond market continues to maintain yesterday's closing levels with 10-Year notes hovering just below 2%. The curve has bull flattened with 2s10s down -1.6 bps.
This Week's Events:
02/25 MBA Mortgage Applications 04:00 February 20 - -3.50% -13.20% -
02/25 New Home Sales 07:00 January 470K 481K 481K 482K
New Home Sales MoM
07:00 January -2.30% -0.20% 11.60% 8.10%
02/26 CPI MoM 05:30 January -0.60% - -0.40% -0.30%
02/26 CPI YoY 05:30 January -0.10% - 0.80% -
02/26 Durable Goods Orders 05:30 January 1.60% - -3.40% -3.30%
02/26 Jobless Claims 05:30 February 21 290K - 283K -
02/26 Continuing Claims 05:30 February 14 2395K - 2425K -
02/26 FHFA House Price Index MoM 06:00 December 0.50% - 0.80% -
02/27 GDP Annualized QoQ 05:30 4Q S 2.00% - 2.60% -
02/27 Personal Consumption 05:30 4Q S 4.30% - 4.30% -
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