US DATA: Higher Long-End Rates Continue To Weigh On Mortgage Activity
Jan-08 12:27
- MBA composite mortgage applications extended their recent slide, albeit with a more modest -3.7% last week after a cumulative -22% in the two weeks prior covering the Christmas holiday period (all figures SA).
- Refis saw some very mild stabilization (+1.5% after a two week decline of -36%) with purchases instead leading the decline in the latest week (-6.6% after -13% over two weeks).
- It comes as 30Y mortgage rates have continued to churn higher, albeit by only 2bps in the latest week to 6.99%. It’s up from 6.67% in early Dec and a recent low of 6.13% in mid-Sep for its highest since July.
- Interestingly considering expectations of looser regulation under incoming President Trump, the regular-jumbo spread at exactly 0bps (from -16bps the previous week) reached its highest since Nov 2023. It is however just a single week and would need to see similar readings in weeks ahead to confirm this trend.
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EQUITIES: Large EU Bank Block trade
Dec-09 12:24
Large EU Bank Block trade, suggest seller, not spread related.
- CAZ4 15k at 146.90.
OUTLOOK: Price Signal Summary - Bull Cycle In Bunds Remains Intact
Dec-09 12:21
- In the FI space, a bull cycle in Bund futures remains in play and the latest move lower is considered corrective. A move down is allowing an overbought trend condition to unwind. For bulls, price has recently traded through 136.37, the 76.4% retracement of the Oct 1 - Nov 6 bear leg. A clear break of this level strengthens a bullish theme and opens 137.72, the Oct 1 high. Initial firm support lies at 135.35, the 20-day EMA.
- A bullish corrective cycle in Gilt futures remains in play and recent gains reinforce the current short-term condition. Sights are on 96.67 next, a 2.500 projection of the Nov 18 - 19 - 20 price swing. On the downside, a stronger reversal lower would refocus attention on the initial key support at 93.40, the Nov 18 low. A breach of this support would be a bearish development and highlight a reversal. First support lies at 95.49, the Dec 4 low, followed by 95.17, the Nov 28 low.
EURIBOR OPTIONS: Call fly buyer
Dec-09 12:20
ERG5 98.00/98.12/98.25c fly, bought for 1 in 4k.
