April 15th, 2019 9:57 AM by Richard Sardella MLO.100007700/NMLS 233568
Early trade (7:00 am ET) was quiet, no change in the stock indexes and no changes in the interest rate sector.
Friday the 10 yr. edged above 2.55% to close at 2.56% widely considered a key level and very key in our technical analysis; this morning in early activity (8:45) the 10 yr. at 2.57%. MBS mortgage prices opened this morning -2 bps from Friday’s close. Pre-open trading in US stock indexes, the DJIA generally unchanged from the 269 point improvement last Friday.
Earnings season began last week with banks that lead all earnings reports that will go on now for the next few weeks; this morning Goldman Sachs missed estimates for sales and trading revenue, sending its shares lower in pre-market trading, while Citigroup Inc. revenue matched expectations. Earnings season is to confirm the resilience of corporate America in the face of numerous challenges to growth. JPMorgan Chase & Co. posted strong first-quarter results last week, and Bank of America Corp. is up tomorrow.
The only data today; April NY Empire State Mfg. index was expected at 6.8, as reporte4d 10.1. It is the first manufacturing data for April but doesn’t light any fires.
At 9:30 the DJIA opened +5, NASDAQ +5, S&P +2. 10 yr. note at 9:30 unchanged at 2.56%. Fannie 4.0 30 yr. coupon at 9:30 unchanged from Friday’s close and -11 bps from 9:30 Friday.
Looking at all the news this morning, there isn’t any new market-driving news. Same stuff; US/China trade watch, Treasury Secretary Steven Mnuchin said the countries were “getting close to the final round of concluding issues.” Two phone calls are scheduled this week, but in-person meetings will likely be needed to seal any deal. The US/EU trade talks look like they will escalate this week, tariffs on auto imports to the US appears to be the centerpiece. Last week the IMF once again lowered its global growth outlook. Jamie Dimon last week said the US economy and equity markets could continue to grow for years to come (those kinds of comments make me nervous, too excessive and usually seen at major market turning points).
This week is Holy Week; trading and market movements likely to remain in narrow ranges. The bond and mortgage markets close at 2:00 pm Thursday and will be closed until next Monday.
Friday the 10 edged up to 2.56% 1 bp above 2.55% so far it is holding, breaking 2.55% the key market focus by 1 bp isn’t definitive. We noted Friday the next day or two from a technical perspective will be key, unless the 10 moves back below 2.55% our forecast is the next support for the note is a move up to 2.63%; MBS prices if that scenario happens will drop about 60 bps and 30 yr. rate back to 4.50% area.
This Week’s Calendar:
8:30 am April NY Empire State manufacturing index (expected 6.8, as reported 10.1)
9:15 March industrial production and capacity utilization (production +0.3%, cap utilization 79.2% from 78.2%)
10:00 April NAHB housing market index (63 from 62 in Mar4ch)
7:00 weekly MBA mortgage applications
8:30 Feb US trade balance (-$53.7B)
10:00 Feb US wholesale inventories (+0.4%)
2:00 Fed Beige Book
8:30 March retail sales (+0.8% from -0.2% in Feb; excluding auto sales +0.7%, less autos and gas +0.4%)
10:00 Feb business inventories (+0.3%)
2:00 PM US bond market close
Bond Market Closed
8:30 March housing starts and permits (starts 1230K +5.5%; permits 1300K +0.4%)
PRICES @ 10:00 AM
10 yr. note: +4/32 (12 bp) 2.55% -1 bp
5 yr. note: +2/32 (6 bp) 2.37% -1 bp
2 Yr. note: unch 2.40% unch
30 yr. bond: +5/32 (15 bp) 2.97% -1 bp
Libor Rates: 1 mo. 2.477%; 3 mo. 2.601%; 6 mo. 2.637%; 1 yr. 2.748% (4/12/19)
30 yr. FNMA 4.0: @9:30 102.41 unch (-11 bp from 9:30 Friday)
15 yr. FNMA 3.5: @9:30 102.00 +1 bp (-12 bp from 9:30 Friday)
30 yr. GNMA 4.0: @9:30 102.95 unch (-14 bp from 9:30 Friday)
Dollar/Yuan: $6.7093 +$0.0051
Dollar/Yen: 112.04 +0.04 yen
Dollar/Euro: $1.1301 unch
Dollar Index: 96.88 -0.04
Gold: $1286.40 -$8.80
Crude Oil: $63.43 -$0.45
DJIA: 26,371.68 -40.62
NASDAQ: 7974.54 -9.36
S&P 500: 2904.18 -3.23
Richard Sardella has been actively managing and providing services in the mortgage industry for over 27 years. Richard serves on the board of directors as President of Colorado Home Mortgages Inc.
All information furnished has been forwarded to you and is provided by thetbwsgroup only for informational purposes. Forecasting shall be considered as events which may be expected but not guaranteed. Neither the forwarding party and/or company nor thetbwsgroup assume any responsibility to any person who relies on information or forecasting contained in this report and disclaims all liability in respect to decisions or actions, or lack thereof based on any or all of the contents of this report.
MLO of record MLO.100007700 / NMLS#233568 / CHM NMLS#127716.