Purchase Applications jump, And Coronavirus Fears Remain

The stock indexes early this morning were trading better, the 10 yr note yield 1.36% +1 bp. MBS prices down 6 bps at 8:30 am ET.

Weekly MBA mortgage applications increased last week; +1.5% on the composite, purchase apps +6.0% while refinance apps declined 1.0%. The week’s results include an adjustment for the Washington Birthday (Presidents’ Day) Holiday. The seasonally adjusted Purchase Index increased 6 percent from one week earlier. The unadjusted Purchase Index decreased 1 percent compared with the previous week and was 10 percent higher than the same week one year ago. The refinance share of mortgage activity decreased to 60.8 percent of total applications from 63.2 percent the previous week. The adjustable-rate mortgage (ARM) share of activity decreased to 5.3 percent of total applications. FHA share of total applications increased to 10.5 percent from 9.5 percent the week prior. The VA share of total applications decreased to 11.8 percent from 12.1 percent the prior week.

Democrats debated for the last time before Super Tuesday. Nothing new, Sanders and Bloomberg were the targets of the other five. Cross-talk, shouting, and long-winded answers. They argued over authoritarian leaders, age, socialism, and who is best to beat President Donald Trump in November. A lot of mud flew, but in the end, the debate doesn’t appear to have changed anything. Sanders’ presidential rivals warn that nominating the self-described democratic socialist will ensure President Trump’s re-election. Still, a growing number of party voters see the senator as their best chance of winning in November.

Coronavirus, according to China’s leaders, is slowing, but continue to increase in S.Korea and Japan.

At 10:00 am ET, January, new home sales better than thought; expected at 720K increased to 764K.

At 1:00 pm ET, Treasury will auction $41B of 5 yr notes. Yesterday, the 2-yr auction didn’t meet with strong demand, and the bidding was sloppy.

Financial markets have absorbed a lot of news over the last two weeks, the virus and its potential implications for the economy. Yesterday the CDC stirred the markets talking about its preparations and warning the US won’t be immune to the spread. The DJIA dropped 879, and the 10 yr yield down another 4 bps in yield. Today is starting strong on the stock indexes, and unless there is news about the virus, indexes will likely end higher this afternoon. The 10 yr, in the very short term, is in overbought levels—time to consolidate and wait for additional news.

Source: TBWS