US DATA: Mortgage Applications Pull Back, Likely More Volatility Ahead
Apr-16 11:15
US mortgage activity pulled back last week as mortgage rates unsurprisingly lurched higher again in response to higher swap rates. Expect more volatility ahead considering swings in US rate markets.
- Composite applications fell a seasonally adjusted -8.5% last week after jumping 20% the week prior.
- It was led by refis (-12.4% after 35.3%) whilst new purchase applications saw a less volatile version of the move (-4.9% after 9.2%).
- Relative levels: composite at 57% of 2019 average, new purchases 63% and refis 48%.
- The 30Y conforming rate increased 20bp to 6.81% after a 9bp decline the week prior to 6.61% for the lowest since Oct 2024 after a recent high of 7.09% in January.
- Expect further swings in mortgage activity ahead as volatility in rates markets continues. 10Y swap rates averaged 6bp higher last week than the week prior (3.67% vs 3.61%) but included a huge range of 3.32-3.96% last week which will have complicated mortgage deals. The 10Y swap rate is currently 3.77%.
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EQUITIES: Option Expiries for Friday
Mar-17 11:08
Equity Option Expiries in Notional Terms for Friday's Triple Witching.
US:
- SPX: $2.91T vs $2.85T Friday.
- NDX: $106.21bn vs $104.53bn.
- Amazon: $16.24bn vs $15.33bn.
- Apple: $21.57bn vs $20.86bn.
EU: As of Friday's Data.
- SX5E: €252.84bn.
- SX7E: €19.05bn.
- DAX: €66.52bn.
- CAC: €6.54bn.
- FTSE: £24.27bn.
OUTLOOK: Price Signal Summary - Bear Threat In S&P E-Minis Remains Present
Mar-17 10:59
- In the equity space, the trend condition in S&P E-Minis remains bearish and fresh cycle lows last week reinforced current conditions. Moving average studies are in a bear-mode set-up highlighting a dominant downtrend. Sights are on 5483.50, a 2.00 projection of the Dec 6 ‘24 - Jan 13 - Feb 19 swing. Note that the short-term trend condition is oversold, a corrective bounce would allow this set-up to unwind. Firm resistance to watch is 5976.83, the 50-day EMA. First resistance is at 5726.75, the Mar 12 high.
- The medium-term trend direction in the EUROSTOXX 50 futures contract remains up and the recent pullback is considered corrective - for now. However, note that support at the 50-day EMA, at 5314.94, has been pierced. A clear break of this average would highlight a stronger short-term bear threat and suggest scope for a deeper retracement. This would open 5202.00, the 50.0% retracement of the Dec 20 ‘24 - Mar 3 bull leg. A resumption of gains would open the 5600.00 handle.
GILTS: UBS Continue To Like 2s10s Steepeners
Mar-17 10:52
UBS expect the FY25/26 gilt remit to provide fresh steepening pressure for the 2s10s curve.
- A couple of other factors also play into their view:
- They expect “an uneventful MPC to offer little support to gilts, especially since the data following the last meeting has also been relatively strong”.
- They are also of the view that “the broad-based deterioration in consumer confidence and ongoing drag from higher mortgage payments are posing downside risks to growth forecasts.”
