December 2nd, 2019 9:06 AM by Richard Sardella MLO.100007700/NMLS 233568
Interest rates jumping this morning after trading unchanged last week; at 8:00 am ET the 10 yr at 1.84% +6 bps, MBS prices -17 bps from Friday. Holiday internet shopping hit a record $17B while hard stores once again lost to internet buying. Early trading in US stock indexes generally unchanged. Stocks under a little pressure with President Trump restoring tariffs on some imports from Brazil and Argentina, overshadowing data showing that the Chinese and eurozone economies were stabilizing.
Impeachment gets back underway with Congress back from Thanksgiving. The process moves from the House Intelligence Committee to the House Judiciary Committee, where more testimony will occur, Republicans wanting more witnesses than Dems are willing to allow. It doesn't matter; we all know where this is going. Some Republicans on the committee considering calling Joe Biden, the whistleblower, and even Adam Schiff. None will likely be allowed. The Constitution calls for the chief justice of the US to preside over a Senate impeachment trial.
The Financial Times reporting today that the Federal Reserve may implement a rule that would allow inflation measures to exceed the 2.0% target. China's Manufacturing PMI inched back into expansionary territory (November Manufacturing PMI rose to 50.2 from 49.3), while eurozone economies also reported slightly better than expected Manufacturing PMI readings of their own Eurozone's November Manufacturing PMI rose to 46.9 from 46.6 (expected 46.6). Germany's November Manufacturing PMI rose to 44.1 from 43.8 (expected 43.8). Comments from China; its main focus in the trade talks is to remove the tariffs Trump has placed on its goods and the threat of adding more on Dec 15th. The trade deal is now "stalled" due to the passage of the Hong Kong Human Rights and Democracy Act. China suspended visits by US military ships and aircraft to Hong Kong and placed sanctions on some US nongovernment organizations, in the act of retaliation.
At 10:00 am ET Nov ISM manufacturing index expected at 49.4 declined to 48.1 (Oct 48.3); the weaker index sent stocks lower and improved the rate markets a little. Oct construction spending also weaker than forecasts; -0.8% on forecasts of +0.4; Sept spending originally reported +0.5% revised to -0.3%.
The increase in rates today pushed our technicals to bearish, standing back though the rate markets have been very stable for most of November. The 10 yr and the rest of the curve not moving much, but any bullishness has been short-lived. Strong retail sales and increasing belief there will be a phase one deal with China will happen soon.
This Week's Calendar:
10:00 am Nov ISM manufacturing (49.4 expected, as released 48.1)
No time Nov auto and truck sales (17.0 mil)
7:00 am weekly MBA mortgage applications
8:15 am Nov ADP private jobs (156K from 125K in Oct)
10:00 am Nov ISM non-manufacturing (54.5 from 54.7 in Oct)
8:30 am weekly jobless claims (220K +7K)
10:00 am Oct factory orders (+0.3%)
8:30 am Nov employment data (Unemployed 3.6%, NFP jobs 180K, private jobs +170K, average hourly earnings +0.3%, yr/yr +3.0%, manufacturing jobs +20K (Oct manufacturing -36K)
10:00 am final Nov U. of Michigan consumer sentiment (96.8, unch from mid-month)
3:00 pm Oct consumer credit (+$15.5B)
PRICES @ 10:10 AM
10 yr note: 1.82% +4 bp (got a boost frm 10:00 data 1.85% the high earlier)
5 yr note: 1.65% +2 bp
2 Yr note: 1.62% +1 bp
30 yr bond: 2.27% +7 bp
Libor Rates: 1 mo 1.697%; 3 mo 1.905%; 6 mo 1.896%; 1 yr 1.952% (11/29/19)
30 yr FNMA 3.5: @9:30 102.58 -9 bp (-6 bp frm 9:30 Friday) 3.0 101.23 -17 bp (-17 frm 9:30 Friday)
15 yr FNMA 3.0: @9:30 102.34 -4 bp (+3 bp frm 9:30 Friday)
30 yr GNMA 3.5: @9:30 103.48 -11 bp (-22 bp frm 9:30 Friday) 3.0 102.59 -19 bp (-19 bp frm 9:30 Friday)
Dollar/Yuan: $7.0396 +$0.0070
Dollar/Yen: 109.53 +0.02 yen
Dollar/Euro: $1.1044 +$0.0026
Dollar Index: 98.14 -0.14
Gold: $1464.80 -$7.90
Crude Oil: $56.44 +$1.27
DJIA: 27,916.81 -134.60
NASDAQ: 8573.44 -91.43
S&P 500: 3120.37 -20.61
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.