The biggest difference between Fannie Mae MBS and Ginnie Mae MBS is that Ginnie Mae MBS have an explicit guarantee from the federal government.
For the week ending July 1, Fannie Mae TBAs ended at 104 6/32—up 10 ticks for the week. The ten-year bond yield, tradable through TLT, fell by 6 basis points to 1.4%.
Mortgage rates are the lifeblood of the housing market. The Fed’s plan to help the housing market when it pushed rates lower to allow people to refinance.
Ten-year bond yields influence everything from mortgage rates to corporate debt. Now, they’re the benchmark for long-term US interest rates.
Last week, the highlights were the FOMC (Federal Open Market Committee) minutes and the jobs report. The jobs report had a huge payroll number.
The week after the jobs report usually doesn’t have much data—more or less, this week isn’t an exception. Earnings season kicks off this week.
QE (quantitative easing) has increased the size of the Fed’s balance sheet almost eightfold since the turn of the century.
Equity markets continue to improve and investment-grade borrowers are able to get access to credit. The Fed said that credit conditions improved overseas.
The Fed has been consistently high in its inflation forecasts. At the June 2016 FOMC meeting, the Fed took up its 2016 inflation forecast from 1.6% to 1.7%.
During the June FOMC meeting, the Fed lowered its estimates for 2016 GDP growth to 1.9%–2.0%. The central tendency ticked down from 2.2% to 2.0%.
The Fed noted the improvement in the labor market, although it’s concerned about global growth. That said, the labor market has some strange numbers.
On July 6, the Fed released the minutes from the June FOMC meeting. The Brexit vote mainly overshadowed anything that came out of the June FOMC meeting.
During the week ending July 1, 2016, Ginnie Mae TBAs outperformed Fannie Mae TBAs, rising by 13 ticks to close at 106 11/32.
For the week ending July 1, 2016, Fannie Mae TBAs ended at 105 18/32—up 11 ticks for the week.
Last week, the ten-year bond yield fell 12 basis points to 1.44%. Mortgage rates fell 10 basis points to 3.46%.
After closing the previous week at 1.56%, bond yields, as tracked by the iShares 20+ Year Treasury Bond ETF (TLT), fell by 12 basis points to 1.44% last week.
Last week was pretty light in terms of economic data, but markets were concerned with adjusting to the Brexit vote. For all the worries about Brexit overseas, it simply won’t have much of an effect on US corporate earnings.
We have some important economic data coming in this week with the jobs report and the minutes from the June FOMC (Federal Open Market Committee) meeting.
Mortgage refinance applications, as measured by the MBA (Mortgage Bankers Association) Refinance Index, fell last week. Since mid-2013, refinances have been dropping dramatically.
Mortgage applications fell 2.6% last week after rising 2.9% the week before. Rates were increasing for most of the week, only to fall on Friday on the Brexit vote.