August 6th, 2018 9:17 AM by Richard Sardella MLO.100007700/NMLS 233568
Interest rates opened this morning generally unchanged and stock indexes in early activity also showed little changed, although the DJIA at 9:00 am EST traded lower. There are no economic reports today and not much news until Thursday and Friday when July PPI and CPI are reported.
Major events this week include quarterly refunding with 3s, 10s and 30s being auctioned on Tuesday thru Thursday. New 10s and 30s should be closely watched for demand. This quarter Treasury will borrow the most since 2010. The debt continues to increase rates and there is nothing we can see that will slow the rapidly climbing debt. Markets may be worrying but behind the scene, about $900B a year in accumulating debt that is now $22 trillion dollars.
JPMorgan Chase’s Jamie Dimon recently forecast the 10-yr note climbing to 4.0% this weekend, upping the forecast to 5.0% even though the 10-yr can’t hold above 3.0% currently. Dimon said he thinks the 10-yr should be at 4.0% now. “You better be prepared to deal with rates 5.0% or higher - it’s a higher probability than most people think.” Dimon spoke at the Aspen Institute’s 25th Annual Summer Celebration Gala and is nevertheless is optimistic the current economic growth could last another two to three more years.
President Trump touted his tariffs are working; saying “my thing” is playing hardball. He characterized his tariffs are working “big time.” Beijing responded through state media saying the nation is ready to endure the economic fallout. China is prepared for a “protracted war” and doesn’t fear sacrificing short-term economic interests. China’s economy is slowing, its currency is declining, and its stock markets are in a bear market. In the meantime, US markets and EU markets continue to believe that in the end there will be no trade war strong enough to cripple growth.
At 9:30 am the DJIA opened -43, NASDAQ -6, S&P -3. The 10 yr at 9:30 am was at 2.94%, -1 bp.
The 10 yr is at its 20-day average now, 40 days at 2.90%. 9-day relative strength is now at a neutral 50. Sticks weaker. Dollar strong.
This Week’s Calendar:
10:00 am June JOLTS job openings (6.650m up from 6.638M IN May)
1:00 pm $34B 3 yr note auction
3:00 pm June consumer credit ($16B down from $24.6B in May)
7:00 am weekly MBA mortgage apps
1:00 PM $26B 10 yr note auction
8:30 am July PPI (+0.3% overall, core +0.3%)
Weekly jobless claims +2K to 220K)
10:00 am June wholesale inventories (0.0% from +0.6% in May)
1:00 pm $18B 30 yr bond auction
8:30 am July CPI (+0.2% overall and +0.2% for the core; yr/yr2.9%, core yr/yr +2.3%)
2:00 pm July Treasury budget (-$73.5B)
PRICES @ 10:00 AM
10 yr. note: +5/32 (15 bp) 2.93% -2 bp
5 yr. note: +2/32 (6 bp) 2.80% -2 bp
2 Yr. note: unch 2.65% unch
30 yr. bond: +13/32 (41 bp) 3.07% -2 bp
Libor Rates: 1 mo. 2.079%; 3 mo. 2.343%; 6 mo. 2.524%; 1 yr. 2.827% (8/3/18)
30 yr. FNMA 4.0 Aug: @9:30 101.69 +2 bp (+11 bp from 9:30 Friday)
15 yr. FNMA 4.0: @9:30 102.47 +5 bp (+6 bp from 9:30 Friday)
30 yr. GNMA 4.0: @9:30 102.31 +3 bp (+14 bp from 9:30 Friday)
Dollar/Yuan: $6.8537 +$0.0231
Dollar/Yen: 111.48 +0.23 yen
Dollar/Euro: $1.1543 -$0.0024
Dollar Index: 95.45 +0.22
Gold: $1217.10 -$6.10
Crude Oil: $69.06 +$0.57
DJIA: 25,405.10 -57.48
NASDAQ: 7823.05 +11.04
S&P 500: 2841.28 +0.93
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.