Wednesday 7/16/08 ... At A Glance

By: Matthew Graham •
At A Glance:
  • CPI headlines at 1.1% and core at .3%, both slightly higher than expectations of .8%/.2%
  • This brings us to the highest inflation rate in 3 years, but MBS only down an eighth, 5UST unchanged DoD
  • Stock futures positive as we enter a potential "rebound day" for financial stocks.
  • QUICK LOCK GUIDE: FLOAT.  Down only an eighth this morning, we need to wait to see where the momentum goes.
  • VIGILANCE: EXTREME.  with CPI high, today is a storm to be weathered.  We knew inflation was our dark cloud on the horizon and now that it's here, we'll have to watch it carefully so we know when to batten down the hatches or try to sail through...
abbreviations guide (ongoing list): 
  • MBS -                 
    • Mortgage Backed Security
  • MDPC-
    • Mid Day Price Change (plus means for the better, minus for the worse)
  • DOW or DJIA -    
    • Dow Jones Industrial Average
  • Ticks-                   
    • 1/32nds of bond pricing.  8 ticks=8/32nds=.25 in cost (YSP or discount)
  • DoD, YoY, MoM-  
    • Day over day, year over year, month over month, etc..
  • O/N-                   
    • Overnight
  • Coupon-               
    • The "interest rate' of the MBS
  • 6.0's, 5.5's           
    • always means FNMA 30yr Fixed MBS with a coupon of that number.  6.0's = 6.0% coupon rate MBS
  • PCE-                    
    • Personal Consumption Expenditures
  • UST-                    
    • United States Treasury Bonds.  5UST = 5 year, 10UST = 10 year, etc.. 
  • NAPM (PMI)         
    • National association of purchasing management (Purchasing Manager's Index)
  • ISM (MFG)           
    • Institute for Supply Management (mfg: manufacturing)
  • Wide/Gap/Gappy  
    • refers to the wideness or gap between treasury yields and MBS yields.
  • "Going Out"          
    • 4:45PM EST.  Official Close is 3pm EST 
  • FI                        
    • "fixed income."  For our purposes, will simply refer to treasuries and MBS 
  • NFP                    
    • Non-Farm Payrolls.  Key part of employment report.  Most meaningful gauge of labor market
  • ADP                    
    • ADP private payrolls, some feel a precursor to NFP, but historically quasi-accurate at best.
  • GSE
    • Government Sponsored Enterprise.  Refers to Fannie Mae and Freddie Mac
  • PPI
    • Producer Price Index. A key inflation indicator. 
  • CPI
    • Consumer Price Index.  An even more key inflation indicator.