Good morning! As we start the week, mortgage bond prices are down slightly, reflecting a mixed response to recent economic reports. The JOLTS report shows a modest increase in job openings, and strong consumer confidence numbers are influencing the market. However, the real estate sector continues to show strength, celebrating new highs.
The JOLTS Report and Market Dynamics
The Job Openings and Labor Turnover Survey (JOLTS) indicated an increase in openings, particularly in business and professional services. Interestingly, leisure and hospitality, previously a strong contributor to job openings, is now showing a decrease, potentially easing some market pressures.
Refunding Announcements and Treasury Supply
Yesterday’s announcement that fewer Treasurys than anticipated will be sold boosted the bond market. The upcoming maturity announcements are expected to focus on shorter-term debt, which could further influence market dynamics.
Economic Indicators and Federal Reserve Watch
This week, the Federal Reserve’s meeting is a focal point. Given the strong GDP numbers and job market performance, rate cuts seem unlikely at this meeting. However, the Fed’s comments on quantitative tightening and future rate decisions will be critical, especially as the Treasury’s General Account (TGA) balance affects debt issuance.
Housing Market Resilience
Real estate continues to demonstrate robust health. The latest Case-Shiller and FHFA reports show all-time highs in home prices, with a 5.2% year-over-year increase in the Case-Shiller index and 6.6% in the FHFA index. These numbers reflect healthy appreciation, debunking media pessimism around housing.
Rent Trends and Inflation
The latest Apartment List National Rent Report indicates a decrease in rents, a positive sign for tackling inflation. This real-time data contrasts with the lagging shelter component in CPI and PCE inflation reports, suggesting potential future easing in inflationary pressures.
Consumer Confidence and Global Economic Outlook
The Conference Board’s Consumer Confidence Index for January rose significantly, reflecting optimism influenced by stock market performance. Meanwhile, flat GDP growth in the Eurozone signals potential recession risks, often correlating with global economic trends.
Upcoming Economic Events
– Tomorrow’s ADP report expects around 145,000 job creations.
– The Fed’s meeting conclusion and Powell’s press conference will be closely watched.
– The BLS jobs report on Friday is anticipated to show 180,000 job creations, with a potential uptick in unemployment rates.
Technical Analysis: MBS and Treasury Yields
Currently, mortgage bonds are down, and the 10-year Treasury yield is up slightly but within a tight trading range. Upcoming economic releases, particularly from the Fed and job data, will likely influence market direction.
The market remains vigilant as we navigate through significant economic updates, including the Fed’s meeting and job reports. Housing market strength and consumer confidence add exciting layers to the economic narrative, while upcoming data releases will guide market strategies.
