US DATA: A Little Further Traction From Lower Mortgage Rates
Mar-12 11:09
- MBA composite mortgage applications increased another 11% sa last week after 20% the week prior.
- Refis are leading the increase (16% after 37%) but new purchase applications have also firmed (7% after 9%).
- It comes with a further modest decline in the 30Y conforming mortgage rate to 6.67%, -6bps after -15bps the week prior, for its lowest since early December having peaked recently at 7.09% in early January.
- The level of refi applications is at its highest since Sept/Oct 2024 when they spiked after expectations of a deeper Fed cutting cycle, but are still only 52% of 2019 averages.
- New purchase applications meanwhile are only their highest since late January and at 60% of 2019 averages.
- Recall that President Trump emphasized his desire for lower borrowing costs in last week’s address to Congress, saying he wants to “bring down mortgage rates” and celebrating the “big beautiful drop” in “interest rates”.
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US TSY FUTURES: CFTC CoT Shows Funds Adding To Overall Net Short
Feb-10 11:05
The latest CFTC CoT report (covering the week ending 4 February) showed leveraged funds, asset managers and non-commercial investors extending on their respective net positioning biases.
- Leveraged funds added over $15mln DV01 equivalent of fresh net shorts across the curve. FV drove the bulk of that swing (over $12mln DV01 equivalent of fresh net shorts added), while net shorts were also added in UXY & US futures. Meanwhile, they trimmed their net shorts across the remainder of the curve (TU, TY & WN futures). The cohort remains net short across all contracts.
- Asset managers marginally extended on their net long position in curve-wide DV01 equivalent terms, adding just over $1mln of fresh net longs. Relatively aggressive trimming of TY net longs (over $9mln DV01 equivalent) and cover of some TU longs limited the overall positioning swing, with net long setting seen across the remainder of the curve. The cohort remains net long across all contracts.
- Non-commercial investors flipped to net short US futures from net long, while adding to existing net shorts across the remainder of the curve (see table below).
Source: MNI - Market News/CFTC/Bloomberg
OUTLOOK: Price Signal Summary - USDJPY Trend Is Oversold But Remains Bearish
Feb-10 11:03
- In FX, EURUSD continues to trade below last week’s highs. Attention is on a bullish candle formation on Feb 3 - a hammer - that signals a possible reversal. However, additional reinforcing price evidence is required to signal a turn in the trend. MA studies in a bear-mode position, highlighting a dominant downtrend. 1.0435, the 50-day EMA, marks a key resistance. A clear break of it would be a bullish development. The bear trigger is 1.0141, the Feb 3 low.
- GBPUSD remains below the Feb 5 high. The pair has recently traded above the 20- and 50-day EMAs, and pierced 1.2523, the Jan 27 high. A resumption of gains would signal scope for a move towards 1.2610, 38.2% of the Sep 26 ‘24 - Jan 13 bear leg. On the downside, key short-term support to watch has been defined at 1.2249, the Jan 3 low. Clearance of this level would instead highlight a reversal.
- A bearish theme in
- USDJPY remains intact and last week’s move down reinforces current conditions. 151.06, 76.4% of the Dec 3 - Jan 10 bull leg, has been pierced. A clear break of it would open 149.69, the Dec 9 low. Firm resistance is seen at 154.70, the 50-day EMA. Note that the pair has entered oversold territory. A recovery would be considered corrective and would allow the oversold condition to unwind.
SONIA: Large Call Condor buyer
Feb-10 11:03
SFIM5 95.95/96.05/96.15/96.25c condor, bought for 2.5 in 12.5k.
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May-09 05:50
